Decision details

This report sets out an overview of the Council's financial position from 2017/18 to 2021/22. It includes an update on the current year's financial position and a revised Medium Term Financial Strategy (MTFS) reflecting the provisional settlement for 2018/19 announced on 19^th December 2017 as well as updated financial assumptions based on the latest evidence.

Like all councils, Lancashire County Council is facing significant financial pressures, and while good progress has been made in addressing the forecast financial shortfall over the strategy period, further work is required to ensure the council can achieve a financially sustainable position.

In summary:

·  The 2017/18 revenue forecast outturn is £709.064m, an underspend of £15.758m (c2%) on the original budget.

·  The MTFS indicates a financial deficit of £144.492m in 2021/22 and a cumulative deficit of £381.796m after allowing for savings of £135m, including £81m of new savings proposals included in reports to Cabinet during 2017/18.

·  The Council is forecast to hold a General Reserve against unforeseen issues of £23.627m representing c3% of net budget.

·  The Council is forecast to hold £122.801m of uncommitted transitional reserve (including the forecast underspend in the current financial year), which is sufficient to meet the deficit in 2018/19 and could also support the 2019/20 deficit, however in order to set a legal budget in future years further savings will need to be made.

·  The in-year agreed capital programme is £171.611m with a forecast spend of £155.271m and therefore a delivery variance of £16.340m.

·  A capital programme for the period 2018/19 – 2020/21 of £226.117m, is proposed, reflecting additions to the programme agreed by Cabinet including revenue savings linked to capital.  Prudential borrowing totalling £200.428m covering the period 2017/18 to 2020/21 is required to fund the proposed programme.

·  Council Tax is assumed to increase by 5.99% in 2018/19, including 3% for adult social care. This maximises the flexibilities set out in the latest provisional settlement without the need for a referendum.

The Cabinet approved the recommendations as set out in the report.