Posted by: westlancashirerecord | January 23, 2017

And You Think Surrey Is Bad?

Financial Outlook for the Lancashire County Council axe-cuts-services-austerity Medium Term Financial Strategy
1. Executive Summary
This report outlines the financial position facing Lancashire County Council over the period 2017/18 to 2020/21. The County Council is experiencing an ongoing period of unprecedented financial pressure as a result of the Government’s extended programme of austerity combined with significant increases in demand for public services.

In September 2016 Cabinet received a report outlining the latest financial position facing Lancashire Council which covered the period 2017/18 – 2020/21 and estimated an estimated in year funding gap of £147.944m by the end of the 4 year period. The Council being forecast to have a cumulative deficit of £397.900m by the end of 2020/21.

This report provides an updated position following a review of the existing assumptions to reflect the most current information available. As a result of these reviews the funding gap has reduced to £146.133m, however the cumulative gap has increased to £411.209m as a result of a larger gap in earlier years. Whilst this appears positive overall, this improved position predominantly relates to the identification of further savings of £12.320m for 2017/18 and following years, which are offset by a number of factors, the most significant being the continuing increasing demand in Children’s Social Care.

It remains critical that the vast majority of newly identified savings and previously agreed savings are delivered fully and on time, as any delay or under delivery will further increase the financial gap. The savings that are included cover savings identified as part of Zero Based Budget Review (ZBBR) process totalling of £6.320m in areas such as Design and Construction, Emergency Planning and Resilience and Legal and Democratic Services. In addition it has been identified as part of the detailed review of Adults Services that further savings (over the 4 year period) can be found relating to Learning Disability Remodelling (£4.800m) and in Financial Assessments (increased income) (£1.200m) through benefits maximisation.

1.2 Financial Overview 2017/18 – 2020/21
Under a separate Money Matters report the County Council’s financial position for 2016/17 as at 30th September has been outlined (£13.271m forecast underspend). This is a significant improvement compared to the financial position reported to Cabinet in September, but is primarily the result of Treasury Management activities and the underlying position reflects increasing pressures on demand led budgets, particularly Children’s Social Care. The assumptions made in the original MTFS have been reviewed and been updated to reflect the latest information available.

Lancashire County Council continues to face, as previously stated, an unprecedented period of financial constraint through to at least 2020/21.

The recent PwC report presented to Cabinet validated the MTFS position previously reported and reiterates that the financial commitment required to fund statutory demand led services is above the County Council’s resources, even if the lowest quartile benchmark for expenditure is achieved in each service area. Whilst we cannot be certain of the point at which funding may not cover statutory demand led services as, for example, the resources available to the County Council have yet to be confirmed for future years, indications from the previous base budget review tied in with the outturn position delivered in 2015/16 suggests that there will be insufficient resources to cover statutory services, as they are currently delivered, from 2018/19.

The County Council, in redesigning the services it provides to the public, faces the challenge of doing so whilst delivering significant savings, over and above those already agreed and the additional £12.320m identified in this report, of an estimated £142m over the next 4 years.

As part of the process of redesigning its services the County Council has previously explicitly recognised that it will need to utilise its reserves. Details on the reserves are detailed in the Money Matters report Appendix C. In this report it is noted that as at 1 April 2016 the County Council had £314.647m of reserves, some of which are already committed. Including the Funding Gap identified in this report, it has been identified that there is an estimated reserves requirement of £60.350m to support the revenue budget in 2017/18. Consequently, by 31st March 2018 it is anticipated that there will only be the £36.000m County Fund and a residual £79.767m of service reserves which includes £8.354m school PFI expenditure and £5.084m which is not LCC money, meaning in effect the available balance of £66.329m. [click following pics to read]

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