Shropshire Council says cancelled relief road could push authority to brink of bankruptcy

Shropshire Council warned Monday that it may face bankruptcy unless it borrows up to £100 million to plug a funding gap created by the cancellation of a planned £215 million North West Relief Road around Shrewsbury.

The council said it could run out of money by April 2026 if the shortfall is not addressed. Liberal Democrat council leader Heather Kidd said the authority is likely to approach the UK government for further financial support, and that having to repay a Department for Transport grant awarded in 2019 could "tip the council over the edge."

A council report identified the funding of the now-cancelled four-mile (2.5km) bypass as one of the largest threats to the authority's financial security. The scheme, originally proposed by the previous Conservative administration to reduce congestion and pollution in Shrewsbury town centre, was formally halted by the new Liberal Democrat administration in the summer after project costs reportedly rose from an initial estimate of £87.2 million to about £215 million.

Shropshire Council said roughly £39 million had already been spent on the project before its cancellation. That included about £21.875 million on designer and engineering consultant fees and £7.975 million on pre-construction contracts and enablement works that had been started by the previous administration.

The Department for Transport had awarded a grant to the scheme but has told the council it would not extend additional funding beyond the amount originally allocated. Council officials said that if the DfT decided it wanted the grant — reported as worth up to £54.4 million — returned, the authority would face a significantly larger hole in its finances and would be forced to borrow tens of millions of pounds.

The council is one of 29 local authorities that received Exceptional Financial Support from central government last winter as part of a combined package worth £1.5 billion. An independently chaired "improvement board" is being set up to scrutinise spending and is expected to be in place by a meeting of council leaders scheduled for Oct. 15, the council said.

Campaigners and opposition figures called for a full inquiry into the handling of the relief road. Better Shrewsbury Transport (BeST), which long opposed the scheme, wrote to Shropshire Council leaders seeking a "full and thorough" investigation into how the council committed to and spent tens of millions of pounds on a project that was later cancelled.

Mike Streetly of BeST said residents across the county were "furious" and questioned how £39 million had been expended. "Something has clearly gone seriously wrong. A full and thorough inquiry is the only way to learn the lessons and reassure the public that something like this won't happen again," he said.

Environmental opposition to the scheme had coalesced around the fate of a 550-year-old tree known locally as the Darwin Oak, named in recognition of Charles Darwin whose home was nearby. A petition to save the tree attracted more than 100,000 signatures and became a focal point for critics of the bypass.

Council leaders said an improvement board will monitor spending and advise on whether to seek further government assistance. The authority has not yet confirmed whether it will formally apply for additional central funding, and officials said they are continuing to review their options to balance the council’s books while maintaining statutory services.

The collapse of the project and the scale of pre-construction spending have intensified scrutiny of local decision-making and raised questions about the oversight of large capital schemes. The council said it will publish further details as work to establish the improvement board and to review the project’s finances proceeds.