Financially squeezed Shropshire Council is on course to use up most of its cash reserves by the end of the financial year.

Gloomy financial figures discussed by councillors showed the authority was on course for a £14m overspend for the current year, leaving less than £2m in the council’s general reserve fund.

However Shropshire Council says balances will be restored to around £30m when the next budget rolls around in April.

The authority has delivered most of its planned cost-savings for this year against a £52m target in the face of higher-than-anticipated demand in social care, and last week announced further suite of cost saving measures as part of its proposed budget for the coming financial year.

“The general fund balance sits at over £16m therefore we are in a positive position, even if the overspend should be that high, ” council chief financial officer James Walton told a meeting of the council’s Transformation and Improvement Scrutiny Committee today (February 19).

“That is the position at the end of December, work has been ongoing since then and will continue through to the end of March. By the end of March I would hope that [overspend] figure would come down, but even if it went up slightly it would still be contained within the general fund balance.

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“That would of course leave us with a very low general fund balance at the end of the year.”

Shropshire Council says it’s managing reserves over multiple years as part of its medium-term financial strategy, and reserves were expected to be restored to recommended levels when next year’s budget rolls around in April. 

The council aims to hold between £15m and £30m in reserve to cover unplanned financial demands.

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However Mr Walton added that the council’s position to respond to an unexpected crisis before the end of the current financial year was “moving towards precarious”, and the authority was working to reduce its overspend to improve the position.

“Even if the general fund balance was in single figures in terms of pounds let alone millions by the end of the year, while that in itself could look concerning and, certainly from a national position looked at purely on that basis would raise eyebrows, nevertheless what needs to be taken account is that on the first of April that figure will go up to around £30m,” he said.

“The important point is ‘do we have a level of general fund balance over the medium term to enable us to manage our financial position?’ – as at this current financial year we are saying ‘yes’.”