'There is a financial iceberg looming – we must plan for long-term success and be prepared' says Lincolnshire County Council's Martin Hill

The leader of Lincolnshire County Council, Martin Hill, talks about the local authority's budget in this month's column. He writes:

At the county council, we recently set our budget for the next year in the face of a number of challenges.

We all hoped that the last year would bring a more stable time around the world, following the upheaval of so much of our daily lives during the Covid pandemic.

However, the last year has been tumultuous to say the least and in that time we have had three prime ministers, four levelling up Secretaries of State and local government ministers, and five housing ministers.

Thankfully, government is a lot more stable here in Lincolnshire.

The global economic crisis has had a profound effect on everyone and the knock-on effects of the pandemic on our public services and our nation’s finances have been magnified by Putin’s invasion of Ukraine, leading to high inflation and workforce shortages.

Inflation has risen to unprecedented levels, peaking at 11.1 per cent in October 2022 and is expected to remain at high levels for a prolonged period.

As well as the implications this has for our residents and businesses, the council itself has a lower spending power because of these financial conditions.

Like most economies amidst an increased cost-of-living, our government has prioritised clamping down on inflation.

In the Autumn Statement, the chancellor, Jeremy Hunt, set out a plan for short- term increases in public spending as growth slows and unemployment rises.

We have seen a better one-year financial settlement than we expected for 2023/24 from the government. There is also some confidence that this will be maintained for 2024/25.

In particular the additional money that has been provided for our major costs in adult care is much-needed, whilst reforms to health and social care are under development.

We have managed our finances incredibly carefully. Unlike many councils, we are projecting to have kept our spending within budget this year despite so much uncertainty, on top of cost and demand increases.

We have continually reacted and responded to this and managed our major risks. But we must not be under any illusion – once growth returns, lower increases in public spending are forecast and our future financial situation is challenging.

Our funding has increased less than inflation, we are still awaiting a resolution to ongoing discussions with government on a fairer funding formula for county areas, and the shortfall in our highways maintenance funding has yet to be addressed.

Although we have welcomed extra temporary support, particularly for care services, there is still a financial iceberg looming.

We have set our budget going forward on the assumption that our funding will not increase from 2025/26 onwards as it has in recent years and cost pressures will continue.

As the Prime Minister said in his New Year’s speech, coming out of a recession, reducing inflation and growing our economy will take time and hard work.

At the county council, we must plan for long-term success and be prepared to put in the hard work to achieve it.