Big drop in Lancashire County Council deficit - but funding questions mean figure is far from certain

Lancashire County Council’s budget deficit is estimated to have more than halved in less than six months.

The forecast gap between the authority’s income and expenditure is expected to stand at £28.4m by 2023/24 – down from a predicted £64.7m last July.

Lancashire County Council has reassessed its financial position following recent government announcements

Lancashire County Council has reassessed its financial position following recent government announcements

But the authority’s chief executive, Angie Ridgwell, told a cabinet meeting that the “uncertainties that are still inherent” in local government finance had prompted officers to produce a range of possible scenarios about County Hall’s financial prospects.

That process concluded that the county council could be sitting on a £6m surplus in three years’ time – or an £86m deficit. But the £28m gap was considered to be the “most likely” outcome.

Speaking after the meeting, Conservative council leader Geoff Driver acknowledged that local authorities like Lancashire needed more certainty – and said he expects the government to provide it this year, both in a spending review and by bringing forward the so-called “fair funding review” into council finances from its current due date of 2021.

“Now that the government has got a big working majority, I’m sure they’ll tackle these issues.

“The uncertainty [for councils] is there, but we are comfortable in terms of the decisions we’ve made and we’re confident that the [deficit prediction] option we’ve chosen is the right one.

“We’re looking at ways of making the council much more efficient in the way that it works. The fact that we’ve got £150m in reserves to help us means we can make savings in a really considered way to make sure the impact on the people of Lancashire is absolutely minimised,” County Cllr Driver said.

The authority’s reserves are now forecast to last longer than the four-year duration of the current medium-term financial strategy. They have been predicted run out before the end of that rolling period in recent years.

The improved financial position has been attributed to the one-year spending review undertaken by the government in the autumn and confirmation since the general election of additional social care cash – of which County Hall’s share is £33.4m.

But documents presented to cabinet reveal that demand for both adult and children’s social care continues to put pressure on the county council’s budget, with additional costs of £47m and £11m for each service forecast over the next four years.

The cost of children’s services is being hiked by the number of looked-after children in Lancashire and the need for agency residential and fostering placements and fostering placements. The authority is planning to introduce a new “family safeguarding” model of early intervention, on which it has pinned hopes of £10m in savings.

Elsewhere, County Hall is set to deliver £58m of budget reductions between now and 2022/23 – an aim which the cabinet papers say comes with “inherent risks”. Just over five percent of those savings have now been classed as undeliverable “due to changing circumstances and consultation feedback”. Departments are expected to come up with other savings to compensate, while the remainder are described as being “on track”.

County Cllr Driver confirmed that previously-announced plans to bring in consultants to help with a fundamental review of how County Hall operates are at an advanced stage, with a preferred contractor now identified.

“If we’re going to provide services for the people of Lancashire in the long term so that [they] can be satisfied that those services are going to be there when they need them, we need to ensure that we’re a modern up-to-date county council,” he said.

"TOLD YOU SO"

Less than 24 hours after the financial predictions were presented to cabinet, they were pored over by members of the cross-party internal scrutiny committee. Opposition members suggested that the savings now acknowledged as "undeliverable" showed that they had always been a step too far.

"Some of us said at the time that you couldn't make these savings - so I'm not going to say 'I told you so', but there were occasions when that message was made but ignored," said Liberal Democrat group leader David Whipp.

Labour's Steve Holgate accepted that services had to be assessed "thoroughly" for any potential restructuring, but added: "The revised savings target shows just how thorough and, in some cases, unreasonable these savings were."

But Conservative committee chair David O'Toole said the "massive deficit" which the current administration had to address meant that "every possible option" had to be explored.

Almost £9m of previously proposed savings have been abandoned - £5.7m of which relate to the county council's "passport to independence" scheme to people stay healthier and self-sufficient for longer.