Lincolnshire County Council may need to aside extra £1m to cover contracts due to rising inflation

The authority’s Highways and Transport Committee next week will be asked to vote on a potential mid-year hike in the budget, as small and medium enterprises (SMEs) could be put under “real pressure”.

The construction sector is being hit by rising materials prices, fuel prices, skills shortages and a lack of HGV drivers.

The report was due to be considered in September, however, a number of meetings and decisions were postponed following the death of Queen Elizabeth II and the subsequent period of mourning up to her funeral.

Data within a report before the committee showed that up to June there were price hikes since contracts started of between 10.3 per cent all the way to 31.88 per cent for various services.

“There remains significant risk that SMEs working within the highways works and traffic signals contract are struggling to deal with the pressures they are facing,” said the report.

“The decision to pursue any of the options set out in this report is a significant one given the challenges that are also faced by local government as additional funds from central government remain unlikely.

“However, the cost to replace those at risk is real and service continuity plays a significant factor when delivering essential services of this type.”

There are three options before councillors including doing nothing, increasing the budget by £964,000 or increase it by £1.511million.

The preferred option is the £964,000 uplift, with the report noting that the figure would target support “where it is most needed”.

The report warns that if nothing was done, the council could still be hit by unexpected costs if one or more supplier goes into administration.

It said that if councillors supported the higher figure it “would ensure the whole supply chain feels the benefit of the increased prices and prevents any anomalies in how the increase is distributed”.

“This would clearly have a larger impact on LCC budget but would send a strong message to the supply chain that we are sharing the impact of the current inflation. This would ensure that the supply chain and service is protected and eliminates any reputational damage.”

The committee meeting will be held on Monday, October 24 before it goes to Executive Councillor Richard Davies for a final decision.