Controversial changes to the way Government funds local authorities could plunge East Lindsey District Council into yet more financial turmoil.
That is the stark warning from council leader Craig Leyland who has revealed plans to replace direct government grants with income from business rates could leave ELDC facing an estimasted £800,000 shortfall.
Coun Leyland says the reason for that is that unlike more industrialised regions, East Lindsey is largely rural with small and medium businesses who will be entitled to business rate relief.
The change – which is due to be phased in over the next two years – has sparked fears ELDC will have to make further cutbacks.
Coun Leyland said: “We have had to deal with fairly severe financial challenges because our funding from government is being reduced over the next four years by £6m.
“One of the most difficult challenges is that direct government grants will disappear within the next couple of years.
“While it is being replaced with business rate retention, one of the challenges we have is that is we have a lot of small and medium enterprises.
“Many of them receive business rate relief and the previous chancellor (George Osbourne) announced they will be entitled to a rebate.
“We forecast that could cost us £800,000.”
Coun Leyland revealed the council had already saved around £1.5m and said additional savings would follow in a ‘Transformation Programme’ which will see the authority hand over control of some services and facilities to town and parish councils.
He added: “We have to had to undergo a fairly drastic restructure of what we do. We have saved about £1.5m and that process is on-going. The Transformation Programme is a significant part of that.
“We are a very well managed council in terms of how we manage our budget.”
Coun Leyland admitted he saw little chance of a U-turn by the government regarding funding and admitted East Lindsey was not alone.
He added: ”We constantly make the argument Lincolnshire as a whole does not receive a fair share. We need to be better at making that argument. Hopefully, now we have a relative new batch of MPs, they will make the case and the government will listen.”