Purpose

This report provides an update to Cabinet on the Council's 2026/27 revenue, capital and schools budget financial position as at the end of Quarter 1. Securing sound and robust finances is a priority for the Administration as financial security enables the delivery of the Council's ambition for providing efficient and effective county services to the residents of Lancashire.

The forecast position at Quarter 1 is based on several assumptions relating to current expenditure, expected demand, cost pressures and service knowledge and a risk assessment of savings delivery trends and service knowledge.

The total forecast revenue outturn position for 2026/27 at the end of Quarter 1 is an overspend of £15.655m, which represents 1.18% of the approved budget.  Services are actively implementing and refining mitigation strategies designed to address adverse variances and reduce their impact wherever possible. The effectiveness of these actions will be reflected in the Quarter 2 position, and the financial position will continue to be closely monitored in the meantime.

The 2026/27 budget contains agreed savings of £73.9m with delivery currently forecast to be 87%, however services are seeking to increase this delivery level and where this isn't possible actioning mitigations to reduce the impact on the revenue forecast.

The 2026/27 Capital Programme agreed by Full Council in February 2026 was £292.162m. A review of the Capital Programme has been undertaken as part of the early work of the Efficiency Review Phase 2 (due to be finalised by November 2026) and in light of the prior year outturn. This has resulted in an updated delivery programme of £271.116m. This is an interim position, pending completion of the Efficiency Review work. Cabinet approval is sought for the revised delivery programme as detailed in the recommendations.

The revised capital programme includes additional funding for Highways Maintenance totalling £15m, with £5m previously agreed by Cabinet as part of the Capital Outturn report for 2025/26 in May 2026 and a further £10m included as part of this revised programme for 2026/27.

The forecasted spend for 2026/27 as at Quarter 1 is £262.944m, giving a variance against the Capital Programme of £8.173m which equates to a circa 3.01% under-delivery forecast. Any capital programme needs to be regularly reviewed and re-profiled in line with the scheduling of resources and the assessment of work programme. Variances will be carefully monitored throughout the financial year and reported to Cabinet. 

The Schools Budget (Dedicated Schools Grant (DSG)) at Quarter 1 is forecast to overspend by £151.880m (9.7%) due to the growing demand and placement costs for pupils with Special Educational Needs & Disabilities (SEND). Consistent with many councils nationally, the DSG funding allocation for many years has not increased in line with the growing demand. The Council continues to face significant challenges with the increasing numbers of pupils with SEND, bringing significant financial and service pressures in this context. The position is being closely monitored, with mitigation strategies developed with the aim of reducing the variances.

This is deemed to be a Key Decision and the requirements of the council's cabinet procedure rules (Standing Order C18, Consideration of Key Decisions) have been complied with.

Decision

The Cabinet approved the recommendation(s) as set out in the report.