The Budget and Finance Scrutiny Committee reviewed the council's financial performance for the first quarter of 2026/27, noting an overall projected overspend of just over £15 million. The committee also discussed the second phase of the council's efficiency review, which aims to embed continuous improvement and identify further savings.

Quarter 1 Financial Monitoring Report

The committee received an update on the council's financial position at the end of the first quarter of the 2026/27 financial year. The report indicated a projected overspend of just over £15 million against the net revenue budget, representing just over 1% of the total budget.

Key areas contributing to the projected overspend included:

• Adults' Health and Wellbeing: A projected overspend of £7.1 million, primarily driven by increased demand for services, particularly for more complex cases, despite effective management of unit costs.
• Place: An overspend of £8.5 million, influenced by additional fuel costs and slippage in savings delivery, notably delays in waste treatment plant upgrades at Farrington.
• Education and Children's Services: A projected overspend of just under £1 million, largely due to high demand for placement costs, particularly in children's social care and for children with disabilities.

The capital programme forecast spend was £263 million, with a variance of approximately £8 million. This was attributed to a revised capital plan, including roll-forwards from previous years, grant funding updates, and a fundamental review of the capital programme. Significant investments were noted, including an additional £15 million for highways maintenance and £36 million for the East Lancashire Leveling Up Fund.

Concerns were raised by councillors regarding the investment in a second anaerobic digestion facility at Farrington, the potential impact of reduced street lighting levels, and the transparency of reductions in the capital programme. Officers assured the committee that the second AD plant was an invest to save approach and that the business case would be reviewed. Regarding street lighting, officers stated they were not aware of any proposals to dim lights, but acknowledged that savings proposals would be considered in the future. The committee requested more detailed reporting on reductions to the capital programme.

The committee also discussed the significant deficit in the Special Educational Needs and Disabilities (SEND) High Needs budget, which was contributing to the Dedicated Schools Grant (DSG) overspend. The council had submitted a SEND reform action plan and was awaiting government funding.

Following discussion, the committee considered recommendations related to the Quarter 1 Financial Monitoring Report.

Efficiency Review Phase 2

The committee reviewed the progress of Phase 2 of the council's Efficiency Review, which aims to embed efficiency as a continuous process and identify further savings. The review builds on Phase 1, which identified approximately £22 million in savings across 2026/27 to 2028/29, incorporated into the Medium-Term Financial Strategy (MTFS).

Phase 2 focuses on refining existing opportunities and identifying new ones through structured analysis and service insight. Key workstreams include:

• Contracts and Commercial: Strengthening contract management, improving procurement, and maximising value from third-party spend.
• Capital Programme: Establishing a strategically aligned, flexible, and well-governed capital programme, with improved data quality and decision-making.
• Estates: Shifting focus from rationalisation to improving financial performance, reducing running costs, and generating income.
• Digital: Leveraging technology, automation, and AI to improve productivity and user experience.
• Workforce: Strengthening workforce planning and developing a clearer understanding of productivity.
• Accessible Transport: Improving efficiency and reducing costs in transport provision for children and young people.

The review also emphasises staff engagement through a savings suggestion scheme, which has received over 450 suggestions, and wider staff development. Corporate capabilities in finance, commercial, digital, and data are also being strengthened to support delivery.

Councillors raised questions about the impact of Local Government Reorganisation (LGR) on the efficiency review and the future of council assets. Officers confirmed that work was ongoing on LGR, with the assumption that the government timetable would be maintained. They also noted that the council's estate would be transferred to four new organisations, and decisions on investment would need to maintain flexibility.

The committee considered recommendations related to the Efficiency Review Phase 2.

Budget and Finance Scrutiny Committee Work Programme 2026/27

The committee reviewed its work programme for the 2026/27 municipal year. Key items for scrutiny include:

• Quarterly financial monitoring reports.
• The county council's budget proposals for 2027/28.
• The capital programme review.
• The ongoing efficiency review.
• A deeper dive into savings performance in December.

The committee also agreed to include a specific focus on Local Government Reorganisation (LGR) within its work programme, particularly concerning the disaggregation of Lancashire County Council's assets and financial implications for the new authorities. A specific item to explore the Farrington AD plant was also added.

Several recommendations were made by the committee:

• To establish a task and finish group to examine highway maintenance, particularly the quality of pothole repairs and costings, reporting back to Cabinet.
• To ask Cabinet to set up a member working group to oversee the implementation of the East Lancashire Love Programme.
• To request Cabinet to use the Strategic Contingency Budget Allocation to fund Lancashire County Council's share of the capital cost to keep the Knot End Ferry going.
• To seek clarification from the Government on how the SEND deficit will impact the new Councils on Vesting Day, and to impress upon the Government the importance of funding this issue.

The next meeting of the Budget and Finance Scrutiny Committee was scheduled for Tuesday, 1 December 2026.