The Budget and Finance Scrutiny Committee of Lancashire County Council met on Thursday, 5th February 2026, to review the Quarter 3 financial monitoring report for 2025/26. The meeting focused on the council's revenue and capital financial position, highlighting significant pressures in areas such as adult social care and children's services, alongside underspends in other areas. The committee also discussed the upcoming budget for 2026/27 and made recommendations for future work programmes.

Quarter 3 Financial Monitoring Report

The committee reviewed the 2025/26 Quarter 3 Financial Monitoring Report, which detailed the council's financial position as at 30 November 2025. The report indicated a forecast revenue outturn overspend of £6.117 million, representing 0.49% of the approved budget. This overspend was primarily driven by pressures within Adult Services and Education and Children's Services.

Adults, Health and Wellbeing Services A forecast overspend of £2.454 million was reported for this directorate. This was attributed to increased demand for commissioned care, particularly in Adult Social Care, and higher than anticipated costs for placements and family support for children with disabilities. The report noted that while staffing underspends were present due to recruitment challenges, agency costs remained a significant pressure. The Public Health service, however, reported an underspend of £1.578 million due to effective budget management and the strategic use of the Public Health Grant¹.

Education and Children's Services This directorate faced a forecast overspend of £8.291 million. Key pressures included:

• Children's Social Care: An overspend of £5.063 million was forecast, primarily due to increased demand for placements and support for children with disabilities, as well as a rise in the number of children entering care.
• Inclusion: An overspend of £5.054 million was anticipated due to the commissioning of external resources to address the backlog of Education, Health and Care Plans (EHCPs) and support the SEND recovery plan.
• Home to School Transport: A £3.252 million overspend was forecast, linked to the increased number of children with Special Educational Needs and Disabilities (SEND) requiring transport.
• Children and Family Wellbeing Service: An underspend of £3.676 million was reported, attributed to staffing vacancies and the strategic use of the Public Health Grant.

Place Directorate The Place Directorate was forecasting a slight underspend of £0.336 million. Key variances included:

• Highways and Transport: An underspend of £0.429 million was noted, with additional income from parking and developer contributions offsetting increased costs for concessionary travel and street lighting energy.
• Growth and Property: A forecast overspend of £0.996 million was reported, largely due to delayed savings targets within Facilities Management and an income shortfall in schools catering.
• Environment and Regulatory: An underspend of £0.782 million was forecast, primarily due to efficiencies in waste management and additional income in procurement.

Resources Directorate and Chief Executive Services This directorate was forecasting an underspend of £2.130 million within its digital services, largely due to staffing vacancies and reduced expenditure on IT refresh programmes. Other areas within the directorate also reported variances, with some underspends in areas like Corporate Finance and Law and Governance, and overspends in Exchequer Services and Legal Services due to increased demand.

Corporate Budgets Corporate Budgets were forecasting an overall underspend of £1.650 million. This included an underspend on Pensions and Apprenticeship Levy and Funding and Grants, partially offset by an overspend in Treasury Management related to borrowing costs for the SEND deficit.

Capital Programme

The report also detailed the 2025/26 Capital Programme, which had a revised delivery plan of £299.106 million. The forecast outturn for capital expenditure was £203.257 million, resulting in a forecast underspend of £95.849 million. This underspend was largely due to the reprofiling of delivery for several large and complex projects, including those within the Schools, Transport, and Economic Development blocks.

Significant reprofiling was noted in:

• Schools: Basic Needs, Schools Condition, and High Needs provision all showed substantial reprofiling due to delays in planning, procurement, and construction.
• Transport: The East Lancashire Levelling Up Fund programme had a significant reprofiling of £29.6 million due to delayed business case approvals and contract signings. The Bus Service Improvement Plan also saw reprofiling due to major schemes rolling into future years.
• Economic Development: Projects such as the Samlesbury Enterprise Zone and the Lancashire Central site at Cuerden experienced reprofiling due to delays in construction and planning stages.

Dedicated Schools Grant (DSG)

The Dedicated Schools Grant (DSG) revenue position showed a forecast overspend of £73.08 million for 2025/26. The majority of this overspend (£72.45 million) was within the High Needs Block, driven by increasing demand and placement costs for pupils with SEND. This has led to a growing deficit in the DSG, with forecast borrowing costs of £6.3 million. The report highlighted that the DSG deficit is currently covered by a statutory override, due to end in March 2028.

Recommendations and Work Programme

The committee discussed potential recommendations to Cabinet. A key recommendation was to add consideration of grant profiling to the committee's work programme, ensuring it includes coverage of the conditions, sign-off processes, past and current spend, and changes related to grant funding.

There was also a discussion regarding the scrutiny of mental health expenditure. While acknowledging that the Health Scrutiny Committee also reviews mental health, the Budget and Finance Scrutiny Committee agreed that its role was to scrutinise the financial aspects. It was recommended that further consideration be given to the public health grant expenditure and other expenditure on mental health promotion within services to understand how this area is being funded. This recommendation was to be reported to Cabinet.

The committee also reaffirmed the importance of receiving promised data and noted that the date of the next meeting would be Monday, 29th June 2026.