The year the pause handed back to Lancashire's councils

By Tom Pickup, Lancashire county councillor and Cabinet Member for Adult Social Care. Every figure below is read from a published council or Government document, or computed from one. The companion working paper, Waiting for Vesting Day, checks each figure by script.

West Lancashire Borough Council forecasts a gap of £2.5M in 2027/28 and £1.3M in 2028/29. It holds usable revenue reserves of £2.0M. Its Quarter 1 report, published on 24 September, says it plainly: “The use of £3.791m of reserves is not viable.”

The first of those years was always West Lancashire’s to close. The second was not. Like the other fourteen Lancashire councils, it was due to be abolished on 31 March 2028, and its 2028/29 gap would have passed to one of four new unitary authorities. Then on 7 September the Government paused the decision, told councils to “cease work” on it, and gave no new date. Four weeks on, the review has not reported. On 1 October the county council’s Cabinet authorised a protective judicial review claim, to be filed by 16 October if the Government does not confirm that the July decision has been withdrawn. The Cabinet report puts its cost at about £5,000 if the court stays it. The only timetable on the record is a remark the minister made to leaders on a call. Lancaster’s leader reported it to her council on 23 September: shadow elections “would now be in May 2028”. That would make the new councils’ first day 1 April 2029, and 2028/29 a year the existing councils must budget for themselves.

Who budgeted to the date

The councils built their 2026/27 budgets to different horizons, and the difference now decides who carries the extra year.

The county council balanced 2026/27 and 2027/28. Its budget report says the savings package “provides financial stability for the Council in moving through the period to Vesting Day in Spring 2028”. For 2028/29 its own summary table shows a gap of £17.3M. Under the July timetable that was a successor’s problem, divided four ways. If vesting slips a year, the gap is the county council’s. It comes on top of a forecast overspend of £15.7M this year and a schools deficit heading for £253.5M, whose statutory override runs out in the same year.

Six other councils wrote the date into their plans. Rossendale adopted “a two year MTFS due to local government reorganisation”. Its update to Council next week is the first document in Lancashire to plan on the slip: “The Council can no longer plan on its services, liabilities and financial pressures passing to a successor authority in 2028.” Hyndburn’s Cabinet minuted in February that its £5.1M gap to 2028/29 “would need to be met by reserves” and that the council “would have sufficient reserves to sustain itself until Local Government Reorganisation”. Pendle’s officers wrote in June that long-term transformation was “unlikely to yield sufficient savings in the period before the Council is abolished”. Blackpool cut its financial strategy to three years “given planned Local Government Reorganisation from April 2028” and has not produced the strategy it promised for this summer.

Contracts let for a successor nobody can name

The county council’s register lists 557 active contracts, each with an end date and a limit on how far it can be extended. Under the July timetable, 147 of them, with £219.0M of annual value and no extension to carry them past vesting day, would have been re-let by the county in the ordinary way. A one-year slip adds 91 contracts and £109.3M a year to that set. These are contracts the new councils would have let. Now the county must let them, for successors whose number and shape it does not know.

In the delay year itself, 74 county contracts with £113.0M of annual value fall due, 45 of them with no extension to carry them past April 2029. The largest are the electricity and gas supply for the council and its schools, £46.0M a year between them, ending in September 2028 with no option to extend.

The sector’s usual answer to uncertainty is a short extension to vesting day. Chorley did exactly that with its insurance, extending “to cover the period 01 January 2027 to April 2028” rather than running a full procurement. When the date moves, every one of those bridges has to be extended again, and the law limits how far. The Procurement Act 2023 treats a change of more than ten per cent of a contract’s maximum term as a substantial modification. A further stretch is lawful only through a safe harbour, such as circumstances that “could not reasonably have been foreseen”; otherwise it is a new procurement, with its cost, or a modification carrying legal exposure.

What that costs in pounds, nobody can say. I looked for a published study that prices short-term contracts in English local government and found none. I report what is exposed rather than invent a premium.

Money already spent or committed

Some money is spent or committed whatever the review decides.

By 30 September two of the eight quarterly instalments into the £30M reserve, £7.5M across the fifteen councils, would have fallen due. Whether they were paid is not published; Preston says the payment process “is currently under review”. Blackburn with Darwen’s council has asked for any unspent part of its £3.3M back; Wyre and Burnley have asked their officers to total the cost and seek reimbursement. The Government’s position is that it “will consider council costs as part of the review”, which is not a promise to pay.

Councillors elected next May will serve four years “unless a Structural Changes Order is made”; if the slip is one year, they will serve one.

The savings that were or were not there

Deferred savings are the one cost that depends on whose figures you believe. The six councils that proposed four unitaries claimed £82.1M a year of benefit at steady state. If you believe that, a year’s delay forgoes up to £82.1M, and when the Government slipped Northamptonshire’s vesting day by a year in 2019, the Minister accepted that savings would be “not realised for another year”. My own published model of the same configuration, which counts only effects that follow from structure, puts four unitaries at minus £2.6M a year, so a year’s delay saves a little and defers a £64.3M transition bill. If Lancashire realised savings only at the rates Buckinghamshire and Northamptonshire have actually reported, four unitaries would cost more each year than they save, and a year’s delay avoids between £43.9M and £56.2M.

Whichever basis you hold, the money already spent stays spent, and every council still has to budget for 2028/29.

What the Government can settle

The Government can reduce most of this with a date, a rule and one piece of guidance. A date, or even a range of dates, would let every council choose its 2027/28 horizon and its contract terms. A rule on which costs it will reimburse, and whether the £900,000 it has already paid per new authority must be returned if no authority is created, would let finance officers close their accounts. Guidance that a Government-caused change of date counts as unforeseeable under the Procurement Act would take the legal risk out of extending contracts.

Until the Government gives them, all fifteen councils are budgeting for a year, 2028/29, that the July timetable gave to their successors.

Declaration: I am a Lancashire county councillor, Cabinet Member for Adult Social Care, and a member of the Cabinet that took the 1 October decision. I took no part in preparing any other council’s documents quoted here.