Shropshire Council is expected to declare a ‘financial emergency’ next week as it seeks to avoid effective bankruptcy.
A financial report prepared for the cabinet predicts the council will be more than £35m over budget by the end of the 2025-26 financial year.
Just under £900,000 of this overspend cannot be funded by reserves or other means and could place the authority in a ‘potentially illegal financial position’, it warns.
The overspend is the result of increasing costs associated with adult social care, children’s services and home to school transport.
The report advises cabinet members to declare a ‘financial emergency’ and take ‘emergency action’ to reduce non-essential spending.
Cllr Heather Kidd, Shropshire Council’s leader, warned that if the council could not produce a balanced budget by March, they would have to issue a Section 114 notice, effectively declaring bankruptcy.
‘As a council, we must all move quickly to challenge every pound and stop all non-essential spend. If we do this, I’m confident that we can balance our budget by the end of this financial year,’ she added.
