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Lincolnshire County Council Budget 2018/19

The county council agreed the budget for 2018/19 at its meeting on 23 February 2018.

You can download the full Budget Book 2018-19.

You can download Council Tax info 2018-19.

Watch council leader Martin Hill OBE deliver his Budget speech in full.

Budget speech 2018


To all the new members who joined us in May, welcome to your first budget day at Lincolnshire County Council. I hope you’re not too disappointed that I won’t be posing for photos with a big red box, but money is a little tight.

I also haven’t brought my friend Boris the Patterdale, even though his bark is generally worse than his bite!

Without a red box or a Boris, I can perhaps still surprise you by turning to The Guardian to begin this speech. Well, even it gets things right occasionally, as a New Year column by economics correspondent Richard Partington showed.

Contrary, presumably, to editorial guidance, he found a host of “reasons to be cheerful” about the prospects for the UK economy. They included strong global growth, which is forecast by the IMF to be 3.9% this year and next. That’s due largely to the economic policies of President Trump, although obviously The Guardian couldn’t bring itself to say so.

Global growth is set to increase demand for British exports, already performing strongly as a result of the low pound. The Bank of England - despite its trademark Eeyore approach - also believes inflation has peaked at around 3%. It’s now expected to fall closer to wage rises, encouraging consumers who’ve already defied the doom-mongers with their spending.

The Guardian noted what it called “Britain’s long jobs boom”, which continued in the September to November quarter, with employment up 415,000 on the previous year. This contrasts strongly with the 500,000 job losses predicted after the Brexit vote.

Investment is also being encouraged by record low interest rates, which have started their long return to normality, but still stand at just 0.5%.

Looking ahead, the Bank of England has revised its UK growth forecasts for the next two years to 1.7% and 1.8% - a far cry from the meltdown predicted by some.

Overall, The Guardian saw the UK economy entering 2018 “in better health than many would have given it credit for” - praise indeed! With all this relentless positivity from The Guardian, I’m now considering cancelling my subscription to The Daily Telegraph.

Brexit and elections

Let’s now turn briefly to the most important issue facing the UK - our withdrawal from the EU.

As we all know, it’s a hugely complex process, and there’ll have to be give and take on both sides to achieve a fair outcome. That’s exactly what we saw before Christmas, when the first phase of negotiations ended with agreement on three key issues.

I’m particularly pleased that the question of citizens living in other countries - both here and in the EU - is close to being resolved. That will provide certainty for migrants building their lives in Lincolnshire, and is to be welcomed.

It’s also encouraging that the Government will continue supporting our farmers for several years once EU subsidies come to an end. That gives time to develop a new framework for UK food production and the environment, which is exactly what we need.

On a similar issue, I’d welcome clarity from the Government about how EU development grants will be replaced after Brexit. I’d argue that current funding should be broadly matched by Whitehall, but devolved to a local level, where decision-makers know best what’s required.

As we enter the next phase of Brexit talks, attention has turned to the transition period on the way to a final deal. This will give businesses more time to adjust, but the timescale has to be limited, the terms fair, and the ultimate destination unchanged.

As the Prime Minister has made clear, Brexit means Brexit - and that means leaving the single market and the customs union to forge our own future. Anything less would be a betrayal of the will of the British people, including many Lincolnshire residents, whose decision in the referendum must be respected.

On the subject of polls, I was of course disappointed by the outcome of the general election last June, even though the Conservatives remained in office. I was particularly concerned that an honest attempt in the campaign to resolve the adult care funding issue was distorted for political gain.

Far from proposing a “dementia tax”, as others alleged, we were seeking to start a wide-ranging debate around the creation of an integrated healthcare system. As things stand, adult care is both means-tested and significantly underfunded, while NHS services are neither of those things. In other words, adult care remains very much the poor relation - something that’s going to have to change in the future.

The Government now plans to publish a Green Paper on adult social care this summer, starting that long-overdue national debate. Jeremy Hunt has also had adult care included with his health portfolio, indicating a determination to align the two more closely.

Closer to home, of course, the Conservatives achieved a decisive result in the elections to this council last May. With that strong local support behind us, I believe we’re better placed than ever to meet the many challenges ahead. They include achieving a fair financial deal for Lincolnshire - something I’d now like to discuss in detail.

A Fair Deal for Lincolnshire

As members know, the local government funding formula has been built up layer upon layer, year after year, over many decades. The result is a system that virtually no-one understands, with urban authorities as the clear winners and rural ones as the losers.

The formula also fails to recognise the huge costs of providing services in areas like ours - the “rurality” and “sparsity” issues.

Last year, we launched a “Fair Deal for Lincolnshire” campaign, supported by MPs, parish and town councils, and the general public. It showed that local councils are missing out on £116m of annual funding compared with the England average, or £239 per home.

