Latest Public Sector News

28.09.16

Lancashire CC warned of intervention risk over unsustainable funding

Funding at Lancashire County Council will no longer be sustainable by 2020-21 even if it implements a rigorous programme of safety cuts, putting it at risk of government intervention, according to an independent review.

The council recently revealed plans to close services, including library and youth services, at more than 100 sites in a bid to deliver savings.

Now an independent review of the plans by accounting firm PwC has estimated that the council needs to save £184m, or 17% of its 2016-17 budget, in order to remain financially sustainable. This would require it to deliver lower quartile costs in all service areas, something no local authority has achieved.

Even if all the savings are achieved, they will only deliver £95.2m, or 9% of the budget. Furthermore, PwC found that “a significant proportion” of the savings measures are “at risk of slippage”.

It said that if the council failed to achieve sustainable funding by 2021, the Communities and Local Government secretary might have to intervene to take over some of the council’s functions.

Even with the projected savings, the council will face a £79m in-year deficit and a £227m cumulative deficit in 2020-21.

In a worst case scenario, the in-year deficit will be £148m and the cumulative deficit will be £398m, with adult social care facing a deficit as high as £92m. At current planned rates, the council will exhaust its reserves by 2018-19.

In addition, Lancashire has a higher proportion of its income generated by services than any other council, so a reduction in services might mean a further loss in income.

Cllr David Borrow, deputy leader of the council and portfolio holder for finance, said that the council would make the case to ministers that they “need to rethink how they support councils”.

Lancashire councillors recently opposed plans to establish a Lancashire Combined Authority on the grounds that they would increase the financial burden.

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