Council looks at implementing legal minimum service level amid £41m funding gap

Hampshire County Council has said it is working on establishing a legal minimum service level (LMSL) across its service in the face of a recurring funding gap in 2025/26 of £41.6m.

The news came in a pre-budget setting report from the council's Chief Finance Officer and Director of Corporate Operations who noted that the savings made by such a service reduction would still not be enough to close the funding gap.

Despite not being able to find the remaining £41 million needed to balance the budget, the report stated that the exercise was an important step towards readying the council for the 'commissioner test'.

Meeting the commissioner test means that if commissioners were sent in to review Hampshire's financial position, "they should not be able to find any instance of expenditure that was not already at the LMSL", the report stated.

The report continued: "With this in mind, the intention would be to consider any added value of having external validation of the work that had been completed as this would form a very important part of our submission to Government in advance of the Comprehensive Spending Review, highlighting that the County Council is unable to balance its budget with the funding it has and cannot make any more savings to close the financial gap.

"At this stage, it would be pointless issuing a Section 114 notice (albeit the regulations would require us to) since issuing an instruction to County Council to address the budget shortfall when we had already exhausted all options for saving money would clearly not achieve anything."

Hampshire has been warning central government of its financial position since 2018, when it declared that fundamental change was needed in the local government finance system in order to sustain the council in the long term.

Responding to the Government's 2023 Autumn Statement, the council said: "Disappointingly, the Statement didn't include any additional financial measures to ease the pressures facing local authorities, despite strong lobbying from the sector."

It added that continued upward pressure on the national living wage and tightening of medium term departmental spending plans "sets a worrying backdrop for the medium term outlook for local government finance".

Adam Carey