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"Crucial year" for county's finances, say auditors

Auditors say use of reserves is "unsustainable" and that this a "crucial year" for county hall to deliver new savings plans.
Auditors say use of reserves is "unsustainable" and that this a "crucial year" for county hall to deliver new savings plans.
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Lancashire County Council’s finances are at a “tipping point”, according to its auditors.

Lancashire County Council’s finances are at a “tipping point”, according to its auditors.

An annual assessment of the authority’s financial health concludes that the repeated use of reserves to cover gaps in its budget is unsustainable.

But the report presenting the auditor’s findings says the council recognises the precariousness of its current financial position and is working to address the challenges it faces.

At a meeting of the authority’s Audit, Risk and Governance Committee, Mike Thomas, Director of auditors Grant Thornton, said: “There is a new operational plan [and] new savings programme in place - and it will be a crucial year for the council [in] making sure it delivers against those plans.”

Auditors noted the arrival of new members of the senior management team at county hall, including interim Chief Executive, Angie Ridgwell. But the report concludes it is “too early to judge the success” of their work until “detailed savings options [are] put before members”.

The audit team plans to monitor the financial situation at the authority as the year progresses and has reserved the right to issue a more forceful “statutory recommendation” if their concerns deepen.

County hall has committed to finding £135m of savings in the four years up to 2021/22. Last year, a total of £81m was identified.

But the council has had to rely on its reserves to set a balanced budget in recent years - and they are due to run out by 2020.

Elsewhere, auditors issued a so-called ‘qualified’ conclusion on the value for money offered by Lancashire County Council.

That was due, in large part, to OFSTED judging the authority children’s services department to be “inadequate" almost three years ago. The regulator has made more than half a dozen follow-up visits since and completed a formal re-inspection back in May.

If the outcome of the latest assessment improves the council’s rating, auditors say they will consider revising their own judgment.

But one outstanding value for money concern would remain, after Grant Thornton highlighted that the council's own Head of Internal Audit could offer only “limited assurance” about the authority’s controls.

Ruth Lowry told the external auditors that improvement plans to address the issue were “building the foundations for better control”, but had affected the level of guarantee she could give whilst they were being carried out.