Council may need £100m more to balance books

Leader Heather Kidd blames a lack of central government funding for its financial pressures

Shropshire Council may have to borrow up to £100m to avoid running out of money by April 2026, its leader has admitted to the BBC.

Heather Kidd said the authority was likely to approach the government for further financial support as it desperately tries to balance its books.

A report indicates that one of the largest threats to the council's "financial security" is the funding of the now cancelled £215m North West Relief Road – a four-mile (2.5km) long bypass around Shrewsbury.

If the Department for Transport (DfT) decides it wants its grant back, worth up to £54.4m, the council will have to borrow tens of millions of pounds more to pay off its debts, Kidd has admitted.

The new Liberal Democrat administration pulled the plug on the relief road in the summer, saying it could no longer afford the project, whose costs had spiralled upwards.

Kidd said paying back the DfT grant, awarded in 2019, would "tip the council over the edge".

The North West Relief Road, whose costs had spiralled to more than £200m, was also cancelled because of the environmental impact it would have

The leader said she has spoken with Shrewsbury's Labour MP Julia Buckley about organising a meeting with the government's new transport minister, Kier Mathers, to discuss the situation.

"I can't see the government wanting us to issue a section 114 [effectively declaring the council bankrupt]. I think they will help. I hope they help," she said.

"The more money we have to borrow, the more we have to pay back and there's interest involved.

"We don't know how much we'll need to borrow but it could be up to £100m, but it could be much less than that at £50m."

The authority was one of 29 councils that received Exceptional Financial Support last winter, worth a combined £1.5bn.

Independent 'improvement board'

Borrowing from the Treasury is deemed "exceptional", because it allows councils to take out capital loans to pay for day-to-day spending, which is normally not permitted.

In February, the then Conservative-run council said it needed £26.9m to pay for its plan to downsize its operation, which included the relocation of the councils headquarters and the reduction of 540 full time posts.

It described the loan as a "temporary measure" until assets, such as buildings and land, had been sold off to pay the money back.

The new administration will decide whether to request further financial support from the Treasury once an independently-chaired "improvement board" is set up to monitor progress and scrutinise all in-year spending.

It is hoping to have it in place by the next meeting of council leaders, scheduled for 15 October.