Autumn date set for Lancashire County Council financial healthcheck as £5bn local authority 'black hole' opens up nationwide

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The first in-depth look at Lancashire County Council’s finances since it set its budget earlier this year will not come until October, the Local Democracy Reporting Service (LDRS) understands.

The authority would usually publish its “Money Matters” report – revealing the state of County Hall’s coffers after the first few months of the financial year – at the first cabinet meeting following the summer break, which is in just a fortnight’s time.

It comes after a two-month delay to the publication of the authority’s accounts for 2022/23 – revealed by the LDRS in July – following as a result of issues with a new software system that the county council adopted at the turn of the year.

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However, it is not thought that the revised timing of the financial healthcheck is a direct result of the same problems – and, unlike for the accounts, there is no fixed deadline by which the updated budgetary information has to be published.

How are County Hall's coffers coping?How are County Hall's coffers coping?
How are County Hall's coffers coping?

Nevertheless, the report is eagerly anticipated as it will set out how the authority is coping with inflation – which has remained stubbornly high since the February budget meeting – and interest rates, which have gone up by 1.25 percent over the same period and now stand at 5.25 percent.

The document will also lift the lid on the seemingly interminable pressures for adult and children’s social care.

It comes as a BBC investigation reveals that top-tier local authorities like Lancashire County Council are forecasting a collective £5.2bn black hole in their finances by 2025/26 – with the average council deficit predicted to rise by 60 percent compared to two years ago.

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The figures have prompted the union Unison to warn that some authorities will not be able to offer even the “legal minimum of care” next year, with basic services under threat.

When County Hall agreed its budget six months ago, it had a forecast deficit of £23.2m by 2026/27, down from a colossal £160m estimate just two months earlier.

The budget for 2023/24 – the first in the county council’s history to cross the £1bn mark – included a share of an £86m savings package that had already been identified last November. The update report, when it comes, will set out any challenges faced in delivering those savings.

It will also reveal the level of the county’s reserves, which were expected to stand at £188m at the end of March – and were, at that point, deemed sufficient to cover any budget gaps through until 2026/27.

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In February, the authority was predicting a modest overspend of £2.5m for the 2022/23 financial year. Confirmation of the eventual “outturn”, as it is known, will be brought before next month’s cabinet meeting and will not have to wait for the broader update report in October.

A spokesman for the county council said: “The 2023/24 budget was agreed at a meeting of our full council in February.

“An update on the 2023/24 financial position is expected to be considered at our cabinet meeting in October.

“Delivering the best services at the best value for money for our residents remains our priority and the council is committed to careful management of its finances.”

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In response to the BBC investigation, a spokesperson for the Department for Levelling Up, Housing and Communities said: “No decision on funding levels for beyond 2024-25 in England will be taken until the next Spending Review, so these numbers are unsupported.

“Councils in England have benefitted from an increase in core spending power of up to £5.1 billion in 2023-24 compared to the previous year, with almost £60 billion made available for local government overall.

“We are making up to £4.7 billion available for the adult social care system in England in 2024-25 and have also confirmed an uplift to the Revenue Support Grant, whilst setting out a core council tax referendum principle for 2024-25 of three percent, plus a further two percent for councils with adult social care responsibilities.”