Significant increases in inflation could add almost £1 million alone to the cost of Lincolnshire County Council’s highway maintenance work.

A council report said that the authority will consider increasing the value of its highway contracts so that suppliers can cover rising costs. Its supply chain, which includes small contractors, are under ‘real pressure’, according to the report, and will struggle without help, with costs rising by 13% in April 2022 compared to the previous year.

Contracts rise annually with inflation, but this ‘mid-year bump’ would help businesses who are already having difficulty with costs, reports the Rutland and Stamford Mercury.

The move would add £964,000 to costs for the remainder of the financial year, according to the council report.

The support would be targeted at those businesses most at risk of failing, said the council.

The Highways and Transport Scrutiny Committee will have their say next week on the increase – or whether to opt for an even bigger handout of £1.5million.

A council report says: “There remains significant risk that SME (small and medium enterprises) working within the Highways Works and Traffic Signals contract are struggling to deal with the pressures they are facing.

“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.”

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.