Shropshire Council has made an application to the Government for a capitalisation direction, allowing it to generate capital receipts to fund its £26m transformation programme over the next twelve months.
The transformation programme is helping Shropshire become a smaller and more efficient organisation by changing how services operate, including greater use of digital services and resizing, as it seeks to reduce its workforce by around 540 jobs, equivalent to 1 in 5 posts.
Capitalisation directions permit a local authority to meet revenue costs through capital resources. The amount requested will ultimately be paid for by selling property and other assets to deliver capital receipts. The council expects to need significantly less than the requested amount as capital receipts are realised to match the investment made in transformation. Shropshire has received support in principle for this, and it is subject to final ministerial approval later this month as the application is incorporated in the Government’s Exceptional Financial Support programme.
If approved, the capital direction will not be used to fund the day-to-day costs of running services and the Council’s main budget strategy seeks to address a funding gap in 2025/26 of £22.8m for such service running costs.
The council has already taken £46m from its 2024/25 day-to-day spending budget, following £41m of savings in 2023/24 and has further savings still to be made.
The transformation work that helps deliver these savings can be funded from grants and capital receipts or, with this approval, temporarily through borrowing.
In 2024, 19 councils were granted exceptional financial support by the Government, as councils all over the country face financial pressure from the rising need and growing cost for services such as social care. In 2025, this number is expected to be considerably higher, while some councils have been allowed by Government to increase council tax by more than the nationally set 4.99% maximum. Shropshire has not asked to do this.
Shropshire also has additional pressure from the removal of the rural services delivery grant, which helped offset some of the extra costs of providing services in a rural area, such as more fuel and travel time.
The application is now being considered by the Ministry for Housing, Communities and Local Government.