Councils across the country are dealing with higher costs and uncertainty over the economic future as they try to balance their budgets. Every local authority is legally required to set a balanced budget, meaning they don’t spend more than they receive.
Several local authorities have effectively gone bankrupt in recent years – most recently Nottingham City Council in 2023 – and declared themselves unable to balance their budget. The next budget setting process will begin in February and March for the 2025/26 financial year.
The Labour government has promised to reform how councils are funded, giving them more certainty about the future, but hasn’t unveiled details of this yet. All authorities have struggled with the rising costs of energy, services and materials since the cost of living crisis triggered higher inflation.
Rises in council tax, budget cuts and the use of savings can be used to balance the books. The Local Democracy Reporting Service asked Lincolnshire County Council and each of the seven lower-tier councils how their finances currently stand.
Lincolnshire County Council
As the largest council with the most responsibilities, Lincolnshire County Council currently has the largest predicted deficit of nearly £5m. The Conservative-run authority is legally required to provide social care and transport children to school, but costs in both of these areas have risen significantly.
The council says it’s working to reduce this, and can draw on reserves if necessary at the end of the financial year. Leader Councillor Martin Hill said: “We currently estimate that we will spend £4.7m more than originally anticipated this year.
“This is primarily due to higher-than-expected costs for school transport, waste disposal and social care. However, when setting our budget for the year, we always set aside some contingency funding to deal with such unexpected costs, so we currently don’t expect to be in deficit by the end of the year.
“We are currently working to find ways to eliminate the projected overspend before the end of the financial year, but, if we do end up with a shortfall, we do have reserves we can draw on.”
City of Lincoln Council
(Image: LDRS)
Lincoln’s council is currently predicting a small surplus of £37,000. However, it notes there “remains uncertainty in terms of service demands and income forecasts”, and will continue to monitor its finances closely.
North Kesteven District Council
North Kesteven’s financial documents from a recent meeting predict the council will break even, with no surplus or deficit. However it describes the level of uncertainty for councils as “extreme and unprecedented” due to the state of the national economy and delays with government funding reforms.
South Kesteven District Council
South Kesteven District Council says it doesn’t currently have a publicly-available forecast, and will be publishing financial details next week.
West Lindsey District Council
WLDC expects to spend £160,000 less than budgeted, according to a recent budget paper.
East Lindsey District Council
A spokesperson for ELDC said the council its projected to have a surplus of £660,000 at the end of the financial year.
South Holland District Council
South Holland council is currently on track to overspend by £67,000, based on current projections. The council says that if it’s unable to close the gap, this money would be taken from its savings.
Boston Borough Council
Boston’s council is predicted to have a surplus of £148,000.
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