Lancashire County Council underspent its budget by almost £20m in the last financial year.
The authority had expected its costs to total £764.6m during 2018/19, but ultimately spent £745.3m.
However, the figures mask individual overspends in some under-pressure departments – and the fact that the council took almost £45m out of its reserves last year to balance the books. Without that contribution, County Hall’s expenditure would have outstripped its income by just over £25m.
The difference between the two amounts – which is effectively unspent reserves of £19.2m – will now return to the authority’s back-up fund.
It is expected that the council will have money in reserves until at least 2020/21 – but chief executive Angie Ridgwell told a cabinet meeting that the underlying financial state of the council meant that savings still need to be found. They will come in the form of the next phase of the so-called “service challenge” to reduce spending.
“Members will recall that there is a structural deficit in our medium-term financial position of £47m, which needs to be addressed,” Ms. Ridgwell said.
The authority’s forecast deficit had previously reached nearly £200m in 2016/17. Last year, the council implemented £68m of savings, some of them ahead of schedule.
Children’s services recorded the largest overspend of any service last year, going over budget by £2.9m. Papers presented to cabinet revealed that agency residential and fostering placements accounted for the majority of the additional money spent.
Residential placements increased by almost 90 to 296 in the twelve months to March 2019, while fostering placements went up by almost 50 to 524 over the same period. A review into the reasons for the increases is underway and members were told demand is likely to remain high.
Adult services – the county council’s other historically high-pressure department – almost broke even. But cabinet papers noted that if the reserve funding allocated to the service last year had been discounted, it would have overspent by around £19m.
The main area of underspend last year was on public health, whose budget came in with almost £4m more left within it at the end of the financial year than was expected. However, within that sum, there was a £1.3m overspend on sexual health contracts, under which the volume of work has increased “significantly” over the past twelve months.
Both the ruling Conservatives and opposition Labour group agreed that the council’s position stemmed from tough financial settlements from government in recent years. But there was little sign of agreement on how to tackle the funding gap.
“The county council, like most local authorities, has faced serious reductions in government support – but the difference between this administration and the previous [Labour] administration is that we’re sorting it out rather than just hoping something would turn up,” council leader Geoff Driver said.
However, deputy Labour opposition leader John Fillis, said residents were bearing the brunt.
Over the last two years, council tax has gone up by 10 percent, so it’s the people of Lancashire who are paying the price, at the same time as seeing cuts…right across the board. They are paying more for less,” County Cllr Fillis said.
Meanwhile, the meeting was told that the decision by furniture retailer IKEA to withdraw from the Cureden redevelopment site was the main reason the council received far less than it was expecting to generate from the sale of land and assets. In total, the authority was £10.2m short of its target for so-called “capital receipts”.