County's finances improving, but more difficult decisions to come

Auditors have been through Lancashire County Council's books
Auditors have been through Lancashire County Council's books

Lancashire County Council has made “real progress” in bringing its finances under control, auditors have concluded.

But the authority has been warned that further difficult decisions lie ahead before the council can be confident that it is on a firm financial footing in the long term.

External audit firm Grant Thornton confirmed that County Hall has arrangements in place to ensure that it is offering value for money by efficiently and effectively using its resources.

Although a similar judgement was reached 12 months ago, the council was then told that it its finances were “at a tipping point”.

“Real progress has been made in stabilising the council’s financial position,” Robin Baker, audit partner at Grant Thornton, advised members of the authority’s own audit, risk and governance committee.

“Clearly, there continue to be significant challenges and you will need to maintain the discipline which you have shown so far in terms of delivering savings.”

County Hall has identified a further £77m of budget reductions since it was last audited a year ago, bringing to £120m the total planned savings which are due to be implemented.

In its assessment of the authority’s books, Grant Thornton found that the authority had a “good track record” of reducing costs. However, the firm warned of the need to “maintain an effective dialogue with residents” as it considers where to look next for a further £47m of reductions which will be required to bring the council into financial balance by 2022/23.

Reserves will continue to be available to bridge any gaps in annual spending until then – but the financial stability of the authority will depend on councillors agreeing to increase council tax by 1.99 percent each year over the same period.

Auditors issued a so-called “unqualified” judgement when assessing the value for money offered by the council – a slight improvement on last year when they expressed concern about the conclusions of the authority’s own internal audit process. Twelve months ago, that process had been able to offer only “limited assurance” on the council’s internal controls, but this year’s assurance has been upgraded to “moderate”.

Meanwhile, the auditors agreed with the county council’s valuation of its buildings and land, which stands at £2.02bn – an increase of £207m in the past year.

The audit report also noted that the authority has recorded an increased pension fund liability of £17.7m in the wake of a recent court case which could have implications for councils across the country. The Court of Appeal ruled that discrimination occurred in transitional pension arrangements for judges and firefighters and the judgement may have an impact on other public sector pension schemes.