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Cash-strapped county warns services will 'break' in two years

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Lincolnshire CC has warned its services will become unsustainable in two years’ time and urged ministers to adopt a council finance system which shifts resources from London to counties.

The council made the call as it lobbied the county’s MPs in Westminster yesterday, amid indications the government will publish a consultation document on the fair funding review in the coming weeks. One source predicted to LGC that ministers had ruled out any change impacting before 2020-21.

Although hopes were expressed at Lincolnshire’s event that counties and metropolitan councils could jointly lobby for a shift in resources away from London, a number of the MPs present warned that without a majority the government faced difficulties undertaking fundamental reform.

Lincolnshire’s intervention comes after Northamptonshire CC – another county whose historic decision to set low council tax bills now penalises it as a result of the government cap on rises – warned it faced not being able to set a balanced budget.

Lincolnshire leader Martin Hill (Con) said that at a meeting last week communities secretary Sajid Javid “said he was personally committed to reforming [council finance] fairly” but faced “the challenge of getting it through the House of Commons”.

Cllr Hill said the county would receive an extra £116m annually if its funding was brought up to that of the average area.

“We don’t expect special treatment but we are getting to the stage where things will break unless something changes,” he said.

“For the county council we can set a budget for the next two years. After that unless something changes to make the system fairer we’ll be in some difficulty.”

Tony McArdle, Lincolnshire’s chief executive, said that under a fair new formula every council in Lincolnshire would benefit while “the loser would be the London boroughs”.

He continued: “The London boroughs couldn’t argue for anything that’s more beneficial than what they currently get. They can only lose if this debate takes place. I have spoken to chief executives in London and they agree with that.”

Mr McArdle agreed that in two years’ time the council would “run out of money” and warned that as the council ate into its reserves, “the level of risk we take on financially is unacceptable”.

He said the council’s political leadership faced a “very difficult political decision to cut [services] below the statutory minimum”.

Lincolnshire has used over £80m of its reserves over the past five years and now has £50m remaining, according to a council briefing.The council’s main central government grant has fallen from £211m in 2011-12 to £152m this year and will be £131m by the end of the decade. This includes just £20m of revenue support grant.

Over the forthcoming two new financial years it will face annual cost increases in adult social care of £7.5m and £7.4m respectively.

According to the council, Lincolnshire sets the third lowest council tax of the 27 shire counties.

County Councils Network director Simon Edwards, said each Lincolnshire resident received slightly under half the central government funding of their inner London counterparts.

“We don’t want more than other areas but we need to say that there’s a historic underfunding of the shires in England,” he said.

He urged the MPs present: “If you can work with colleagues around the country you have enormous power to support your residents with fairness and equity.”

Conservative MP for Gainsborough Sir Edward Leigh, a former chair of the public accounts committee, said should counties seek to increase their share at the expense of metropolitan councils, the “key is whether Conservative MPs will be screaming blue murder in places like Shipley”, at a time when ministers depended on their support. The suggestion led Mr Edwards to suggest there was scope for the CCN to cooperate with the metropolitan councils’ body Sigoma on fair funding.

While fellow Tory MP Caroline Johnson, of Sleaford and North Hykeham, expressed doubt that London MPs would vote for change, the Labour peer Baron Quentin Davies of Stamford, predicted the Democratic Unionist Party “wouldn’t object” to a redistribution between English councils.

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