Cash boost for Lancashire County Council 'will be wiped out' by national insurance costs, deputy leader claims

That is the assessment of the Conservative-run authority’s deputy leader who says he is struggling to see any improvement in the financial outlook for councils - in spite of the fact his own is in line for an additional £75.3m.

Alan Vincent - who is also the cabinet member for resources - was speaking after ministers announced the provisional local government finance settlement, which sets out how much money councils can expect to have at their disposal over the 12 months from April.

He warned that the government had failed to cover the full national insurance cost increase generated by County Hall’s own staff - and had done nothing to help insulate the authority from the charges likely to be levied by companies that provide services to the authority, including care for the vulnerable, to protect their businesses.

The county's Labour opposition group says it is up to the Tories to show they can use the cash boost they have received wisely.

According to the figures, published on Wednesday, Lancashire County Council will see its so-called ‘core spending power’ increase by 6.6 percent in cash terms - 0.6 percent more than the England average - to reach £1.225bn for 2025/26.

The tally factors in a presumed maximum-permitted rise in council tax of five percent - two percent of which must be spent on adult social care - which will only be confirmed when County Hall sets its budget in February.

The settlement also includes an extra £21.7m for adult social care - the service that costs the county council more money than any other it provides.

However, County Cllr Vincent has criticised ministers over the as-yet-unspecified amount the authority will receive to compensate for the increased costs resulting from the rise in employer national insurance announced in last month’s budget.

A £515m nationwide grant - allocations from which will be finalised in the new year - is intended to be a contribution towards the higher bills that will be faced by council

"There were no real surprises in the figures, but the failure to fully cover even our direct additional national insurance costs - coupled with the even greater impact of our receiving no help at all with an expected major hike in costs added by external suppliers to our bills - is likely to wipe out much of the additional funding that we need and other authorities desperately need," County Cllr Vincent said.

"Next year is likely to be just as hard as in previous years, in reality, as inflation increases, interest rates remain high, and wage growth remains across the Board at well above inflation.

"The County Councils Network response was that they now expect no improvement next year in the financial position of County Councils throughout England - and [that] council tax rises and savings will continue to be the reality. It is very hard to argue with that analysis.”

Nationally, the government has provided an uplift in social care grant of £880m.

Labour opposition group leader Matthew Tomlinson said of the finance settlement: “After 14 years of Tory cuts, it's encouraging to see a Labour government beginning to recognise the challenges local councils are facing.

“A real-terms increase in funding, plus extra cash for pothole repairs and more for social care must be recognised as a positive step. The Conservative administration at County Hall must now show how it will use the extra cash to benefit the residents we all represent.”

Local Government minister Jim McMahon promised that reform of the council funding system was also on the way. 

"We know councils are calling out for help which is why we have prioritised this vital increase in funding, but we must stop taxpayers’ money being thrown into a broken system.

"As a former council leader I know too well that councils have suffered from short-term solutions. But we will fix this outdated system, turning to our partners in local government, working hand in hand to bring ambitious reform and do the long-term, necessary work to rebuild the foundations and, crucially, trust.”

A multi-year funding settlement - the first for more than a decade - will be introduced in 2026/27 in an attempt to provide councils with certainty over their medium-term financial futures.