Lancashire County Council reacts to 'fair' government funding for services

The publication last week of the annual finance settlements for all local authorities marked the start of a new ‘fair funding’ regime first promised by the previous Conservative government almost a decade ago, but which never came to fruition.

The current Labour administration has now delivered the long-promised overhaul, creating a link, it says, between the level of deprivation in an area and the amount of money received by the councils covering that patch.

The new approach was reflected in the funding each local authority was last week told it would be getting – although the amounts are provisional, pending a consultation with councils which will close in mid-January.

Figures published by the Ministry of Housing, Communities and Local Government (MHCLG), show that Lancashire County Council will get a new ‘fair funding allocation of £579.2m in the 2026/27 financial year, which, when coupled with other grants totalling £25.9m and expected council tax income of £730.3m gives it what is described as a ‘core spending power’ of £1.335bn – an increase of 14.2 percent on the level in 2024/25, under the previous system.

However, that uplift includes an assumed increase in council tax bills of 4.99 percent – the maximum permitted by the government.

The same is true of the equivalent provisional amounts that MHCLG has indicated the county council will receive through until 2028/29 – with this being the first time a multi-year statement has been dished out by the government in a decade.

With the new fair funding arrangements being phased in over a three-year period, it is estimated that by 2028/9, Lancashire County Council’s core spending power – derived from government grants and council tax income – will stand at £1.479bn, up 26.5 percent from 2024/25.

However, County Hall stressed to the Local Democracy Reporting Service that it was still facing pressure from demand for services and inflation.

The Reform UK-run authority’s cabinet member for resources, HR and property, Ged Mirfin, said: “The settlement is very complex this year and, given the changes introduced by government, it is taking longer than usual to understand the full implications for the council.

“Unpacking the supporting evidence which accompanies the settlement notification – [and] runs to many hundreds of pages – will take at least a couple of days to read, digest, understand and calculate any adjustments.

“Any calculations [will then have] to be checked and double-checked before we can release a final figure.

“This is typical of multi-year settlements when grants are rolled up and new data is required to calculate individual settlement figures for individual spend areas and directorates.

“We are confident this can be done over the coming days with a final figure published early in the new year.

“We are grateful to our highly qualified staff for forensically guiding us through this incredibly complex process,” County Cllr Mirfin said.

Speaking last week about the council funding settlements announced nationwide, Secretary of State for housing, communities and local government, Steve Reed, said they were “a chance to turn the page on a decade of cuts, and for local leaders to invest in getting back what has been lost”.

Local government minister Alison McGovern added: “Deprivation doesn’t happen by accident – it’s the result of years of broken systems and wrong priorities. This settlement tackles that head-on by directing funding where it’s needed most.

“By fixing the link between funding and deprivation, we’re giving local areas the tools to create opportunities, support families, and rebuild the services that hold communities together. This is how we deliver a fairer Britain where everyone has the chance to succeed.”