Decision details

Cabinet will be asked to consider recommendations on the County Council's Budget for 2015/16 – 2017/18.

County Councillor David Borrow, Deputy Leader of the County Council, and Gill Kilpatrick, County Treasurer, presented reports setting out updates on the County Council's financial position for 2014/15 and the financial strategy for 2015/16 - 2017/18.

The County Treasurer reported that both reports looked at the overall financial health of the County Council, both for the current year and, in terms of the future, over the next three years. During 2014/15, the County Council would need to achieve savings of £76m and it was therefore important that progress was carefully monitored. 2014/15 had seen a greater level of demand, particularly on social care services and the reports set out other areas of increased demand.

It was reported that, as at 30 September 2014, there was an overall in year net underspend of £4m in relation to the revenue budget. This included an underspend in the Environment Directorate due to changes to the Waste PFI contract, together with an underspend in relation to capital financing, due to changes to the County Council's investment portfolio.

In terms of the Capital Investment Programme, it was reported that 84.4% of the programme was on target with slippage attributed to, for example, planning issues and the review of the County Council's property portfolio.

Balances remained robust at £36m with the Downsizing Reserve amounting to a further £73m of uncommitted funds.

In terms of the future, reference was made to the overall savings requirement of £300m between 2014 and 2018 with £142m of those savings agreed by the Full Council in February 2014. The report set out how the financial situation had changed since then, making particular reference to the changes in demand and costs such as demand for social care, landfill tax and waste transport, all of which equate to an additional £9m of costs over the next three years. The potential impact of the Care Act, beyond the first year, together with costs associated with Deprivation of Liberty Safeguards were also further potential costs. The report made reference to inflationary pressures and changes in costs, particularly around the pay bill and Education Services Grant, which would benefit the County Council by £4m. Legacy financial costs, such as capital financing charges, pension costs and energy costs, would add an additional £14.5m to costs over the next three years. Changes in resources around business rates, council tax and the New Homes Bonus, would also mean additional costs of £4.6m over the next three years.

Additional risks for the future included changes following the May 2015 General Election and further likely reductions in local government finance settlements in future years. By 2017/18, it was highlighted that the County Council would have a budget envelope of £689m.

At this point, proposals for future service offers were tabled which would be the subject of initial consultation prior to the formal consultation on the Cabinet's proposals which would take place following the meeting of Cabinet on 8 January 2015. Reference was also made to the Budget Scrutiny Working Group which would consider the initial proposals and report back to Cabinet on 4 December.

Resolved: - That:

(i)  The forecast of the financial outlook for the County Council over the next three years and the increase in the level of savings required from £161m to £176m, as set out in the report, now presented, be noted;

(ii)  Consultation on the package of service offer proposals put forward for consideration by the Chief Executive and her Management Team, as now presented, takes place, with responses to be received by the 15 December 2014, to enable Cabinet to consider all responses at the meeting of the Cabinet on 8 January 2015;

(iii)  The views of the Budget Scrutiny Working Group be requested on all the proposals set out in these resolutions for consideration at the meeting of Cabinet on 4 December 2014;

(iv)  The Chief Executive and her Management Team be tasked to bring forward further service offer recommendations which bridge the gap in 2015/16 and future years.

The Service Offer proposals, together with relevant equality analyses, are available at:http://council.lancashire.gov.uk/ieListDocuments.aspx?CId=122&MId=3015