With extra funding like that, we could pay for a new bypass, hospital or major road improvement scheme, every single year. And we’d still have enough to fill four times as many potholes, provide all businesses with fibre broadband, and freeze council tax.

As the campaign gained momentum, we secured a meeting in October with Communities Secretary Sajid Javid. He praised us as a well-run authority providing good services, despite our historic underfunding. Mr Javid also accepted that the formula is unfair to rural areas, and stressed his personal commitment to reform.

Since the autumn, we’ve stepped up the campaign, with strong backing from the County Councils Network.

Earlier this month, it released its own figures, warning that shire counties could face a £2.5bn black hole by 2020. Just days later, Northamptonshire County Council revealed the full extent of its financial crisis, issuing an order banning all non-statutory spending.

On the face of it, they are a similar upper-tier authority to us, providing services to a comparable population across a large area, with just one major conurbation. Thankfully, our financial situation is very different, due to our pragmatic approach over many years to achieving savings, maintaining sufficient reserves, and setting sensible council tax levels.

Elsewhere, Surrey was reported to be facing a £105m shortfall - a story that made the front pages of many national dailies.

As regards council tax, CCN figures show that residents in county areas are being hit as their underfunded authorities put up rates. The average Band D bill is now £1,662 in county areas - £132 more than the English average.

Clearly, this situation can’t continue, and it’s time to overhaul the system completely, as the Government has recognised. In December, it launched a Fair Funding Review, which is currently out for initial consultation. Even at this early stage, however, the broad outlines of the review are encouraging.

For example, it suggests that rurality and projected (rather than historic) population levels could finally be properly recognised. Pressures around adult social care, children’s services and flood defences could also be central to funding.

Across this chamber, we should all welcome the fact that Government has listened to local government concerns and embarked on the process of change.

In addition, the review seems to be moving ahead rapidly, with three consultation stages taking place this year, looking at need, resources and transition. This strikes me as a sensible approach, and raises the prospect of new arrangements being in place as early as 2020.

With Brexit taking centre stage in Westminster, it would have been easy for the Government to put local authority finance on the back burner. It hasn’t chosen that easy option - and should be commended for that.

The financial background

Let’s now look at the background to our budget proposals today, beginning with the four-year funding deal we accepted in 2016. The deal currently has another two years left to run, and it makes sense to set a budget today for that period.

As in previous years, our financial planning in the autumn took account of ongoing reductions in Government funding. We also looked at growing service pressures, particularly due to rising demand for adult and children’s social care.

To meet those challenges, we decided once again on a balanced approach, protecting priority services but still achieving further savings. We also anticipated raising council tax by 1.95%, plus 2% for the adult care precept, as well as using limited reserves.

Then, in the Provisional Local Government Finance Settlement in December, the Government relaxed the rules around council tax. It allowed councils to increase the general element of the bill by up to 3% without a referendum - a 1% rise on the previous limit. This will generate only about £2.6m, or one-fifth of the cut in our core funding, so while welcome, it’s far from a panacea.

We also learned that our joint bid to take part in a business rate pilot scheme had been accepted - a real feather in the cap for this area. The pilot will enable this council, the districts and North Lincolnshire to retain all locally generated business rates over the coming year. That could be worth an extra £20.5m, including £7.5m for us, and will put us firmly at the forefront of local government change.

Although the funding is on a one-off basis, there’s also the possibility the pilot could be extended for a second year.

Our finances in detail

Looking now at funding in more detail, our main grant - RSG - will fall by a further £14m in each of the next two years.

By 2019, we expect it to be just £20m, compared with £211m at the start of the decade - a drop of 90%. The context to this, as you know, is the gradual move towards a system based largely on locally retained business rates. During our pilot year, local councils will share 100% of this income, although in the future the Government seems to be looking at 75%.

Apart from that target figure, it’s not yet clear how the new system would work, although it needs to be fit for purpose and in place by 2020. With our government support reducing year on year, and demand rising, we need once again to find savings, although we’ll continue to protect high priority areas. As in the past, priorities include adult and child safeguarding, roads, flood risk management, stronger communities, and fire and rescue.

In other areas, we intend to find savings of £34m over the next two years, on top of the £290m already achieved since 2011. Most of the new savings will result from difficult decisions this council has already taken, showing the importance of facing challenges head on.

In addition to achieving more savings, our proposals would meet unavoidable cost pressures of about £52m. These are particularly acute in adult care as our population ages, and as we fund the National Living Wage with no extra government support.

There’s also uncertainty about the long-term future of the Better Care Fund, an important element of our budget strategy, providing us with £86.4m for adult care over the next two years. Children’s social care is another area where demand has grown rapidly, and extra funding will be allocated as part of our business rate pilot, as well as to highways advanced design work.

