City council faces £52.5m funding gap this financial year

Proposals to tackle Leeds City Council’s significant budget shortfall, which has risen sharply due to the continued costs of coronavirus, are set to be discussed by senior councillors next week.

As part of a meeting of the executive board on 24 September, members will consider a number of reports setting out the “extremely difficult financial situation” faced by the council, and the measures it has proposed to meet its budget shortfall.

Reports for consideration include an updated Medium-Term Financial Strategy which provides the council’s financial planning framework for the next five years and reports on its projected financial position for this financial year and the next.

Following significant extra costs relating to Covid-19 in 2020/21, the council is currently projecting, after the application of Government support, an estimated funding gap of £52.5m in this financial year.

In addition, for the financial year ahead (2021/22) the council is facing a funding gap of £118.8m. Of this figure, £66.1m is due to the ongoing impact of Covid-19.

Leeds is estimated to receive in total £67.8m of Government funding towards offsetting the financial impact of Covid-19 upon its approved 2020/21 budget.

The council has already embarked on a large savings programme totalling £32.6m. Measures introduced have included:

  • Implementation from May 2020 of a recruitment freeze for non-essential posts
  • Introduction of additional agency and overtime restrictions
  • Immediate freeze on non-essential spend
  • Review of the current procurement strategy to identify further savings
  • Undertaking a programme of work to identify and capture any savings that may be available as a result of changes made to the delivery of services and working arrangements due to coronavirus

A number of saving proposals for the next financial year (2021-2022) will also be considered at next week’s meeting. These will be followed by further proposals being brought to the executive board by the end of 2020.

Leader of Leeds City Council, Councillor Judith Blake, said: “In what has been an extremely difficult decade for local authorities, we have proved here in Leeds that we are a prudent, financially well run council.

“Coronavirus has had an enormous impact on our financial position. Not only in terms of the costs to tackle Covid-19, but on many of our revenue streams that help provide the funding we need to fund vital front-line services.

“Whilst welcoming the assistance offered so far by Government to meet the costs of coronavirus, it simply does not go far enough when you also consider the significant cuts made to our central grant funding since 2010.

“We are therefore in talks with the Government to discuss what else they can do to help because without additional assistance, there is a threat of big cuts to services.

“These financial reports to executive board set out the stark financial position we face, and a number of steps we intend to move forward with to mitigate the impact of the budget gap in the next financial year.

“We will do everything in our power to ensure our front-line services supporting the elderly, vulnerable and all those in need continue to be protected.”

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