Lancashire County Council to raid rainy day cash in funds crisis

Angie RidgwellAngie Ridgwell
Angie Ridgwell
The extent of the financial stress Lancashire County Council is under to balance its books has been laid bare by new research.

The cash-strapped local authority plans to prop up its budget by piling more than £110m from its reserves to plug gaps over the next two years.

But with vast amounts of savings required beyond 2020, concerns have been voiced that Lancashire – along with counterparts across the country – could face “untenable budget positions.”

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Analysis by The Bureau of Investigative Journalism (TBIJ) claims several county councils are showing similar signs of financial strain as Northamptonshire, which has run out of cash.

It comes as a new report from the National Audit Office (NAO) has revealed one in 10 local authorities could run out of reserves within the next three years.

Angie Ridgwell, the recently installed chief executive of LCC, said “further savings will need to be made” by 2020/21 with the authority facing a predicted budget deficit of £144m in 2021/22.

She said: “The county council’s revenue budget has been supported in recent years by the reserves that have been available to the county council and their value has therefore reduced.

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“The value of the council’s uncommitted transitional reserve is forecast to be £130.620m (including the 2017/18 forecast underspend).

“Current forecasts indicate that there may be sufficient funds within the transitional reserve to support the identified budget gap in 2018/19 and 2019/20.

“However, further savings will need to be made and fully implemented by 2020/21, at the latest, to deliver a sustainable financial position going forward.”

County Hall said the figures used by TBIJ focused only on the transitional reserve fund, something they had “clearly identified an element of these reserves as being used to support the down-sizing of the revenue budget.”

They added that overall reserves - including the county fund, earmarked reserves, capital receipts and capital grants - have not seen a reduction “at the scale set out” by the analysis.