No emergency budget, but big shortfall looms
LANCASHIRE County Council will not need to hold an emergency budget this financial year despite the coronavirus pandemic.
But it says drastic cuts may be needed from 2021 with a predicted £170m shortfall over the next three years.
At a meeting of its cabinet last week, members heard that the effects of the crisis would have a significant impact on the finances of the council for this and forthcoming years.
Given available reserves and currently lower levels of demand for a number of services due to lockdown and social distancing measures, the authority will not need an emergency budget.
But members were warned that estimated continuing financial pressures suggested that without significant high level intervention, possibly from the proposed comprehensive spending review in the autumn, action would be need to reduce net expenditure to meet potential funding gap for 2021/22 and beyond.
Revised forecast funding gaps of £44.555m, £54.325m and £71.703m for the three years from 2021 represent a cumulative funding gap of £170.583m, which is an increase of £105.092m from the cumulative funding gap of £65.491m last reported to members.
Based on this forecast there are sufficient reserves to support the budgets for 2021/22 and 2022/23, which allows time for the necessary actions to be taken in a planned way to address the financial gap.
The council said that to address the forecast pressure, officers, working with national professional organisations, will “develop an evidence base and narrative” to influence the spending review.
The council will also look to maximise efficiencies across services and commence work to identify potential savings should a poor settlement arise.
Council leader Cllr Geoff Driver CBE said: “Thanks to good financial management Lancashire County Council is in a much better position than some other local authorities.
“The work we have done over the past three years to put the council on a stable financial footing means we are in a good place to deal with the financial impact of the coronavirus crisis.
“We are hopeful that the proposed comprehensive spending review in the autumn will also reflect the extra financial burden which local authorities have been placed under, and will continue to lobby government to ensure a fair settlement.
“As always our priority remains ensuring we provide the best services possible, especially for our vulnerable residents. The past five months have shown just how essential our services are to people.”