Shropshire Council has been issued a statutory recommendation by its external auditor, Grant Thornton, calling for urgent action to address serious financial weaknesses and secure better value for money.
The auditor’s annual report, following an in-depth review, highlights “significant weaknesses” in the council’s financial sustainability and governance arrangements.
The severity of the council’s financial situation has triggered the statutory recommendation, a mechanism that requires the report to be discussed at a public meeting. This critical document will be reviewed by the Audit Committee on Thursday, 27 November.
Four Areas Require Immediate Action
While the report acknowledges some progress, it identifies a structural deficit and calls for swift implementation of changes across four key areas:
Service Review: A comprehensive review of all services is required to identify the true cost of delivering statutory responsibilities and to understand the scale of the structural deficit.
Budgeting Accuracy: Improved accuracy in financial modelling and budgeting is mandated, with a specific focus on reducing “optimism bias” in forecasts.
Financial Resilience Plan: The council must develop a clear, realistic plan to reduce its reliance on temporary exceptional financial support and to strengthen its long-term financial resilience.
Internal Audit Implementation: Immediate implementation of recommendations from the Internal Audit review is required to improve budget monitoring and reporting.
Council Acknowledges ‘Serious Financial Problems’
Councillor Roger Evans, Shropshire Council’s Cabinet member for finance, noted that the report’s findings were “not unexpected,” with financial problems having been present for “a few years.”
“I, the Administration and the council note this report including all its recommendations,” he stated. “Recent monthly reports have shown we have some serious financial problems to overcome.”
Cllr Evans highlighted actions already taken, including the establishment of an independently chaired Improvement Board and a soon-to-be-updated, “realistic” Improvement Plan. He also confirmed that the council is seeking permission from the government to borrow sufficient funds to cover this year’s overspend and allow time for the necessary long-term actions to be implemented.
He warned that living within the new financial limits will involve “making a number of hard decisions,” some of which will necessitate public consultation.
Audit Committee to Scrutinise Response
The statutory recommendation will be the focal point of the public meeting of the Audit Committee next week.
Councillor Duncan Kerr, Chair of Shropshire Council’s Audit and Governance Committee, confirmed the committee’s role in making an “independent assessment of the controls and procedures in the council.”
“The Committee is meeting in public on Thursday, 27 November, to consider in detail the important and significant recommendations of the External Auditor and assess the response of the council,” Cllr Kerr stated. He noted that the recently enhanced committee, which now includes all political groups, has made the improvement of controls and assurance its main priority.
To read the report, people can visit the council’s website here. It is item 16 on the agenda.