Update on council’s financial position
The Leader of Leeds City Council has called for urgent action to be taken to support local council services amid rising concerns and uncertainty around budgets around the country as the council sets out to save nearly £60million in its 2024/25 budget.
The position in Leeds reflects challenges being faced nationwide, especially in children and families services, increasing the pressure on councils to fulfil their legal obligation to deliver balanced budgets each year.
Council Leader Councillor James Lewis reiterated his call for a fundamental change to how local government’s vital services are funded.
Leader of Leeds City Council Councillor James Lewis said:
Recent high-profile developments have brought the perilous state of council finances across the country into sharp focus. Councils are under massive pressure to deliver savings and support an increasing number of vulnerable people in need while also keeping up good levels of day-to-day services such as collecting waste and fixing the roads. What’s becoming ever more apparent is that the system of local government funding is fundamentally broken.
Councillor Lewis has repeatedly called for the government’s Fair Funding Review to be implemented, and a switch to more of a needs-based approach when deciding how council funding is allocated. Replacing the current one-year funding agreements with multi-year settlements would also offer greater stability by helping local authorities with their financial planning.
If the results of the Fair Funding Review which began in 2016 were applied, Leeds would be better off by an estimated £45.3million next year. The government has now indicated any such reforms will not be introduced before the end of the current parliament.
Councillor Lewis added:
The decision not to implement the Fair Funding Review is deeply frustrating as this issue needs addressing now and cannot wait, people in Leeds and elsewhere need the support that money would have offered them. We will continue to do all we can with what we have, but a complete revamp and modernisation of how local government finance is managed with a more needs-based approach at the heart of all decisions is absolutely essential and long overdue.
Core government funding for Leeds is now less than half the level it was in 2010/11, being £197.8m for this year compared to £450m then, which means that since 2010 over £2.5billion cumulatively has been taken away from frontline local council services provided by Leeds City Council.
The latest figures for Leeds show a projected overspend of £33.9million for the current financial year caused by the continued impact of rising costs and demands on services, and initial council estimates have identified the need for a further £59.2million of savings to be delivered in next year’s budget for 2024/25. This is down to increased energy and fuel costs, high levels of inflation and rising costs and demand for services especially for looked after children, those with special care and education needs as well as in adult social care, together with a nationally-agreed pay increase for staff all contributing to the shortfall. Recently produced figures show that 61 per cent of the council’s net managed expenditure goes to provide social care in the city.
To help achieve the savings, the council is carrying out continuous service and asset reviews along with freezes on recruitment including on agency staff and overtime, as well as on non-essential spending except where necessary for health and safety or statutory reasons.
In terms of its overall size, the council now has approximately 3,500 fewer staff (as at 31st July) than it did in 2011.
Leeds City Council was formally praised last year for how it operates following a peer review carried out by the Local Government Association. Among its findings the review recognised the council’s finances as being well-managed in the face of significant pressures, while the collaborative ‘Team Leeds’ approach as part of the Best City ambition was also highlighted as a strength.
The latest budget position in Leeds will be considered by senior councillors at the meeting of its executive board at Civic Hall on Wednesday 20 September. To see the reports they will be discussing, go to Council and democracy (leeds.gov.uk) (agenda items 11 and 12).