Liverpool City Region Combined Authority is incurring “significant costs” as it resolves a contract dispute.
Like all local authorities, the city region is considering its position as the new financial year comes into view. Earlier this year, the combined authority passed its annual budget for 2023/24 but a financial performance report, to be discussed later this week, has outlined some challenges facing the six-region body in the year ahead.
Chief among them is a contractual dispute which is totting up “significant costs” according to the report. It said: “Whilst provision has been made within the current year’s budget for these costs, if this dispute becomes protracted, this could place pressure on the budget in the next financial year.
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“In the first instance the Authority would look to reprioritise funding however to the extent that this wasn’t feasible there may be a requirement to contribute from reserves.” The document said the combined authority’s aim is to move towards financial sustainability and a move from reliance of reserves.
The report added: “At this point in the financial year, it is unlikely that there will be any significant unplanned pressures on the budget: the impacts of pay and cost pressures on the year have been factored in as part of the forecasting exercise and as such it is unlikely that there will be recourse to an unplanned use of reserves in the current financial year. Based on outturn projections, it is forecast that the Combined Authority will be able to make planned contributions to reserves which will be used to support expenditure in the next financial year.”
Like most sectors, the impact of pay and inflation was described as a “significant risk, particularly for front facing transport services.” The report said this was evident where key services have experienced an overspend due to pay awards and increased energy costs.
It said: “Due to underspends elsewhere in the budget the Combined Authority has been able to manage these pressures within the overall quantum of the budget. Notwithstanding this, the impact of heightened pay claims, utilities, general cost and bus contract inflation will continue to persist over the next couple of years and place pressure on the budgets.
“While specific inflationary provision has been made in the 2023/24 budget to mitigate the impact of this, there still remains a risk that inflationary pressures continue to grow, and that funding set aside is insufficient. This will be carefully monitored throughout the year and as far as practicable, action taken to address and mitigate the impact.”
The report will be considered when the combined authority meets at Mann Island on Friday.
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