Lancashire County Council needs to save £43m this year

Alan Vincent, who is also the member for resources at County Hall, was speaking at a cabinet meeting where it emerged that the authority will attempt to make almost £43m of savings by the end of the current financial year.

The county council was unable to realise a £30m spending reduction it had planned last year – and instead used some of the Covid grant money received from central government to cover the costs of the delayed savings delivery.

However, that one-off solution means that the cash will now have to be found on a recurrent basis – along with a £12.6m target already set for 2021/22.

County Cllr Vincent said that the continuing impact of the pandemic would make that challenge “even tougher”.

“We have skilled officers and a good workforce and we will do everything we can to ensure those savings are actually made during the current year – but I’m not going to give any guarantees, because it’s going to be difficult,” he warned.

He also suggested that the authority would resist any attempt by the government to punish it for what he said was its financial stability and prudence, after County Hall’s reserves increased by over £42m to almost £202m.

“They shouldn’t be looking at [our] reserves and saying, ‘You look as if you’ve got yourself covered, so we won’t give you as much as we might give others’. If we are penalised for saving money when others have spent it, that would be ridiculous.”

The increase in reserves is due to a combination of a £19m underspend in the council’s budget last year and the transfer of government funding set aside for future volatility in income because of the pandemic.

However, £33m from the safety net cash pot is already committed over the next three years – and the council still has an underlying structural deficit of £50m by 2023/24, which a cabinet report warns will result in “significant increases to commitments” from reserves.

Labour opposition group leader Azhar Ali said councils usually face the fallout from periods of big spending by the government – like that prompted by the pandemic.

“Whether local government will get additional monies this forthcoming year…to support adult social care and children’s services, or whether there is some sort of clawback and that money dries up [remains to be seen].

“And that [would] have a significant impact on reserves and how the council proceeds – so it’s going to be a challenging year,” County Cllr Ali said.

The report to cabinet revealed that there was still uncertainty about the long-term impact of the pandemic on adult services, which account for 43 percent of the authority’s annual spending. Although the department achieved a £15.8m underspend last year, that was only as a result of an injection of £31m in cash from government grants.

Demand for care at home increased because of the Covid crisis, as alternatives were sought to residential care – resulting in a £2m overspend in that element of the service.

Occupancy in the county council’s own care homes has reduced from 600 pre-pandemic to around 470, leading to a loss of more than £1.9m in income – just as reliance on agency staff increased to cover sickness, self-isolation and shielding, causing a £1.7m overspend on the wage bill.

Day services, which were initially closed during the first lockdown, also suffered a loss of income of around £540,000.

Meanwhile, demand for domiciliary care for people with a learning disability or autism rose by 11 percent.