Rare windfall for cash-strapped county hall

Lancashire County Council is set to benefit from a multi-million pound windfall after a change to how money is set aside to cover the cost of its assets.

Changes to a complex financing calculation could save county hall over 22m between 2017/18 and 2018/19.
Changes to a complex financing calculation could save county hall over 22m between 2017/18 and 2018/19.

Under a complex calculation, councils have to save a “prudent “ amount each year to finance their capital expenditure.

But a new method of arriving at the figure reveals county hall has saved £134m more than it needed to over the past decade.

Some of the money can now be clawed back over the next 14 years by reducing the amount that has to be put aside in future. The one-off cost savings will begin to accrue from the last full financial year (2017/18) and will enable the cash-strapped council to benefit to the tune of £13.2m in that timeframe alone.

The proposed changes were considered at a meeting of the full council, having been approved by cabinet earlier this year.

Commenting on the plan, Liberal Democrat group leader, David Whipp, said his party would be supporting the changes, having suggested them at the budget back in February.

“We accept it’s kicking the can down the road,” County Cllr Whipp said. But he asked what had changed since the start of the year.

Responding, leader of the Conservative-run authority, Geoff Driver, said: “Nothing’s changed. It demonstrates how he and the previous [Labour] administration got the council in such a mess.

“Thank you very much for supporting it - you should have supported it when we were making amendments to your ridiculous budgets,” County Cllr Driver added.

There is no specific definition of what constitutes a “prudent” amount to set aside for capital expenditure, but, at the request of Lancashire County Council, the Local Government Association recommended the authority review its so-called Minimum Revenue Position (MRP).

A report presented to full council revealed that legal advice had been sought and received which confirmed that the authority was able to make changes to its MRP for a financial year which had already been completed.

Lancashire County Council has calculated potential savings from the change for the years between 2017/18 and 2022/23, totalling £56.9m.