The Budget and Finance Scrutiny Committee of Lancashire County Council met on 21 January 2026 to discuss the draft budget for 2026/27. Following extensive debate, the committee made the following recommendations to Cabinet:

• Care Homes and Day Centres:
  • Cabinet be urged to consider different, not-for-profit models for upgrading care homes and day centres, focusing on value for money.
  • Cabinet be asked to establish a cross-party working group on the modernisation of care homes and day centres, reporting to the relevant scrutiny committee.
• Mental Health Outcomes/Adult Social Care Improvement Plan:
  • Cabinet be asked to give consideration to concerns regarding mental health outcomes for adults and children, ensuring timely assessments and adequate resourcing, and to utilise the Public Health Grant and other funding sources to support mental health initiatives.
  • Cabinet be asked to consider the funding required to implement the improvement plan for Adult Social Care, following the Care Quality Commission inspection report.
• Future Funding and Council Tax Precept:
  • The Leader be asked to write to the relevant Secretary of State to seek assurance that setting a council tax precept below the maximum available would not result in future funding penalties.

The committee also resolved to add Phase 2 of Lancashire County Council's Efficiency Review to its work programme and requested future reports on the progress of in-year savings delivery and updates on changes to the Medium-Term Financial Strategy assumptions.

Draft Budget 2026/27

The committee received an extensive presentation on the draft budget for 2026/27, covering the council's operating environment, key strategic issues, capital programme, provisional settlement, savings proposals, and identified risks. The Leader of the Council, County Councillor Stephen Atkinson, highlighted the council's priority to put residents first and noted the significant increase in public engagement with the budget process, with nearly 500 responses received. He outlined the national challenges facing local government finance, including increased demand and inflation, estimated at over £93 million for Lancashire. Despite legacy challenges such as £1.2 billion of debt, the council proposed the lowest council tax rises in 12 years, with the core element being 1.8%. Capital investment was planned at £290 million.

The Chief Executive, Mark Wynn, emphasised the importance of scrutiny in understanding the complex budget and noted the challenging financial climate for local authorities. He highlighted that the budget had been set with good officer-member working relationships and alongside an efficiency review.

Brendan Arnold, Interim Director of Finance and s151 officer, detailed the operating environment, noting uncertainty in the UK and international economies, and significant policy changes such as local government reorganisation and reforms around special educational needs and disabilities (SEND). He explained the council's holding of £519 million in government and commercial bonds, known as the Very Long-Term Investment Portfolio (VELTIP), which currently yields 1.9% but has a market value loss of approximately £350 million if sold. The council cannot afford to sell these bonds at present. The draft budget includes proposals for a working capital enhancement reserve to manage the consequences of holding these long-term investments.

The net budget proposed is £1.324 billion, based on a provisional settlement that is expected to be finalised in late January or early February. Savings targets for 2026/27 are modest compared to many other councils, with £42 million already accounted for from the previous year and £21.6 million in fresh savings. The provisional settlement, dependent on a 4.99% council tax increase, offers a 6.5% increase in core spending power, though much of this is generated from local resources rather than direct government grant. The capital programme for 2026/27 is £290 million, primarily funded by government grant, with £53 million from local borrowing. Debt service costs amount to £84 million, or 6.34% of the net budget.

Kieran Curran, Head of Corporate Strategy and Policy, presented the findings from the public consultation, which ran for six weeks and involved an online survey, a budget simulator, and targeted stakeholder communications. Nearly 500 responses were received, with broad support for modernisation and smarter working, but concerns about the impact on vulnerable groups. There was significant support for a preventative and early intervention approach in social care, and a preference for local provision. Calls for greater transparency and more detailed information were also noted.

Directorate Presentations and Discussions

Adults, Health and Wellbeing Services: County Councillor Graham Dalton and County Councillor Daniel Matchett, Cabinet Members, alongside Helen Coombes, Executive Director, presented the budget proposals. The focus was on prevention and early intervention to support residents in living more independent lives. Challenges include rising demand, complexity of needs, and market fragility. The budget includes investment in workforce development and addresses pressures from national living wage changes and inflation. The Disabled Facilities Grant, Better Care Fund, and digital services were discussed, with a transition from analogue to digital telecare systems highlighted.

Education and Children's Services: County Councillor Matthew Salter and County Councillor Ged Mirfin, Cabinet Members, presented alongside Dave Carr, Director, and Paul Turner, Director. The budget aims to protect vulnerable children, invest in growing demand areas like SEND, and strengthen prevention through Family Hubs and Families First programmes. Capital investment is planned for expanding council-run homes and in-house fostering services. Significant investment is earmarked for SEND provision, including expanding high needs provision and strengthening the workforce. The budget also supports the expansion of Family Hubs, integrating early years services, health advice, and parenting support. Concerns were raised about children's mental health provision, with clarification sought on whether this falls under the council's remit or the NHS.

Place Directorate: Several Cabinet Members, including County Councillor Joshua Roberts, County Councillor David Dwyer, County Councillor Warren Goldsworthy, County Councillor Ged Mirfin, County Councillor Brian Moore, and County Councillor Matthew Salter, presented alongside Phil Green, Executive Director. Presentations covered highways and transport, economic development, rural affairs, environment, and cultural services. Key areas of focus for savings included improving back-office operations, risk-based maintenance, digital tools, fair parking charges, waste management modernisation, and the development of anaerobic digestion facilities. The council's extensive property estate was highlighted as an area for potential rationalisation and capital income generation. Cultural services, including libraries and museums, were recognised as vital community hubs.

Resources Directorate: County Councillor Stephen Atkinson, Leader of the Council, County Councillor Ged Mirfin, and County Councillor David Dwyer, Cabinet Members, presented alongside Laurence Ainsworth, Executive Director. The directorate is described as the engine room of the organisation, focusing on stewarding resources, enabling services, and driving transformation. Priorities include embedding good governance, securing financial sustainability, workforce development, digital and AI ambitions, and preparing for local government reorganisation. Savings proposals include service redesign, income generation, and technology efficiencies. A significant aspect discussed was the potential impact on staff, with an estimated 100 FTE reductions over three years, offset by existing vacancies.

Work Programme

The committee agreed to add Phase 2 of Lancashire County Council's Efficiency Review to its work programme and requested future reports on the progress of in-year savings delivery and updates on changes to the Medium-Term Financial Strategy assumptions.

The meeting concluded with a note of the next meeting date and a vote of thanks to the officers, particularly Brendan Arnold, Interim Director of Finance and Commerce, who was leaving the council.