Lead Member: Councillor Roger Evans, Portfolio Holder for Finance

Lead Officer: Clare Williams, Deputy S151 Officer

RESOLVED:

In respect of the revenue budget, to

a)    Note that the outturn variance in the year is £49.428m above budget.

b)    Note that £19.637m has been funded by EFS, leaving £29.278m to be funded from the General Fund reserves and balances.

c)     Note the consequent level of the General Fund Balance is £5.000m.

d)    Note the increase of £5.658m in Earmarked Reserves & Provisions and the resulting level of earmarked reserves of £29.812m (£25.113m is the balances held by schools are excluded).

e)    Note the £17.722m level of savings delivery achieved over the year.

f)      Note that the current combination of earmarked and un-earmarked (General) reserves of £34.069m is at a level that is below that would normally seen as appropriate for a Council of this size.

g)    Note that the MTFP sets out an agreed plan to restore these balances to more appropriate levels over time, including further requests for Exceptional Financial Support in 2026/27 and beyond.

h)    Note that £61.8m of EFS has been applied in 2025/26, some £9.6m less than what was requested originally and approved by MHCLG.

Related to ringfenced funding, to:

i)       Note the performance of the Housing Revenue Account (HRA) this is an account associated with Shropshire Councils housing stock - £1.372m (5.75%) surplus outturn for 2025/26 on £23.861m turnover, and the resulting level of the HRA reserve of £13.489m.

j)       Note the £28.029m overspend for the DSG and the consequent level of the DSG reserve of £45.655m in deficit.

k)     Note that the level of school balances has decreased by £1.994m, from £6.693m in 2024/25 to £4.699m, in the financial year.

In respect of the capital programme, to:

l)       Note the net budget variations of £26.932m to the 2025/26 capital programme (in Appendix 7) and the re-profiled 2025/26 capital budget of £77.375m.

m)   Note the re-profiled capital budgets of £145.380m for 2026/27, including slippage of £15.258m from 2025/26, £129.536m for 2027/28 and £89.113m for 2028/29 as detailed in Appendix 11.

n)    n) Accept the outturn expenditure set out in Appendices 8, 9 and 13 of £68.698m representing 88.79% of the revised capital budget for 2025/26.

o)    Approve retaining a balance of capital receipts set aside of £22.309m as at 31st March 2026 to generate a one-off Minimum Revenue Provision saving of £0.363m in 2026/27.

General, to

p)    Note that these outturn results will now be incorporated in financial statements for external audit and oversight by the Audit and Governance Committee

q)    Note that the Finance risk register is subject to review and will be incorporated in the July Cabinet report that will provide an updated MTFP

The Portfolio Holder for Finance reported that the outturn reflected a significant adverse variance against what he described as an unrealistic and inadequate budget set by the previous administration, resulting in a substantial overspend and financial challenge for the Council.

There was recognition that financial pressures, particularly in social care, were driven by rising demand and costs, which remained difficult to predict and largely outside the Council’s control.

Improvements in financial monitoring and governance were highlighted and welcomed, though concerns remained about achieving long?term financial resilience.  The Council was operating in an exceptional financial context, requiring both cost reduction and targeted investment (e.g. transformation and prevention), creating difficult and sometimes conflicting decisions.

Members emphasised the need for greater transparency and earlier scrutiny involvement, including proposals for exception reporting to identify and address issues sooner.

Overall, the discussion reflected a shared understanding that the Council faces a prolonged and challenging journey, requiring continued discipline, improved forecasting, and difficult decision?making to reach a sustainable financial position.

RESOLVED:

In respect of the revenue budget:

·        a) Note that the outturn variance in the year is £49.428m above budget.

·        b) Note that £19.637m has been funded by EFS, leaving £29.278m to be funded from the General Fund reserves and balances.

·        c) Note the consequent level of the General Fund Balance is £5.000m.

·        d) Note the increase of £5.658m in Earmarked Reserves & Provisions and the resulting level of earmarked reserves of £29.812m (£25.113m is the balances held by schools are excluded).

·        e) Note the £17.722m level of savings delivery achieved over the year.

·        f) Note that the current combination of earmarked and un-earmarked (General) reserves of £34.069m is at a level that is below that would normally seen as appropriate for a Council of this size.

·        g) Note that the MTFP sets out an agreed plan to restore these balances to more appropriate levels over time, including further requests for Exceptional Financial Support in 2026/27 and beyond.

·        h) Note that £61.8m of EFS has been applied in 2025/26, some £9.6m less than what was requested originally and approved by MHCLG.

Related to ringfenced funding:

i) Note the performance of the Housing Revenue Account (HRA) this is an account associated with shropshire Councils housing stock - £1.372m (5.75%) surplus outturn for 2025/26 on £23.861m turnover, and the resulting level of the HRA reserve of £13.489m.

j) Note the £28.029m overspend for the DSG and the consequent level of the DSG reserve of £45.655m in deficit.

k) Note that the level of school balances has decreased by £1.994m, from £6.693m in 2024/25 to £4.699m, in the financial year.

In respect of the capital programme:

l) Note the net budget variations of £26.932m to the 2025/26 capital programme (in Appendix 7) and the re-profiled 2025/26 capital budget of £77.375m.

m) Note the re-profiled capital budgets of £145.380m for 2026/27, including slippage of £15.258m from 2025/26, £129.536m for 2027/28 and £89.113m for 2028/29 as detailed in Appendix 11.

n) Accept the outturn expenditure set out in Appendices 8, 9 and 13 of £68.698m representing 88.79% of the revised capital budget for 2025/26.

o) Approve retaining a balance of capital receipts set aside of £22.309m as at 31st March 2026 to generate a one-off Minimum Revenue Provision saving of £0.363m in 2026/27.

General

p) Note that these outturn results will now be incorporated in financial statements for external audit and oversight by the Audit and Governance Committee

q) Note that the Finance risk register is subject to review and will be incorporated in the July Cabinet report that will provide an updated MTFP?.