LANCASHIRE County Council underspent its budget by almost £20m in the last financial year.

The authority had expected its costs to total £764.6m during 2018/19, but ultimately spent £745.3m.

However, the figures mask individual overspends in some under-pressure departments – and the fact that the council took almost £45m out of its reserves last year to balance the books.

Without that contribution, County Hall’s expenditure would have outstripped its income by just over £25m.

The difference between the two amounts – which is effectively unspent reserves of £19.2m – will now return to the authority’s back-up fund.

It is expected that the council will have money in reserves until at least 2020/21 – but chief executive Angie Ridgwell told a cabinet meeting that the underlying financial state of the council meant that savings still need to be found. They will come in the form of the next phase of the so-called “service challenge” to reduce spending.

“Members will recall there is a structural deficit in our medium-term financial position of £47m, which needs to be addressed,” Ms Ridgwell said.

The authority’s forecast deficit had previously reached nearly £200m in 2016/17. Last year, the council implemented £68m of savings, some of them ahead of schedule.

Children’s services recorded the largest overspend of any service last year, going over budget by £2.9m.  Papers presented to cabinet revealed that agency residential and fostering placements accounted for the majority of the additional money spent.

Residential placements increased by almost 90 to 296 in the 12 months to March 2019, while fostering placements went up by almost 50 to 524.