Lancashire County Council has issued a revised financial forecast after analysing its anticipated funding levels and expenditure requirements over the next four years.

Members of Cabinet have been told that, because of prudent financial planning in recent years, the financial health of the council is good.

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However as a result of national circumstances outside of the council’s control, such as rising inflation and increases in the cost of living, expenditure is expected to increase over the coming years.

A revenue overspend for this year is currently forecast of £17.7m, against the overall revenue budget of £948.107m.

Based on the current forecast, this is expected to rise to a shortfall of £87m for 2023/24, rising to £159.678m by 2026/27. 

The council says the increase is the result of a number of factors including the impact of rising levels of inflation, a higher than originally anticipated proposed national staff pay award and increasing demand for adult and children’s services.

The value of the uncommitted transitional reserve is currently forecast to be sufficient to meet the identified funding gap for 2023/24 and part of 2024/25. 

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Cllr Alan Vincent, deputy leader of Lancashire County Council, said: “As a council we have successfully faced much tougher financial challenges in the past few years and because of our active stewardship our financial health is good, with healthy reserves.

“There is still a lot of uncertainty about what will happen to finances nationally, and we will be keeping an extremely close eye on the situation, but as a responsible administration we feel it is important we act prudently now.

“I also know that collectively as a council, members and staff have the ability and expertise to identify ways to bridge the gap and reduce the forecast shortfall in funding.

“Through our previous challenges we’ve learnt many lessons and gained valuable knowledge that will help us in the coming months as we work together to find additional ways to reduce our spend and increase our income.

“I’m clear that our first approach is to maximise efficiencies and increase income across the council to narrow the funding gap.

“Wholescale staffing reductions are not something we are currently considering but if wage and inflationary pressures continue to rise that reluctance would have to be tempered by the harsh realities that pressure creates.

“We do know there are some big cost areas where we need to focus our efforts, including vacant posts, sickness absence and agency costs. We are also exploring our contracts and property costs to see what opportunities exist there.

“I’m also sure there are other ways that we can work better to reduce costs. It will be challenging, but I know we are up for the challenge.”

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