Elsewhere, home-to-school transport, anticipated staff pay rises, waste disposal charges and general inflation are all contributing to rising costs. To help with these pressures, the final settlement two weeks ago awarded us an extra £2.1m to support sustainable adult care markets in the coming year, plus £1.4m for rural services. We’ve also been given an extra £1.7m from this year’s Pothole Action Fund - enough to tackle an extra 30,000 defects on our roads.

These extra funds are obviously welcome, but they don’t change the bigger picture about long-term funding, which remains difficult.

An overview of services

Turning now to the revenue budget, the council will spend £455m on services in 2018/19, and just slightly less the following year. Those services will improve the lives of almost every one of Lincolnshire’s 736,000 residents, from the very young to the very old.

We’ll support our young people through children’s centres and schools, and help them with transport. We’ll promote economic growth and jobs, maintain and develop our huge road network, and provide for heritage attractions and libraries.

At this point, I’m pleased to announce that we’ll be making £9m available for highways maintenance and environmental schemes, for consideration by the highways scrutiny committee.

We’ll also support the most vulnerable in our society, especially older people, and enhance public safety through fire and rescue and flood risk management. It’s a huge responsibility, and one that inevitably has to be funded, which brings me now to our proposed council tax rise.

Council tax

As I’ve mentioned, the Government is allowing local authorities to increase the general rate by up to 3%, and we need to take advantage of that. Although it will only add £2.6m to our income over the next 12 months, the extra 1% will increase our base budget for future years.

To ensure the sustainability of our finances, we’ve therefore proposing a rise of 2.95%, plus the additional 2% precept for adult care. The total 4.95% increase would mean an extra £1.12 per week for an average Band D property, or 74p for Lincolnshire’s many Band A households. Even with this rise, we’re still expected to have the third lowest council tax of all 27 English shire counties.

Over the last seven years, our council tax has gone up by about 10%, while general inflation has been 21%. In other words, our share of the charge has fallen in real terms, confirming this authority’s long-term commitment to a low rate.

Reserves and capital receipts

To support the revenue budget, we also plan to use - as in previous years - a sensible proportion of our reserves. Currently, we have £68.5m available to help in balancing the books, although obviously this money can only be spent once.

Our proposals suggest drawing on £35.8m, largely from the financial volatility reserve, over the next two years. This will smooth our path as previous savings take effect and we develop new service delivery models. We’ll also continue to keep our general reserve at £15.8m, or 3.5% of the council’s total budget - the top end of the recommended range.

In addition to reserves, we’re investing about £8m of capital receipts each year in projects that generate ongoing revenue savings. This option had been due to end after 2018/19, but the Government has sensibly extended it for another three years, and it’s right to make use of it.

Capital projects

Turning now to the capital programme itself, this council has always looked to the future of Lincolnshire, not just its day-to-day needs. With that in mind, we’re continuing to invest in major road schemes to keep the county moving and generate economic growth. These include the vitally important Lincoln Eastern Bypass, where the council has brought in short-term contractors following the collapse of Carillion.

As a result, we’ve been able to carry on making good progress with the project, without getting drawn into the complexities of the company’s liquidation.

Elsewhere, preparatory works for the second phase of the £81m Grantham Southern Relief Road are getting underway. We’re also looking at potential improvements to the Lincolnshire Coastal Highway, from the A1 through Lincoln to Skegness, and future solutions to Boston’s highways issues.

Away from the roads, we’re continuing to renew or replace our fire, gritter and waste transfer fleets.

In total, the investment in Lincolnshire - including outside grants and contributions - will be £323m over the next two years and beyond.


In drawing to a close, I’m conscious that we haven’t just been discussing the next two years - the period covered by the budget we’re setting today. We’ve also been scanning the long-term financial horizon, after the UK has finally left the EU.

Whatever your view of that post-Brexit future - and mine is positive - there’s no doubt it will present both challenges and opportunities. As a country, we have to rise to them, just as this council has to continue to find solutions to the issues confronting us.

Over many years now - as Sajid Javid recognised - we’ve provided good services for the people of Lincolnshire, despite being seriously underfunded. And we’ll carry on being a well-run authority in the future, doing our very best with the limited resources available to us.

For the next two years, the balanced budget we’re proposing will set a sensible course for Lincolnshire through to 2020. Beyond that, the Government has to play a greater part, and I’m confident that it will.

Already, it’s consulting on a complete overhaul of the formula that has left shire counties so shortchanged for so long. It’s also planning a Green Paper on adult social care funding, despite the cynical opportunism that dogged the issue last year. These are both important steps on important issues, and grounds for cautious optimism for all of us.

To borrow The Guardian’s unexpected phrase about the economy, there are genuine “reasons to be cheerful”, despite the many challenges we face.

On that upbeat note, Chairman, fellow members, I commend to you these budget proposals.

Councillor Martin Hill OBE
Leader of Lincolnshire County Council


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