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Cash-strapped Lancashire county council forecasts decrease in reserves

County Hall
County Hall

Lancashire County council is just one of nearly 200 local authorities in England to have budgeted for a net decrease in reserves in 2018/19.

A total of 199 out of 353 authorities - 56% - have forecast a drop, in a sign that councils of all types, large and small, are struggling to plug funding shortfalls.

Among the top 20 councils budgeting for the biggest net decreases are nine county councils, including Lancashire, East Sussex, Hampshire and Northamptonshire.

The London boroughs of Kensington & Chelsea and Barnet are also in the top 20, along with huge metropolitan councils such as Birmingham and Liverpool.

The figures, compiled by the Ministry of Housing, give a snapshot of the net change in the reserves councils are planning to use for day-to-day spending.

Reserves are set aside by local authorities to finance spending that is unplanned, or for one-off costs that aren't covered by normal budget provision.

They cannot be topped up again until the council finds money from other sources.

The figures also show the overall level of financial reserves held by individual councils.

A drop in reserves does not mean a council is necessarily running out of money - only that its "rainy day fund" is getting low.

Northamptonshire council is so far the only authority to have formally declared itself at risk of spending more money than it currently has available.

But the total amount held in reserve by all local authorities in England has now fallen two years in a row.

From a level of £16.4 billion at the end of 2010/11, the amount rose year-on-year to peak at £25.1 billion at the end of 2014/15.

It then fell to £24.6 billion as of April 1 2016 and £23.1 billion at March 31 2017.

By March 31 2019 the amount is forecast to be £19.8 billion.