Early budget proposals for 2021/22 presented to Leeds City Council’s executive board next week detail efforts to address a £119m deficit, but the tough decisions presented won’t be finalised until February.
The funding gap for the next financial year was first reported to the board in September through a medium term financial plan. Thanks to robust financial planning the council is close to closing this gap but must still find an additional £5.3m of savings.
This stronger financial position is due to a combination of savings proposals, changes to budget assumptions and the impact of the Chancellor’s Spending Review. Previous executive board reports detailing difficult savings decisions taken so far can be found online with more scheduled for February.
A detailed government settlement is yet to be delivered and is due in mid-December, which could further impact the council’s position.
Leader of Leeds City Council Councillor Judith Blake said:
“As a council over the last ten years we have consistently balanced our budget through prudent financial management. However the recent government spending review failed to provide sufficient funding for adult social care or to fully close the gap caused by pressures associated with COVID-19.
“Like many other local authorities this leaves the council no option but to look for further savings. We will also continue to engage with the Government to try and obtain further funding to help reduce the impact of budget pressures on services.
“We have already seen a number of valued colleagues leave the council and that impact will continue to be felt as more leave over the coming year. These are incredibly difficult times for Leeds City Council and none of these recommendations have been made lightly.
“Our staff are showing outstanding commitment, hard work and dedication during these unprecedented times. I would like to thank each and every one of them again for their efforts. They can be assured we will do everything possible to avoid compulsory redundancies.”
The financial picture for the coming year is a complicated one and will require some challenging decisions to be made.
At this stage in the decision making process a 1.99% increase in core council tax has been proposed with further discussions to take place over how the Government’s proposed adult social care precept of 3% will be dealt with in this and future years. This will be finalised at full council in February.
COVID-19 has seen business rates reduce by £104.3m. The Government has provided £75.6m towards this, meaning the council has had to find savings to meet the shortfall of £28.7m.
The council has submitted an application on behalf of Bradford, Calderdale, Harrogate, Kirklees, Leeds, Wakefield and York to form a business rates pool, which has the advantage of retaining business rates resources within the region rather than handing them back to central government.
The Spending Review 2020 announced a “pay pause” for all public sector workers with the exception of those earning below £24,000 who are to receive a minimum £250 increase. The council has therefore budgeted accordingly.
£5.2m of savings proposals are to be put forward for consideration. These include a set of organisational design proposals to realign some services differently within the current directorate structure and a number of service-specific proposals.
A potential reduction in workforce as a result of these proposals would be 97.5 full-time posts. Combined with savings proposals already considered by the executive board in September, October and November, total savings proposed are £63.4m with a potential overall reduction in the workforce of 914 full-time posts.