The Budget and Finance Scrutiny Committee met to review the council's financial performance for the first quarter of 2026/27 and discuss the progress of the Efficiency Review Phase 2.

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, representing approximately 1% of the net revenue budget. Significant pressures were identified in Adults' Health and Wellbeing (£7.1 million overspend), Place (£8.5 million overspend), and Education and Children's Services (just under £1 million overspend). These overspends were primarily attributed to increased demand for services, particularly in complex areas of adult social care and children's social care, as well as higher placement costs.

The Place directorate's overspend was partly due to an additional £2 million in fuel costs, with street lighting identified as a high energy consumer. A £6 million slippage in savings delivery was also noted, primarily related to a delayed waste treatment plant at Farrington.

In terms of the capital programme, the forecast spend was £263 million, with a variance forecast of approximately 3% (£8 million). This was attributed to a revised capital plan, including roll-forwards from the previous financial year and updates to grant funding, such as the East Lancashire Leveling Up Fund. An additional £15 million investment in highways was highlighted, with £5 million announced previously and a further £10 million now allocated. A £4 million investment in an anaerobic digestion facility at Farrington was also noted, based on an invest to save approach.

Several councillors raised concerns and questions regarding specific aspects of the financial report. Councillor Mark Clifford questioned the £4 million investment in a second anaerobic digestion plant at Farrington, given that a sister plant at Thornton was reportedly underutilised and that food waste collection targets were not yet being met. Councillor Aidy Riggott requested copies of the presentation slides and further details on the waste issue, expressing concern about the continuity of leadership in the relevant cabinet role. Councillor Riggott also sought assurances regarding street lighting levels and timing, and the logistical changes at household waste and recycling centres. Councillor Mark Jewell requested clarification on the highways underspend and the purpose of the additional capital investment in highways, questioning whether it was to cover an anticipated overspend or to fund a strategic shift. Councillor Mackenzie Ritson highlighted concerns about the SEND deficit, the expected government funding, and its potential impact on new councils post-Local Government Reorganisation (LGR). Councillor Mrs Marion Atkinson raised questions about the checks and balances for spending the East Lancashire Leveling Up Fund, citing an instance where a project had to be stopped due to a lack of research. Councillor Azhar Ali OBE raised concerns about street lighting dimming, the allocation of strategic contingency funds, and the Knot End Ferry funding. He also questioned the lack of response regarding a potential SEND free school proposal and the status of a task and finish group on highway maintenance. Councillor Mr Joel Michael Tetlow inquired about the waste management facilities and the potential for solar power on lampposts.

In response, officers committed to providing further details on the waste management business case and household recycling centre changes. They also confirmed that the additional highways funding was for more work, not to cover an overspend, and that performance data for highways was now available. Regarding SEND, it was explained that a 90% grant was expected for the deficit, and that government plans aimed to meet SEND costs from national expenditure limits post-2028. The issue of the Leveling Up Fund contact point and checks and balances would be followed up. Assurances were given that no street lighting dimming plans were currently aware of, and the matter of Matthew Salter and the SEND email would be chased. The allocation of strategic contingency funds would be delegated to officers. The M65 was clarified as a Highways Agency road, not a Lancashire County Council road. Details on care home capital maintenance would be sought. The Knot End Ferry funding was discussed, with a recommendation made to use strategic contingency to fund the council's share of the capital cost. The SEND deficit and its impact on Vesting Day for new councils would be clarified with the government.

The committee discussed the following potential recommendations:

• Establish a task and finish group to examine highway maintenance, particularly the quality of pothole repairs and costings, reporting back to the October and November Cabinet meetings.
• Ask the Cabinet to set up a LUF member working group to oversee the implementation of the East Lancashire LUF programme.
• 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.
• Seek clarification from the Government on the plans for the SEND deficit balance sheet on Vesting Day.

Efficiency Review Phase 2

The committee received a report on Phase 2 of the council's Efficiency Review, which aims to embed efficiency as a continuous process, strengthen corporate capacity, and identify further opportunities for savings and improved value for money. Phase 1 had identified nearly £22 million in savings across 2026-2029, with £2.5 million realised in the current financial year on a recurrent basis.

Phase 2 focuses on refining existing opportunities and identifying new ones through structured lines of enquiry and service insight. Key workstreams include: Contracts and Commercial, Capital Programme Review, Estates, Digital, Workforce, and Accessible Transport. The review also emphasises staff engagement through a suggestions scheme, which has received over 450 ideas, and wider staff development.

Councillor Aidy Riggott questioned the reporting of realised savings from Phase 1 and the clarity of the capital programme review process. Councillor Mark Jewell sought clarification on the extent of workforce redesign, the integration of services, the approach to digital by design, and the review of estates and property in light of Local Government Reorganisation (LGR).

Officers explained that the £2.5 million in realised savings from Phase 1 was for the current financial year and would be recurrent. They assured members that the capital programme review was robust and that opportunities for aggregation and renegotiation were being explored. The digital by design approach was clarified as not being digital by default, ensuring human interface where appropriate. The estates review aimed to maintain flexibility for successor authorities while addressing repair needs. Regarding LGR, work was ongoing on the basis of the government timetable, with safeguards in place to ensure effective use of public money.

The committee discussed the Efficiency Review Phase 2.

Budget and Finance Scrutiny Committee Work Programme 2026/27

The committee reviewed its work programme for 2026/27. Councillor Aidy Riggott suggested clarifying the handling of the end-of-year session and a deeper dive into savings performance in December. Councillor Mackenzie Ritson proposed including LGR on the committee's work programme, suggesting it be scheduled for January. Officers agreed to consider these suggestions, noting that LGR was already technically on the programme for 2027/28 and that further work was needed to break down the topic into manageable chunks. The committee also agreed to look into obtaining more information on the Farrington AD plant.

The meeting concluded with the confirmation of the next meeting date as Tuesday, 1 December 2026.