‘Incredibly difficult situation’ as council confronts shortfall of more than £273m

Leeds City Council has warned it faces “severe difficulties” as it tries to deliver balanced budgets in the face of needing to make yet more massive savings.

An update on its five-year medium-term financial strategy explains how the council needs to find £273.7m in further savings over the next five financial years.

The council says it is contending with “extreme financial challenges” as a result of significantly increased costs to provide services and rising demand, especially for vulnerable young people and adults.

The need to find further significant savings in the coming years follows on from the council having had to deliver savings totalling £794.1m from 2010 to the end of the current 2024/25 financial year.

Leeds City Council deputy leader and executive member for resources, Councillor Debra Coupar, said: “It is not an overstatement to say that this is the most challenging financial period so far facing local authorities, following on from more than a decade of needing to make major savings year on year.

“Over the last four years alone six councils have issued section 114 notices, in effect declaring that they cannot achieve a balanced budget, and a survey from the Local Government Association at the end of last year indicated that as many as one in five thought it was likely or very likely that they would have to do the same before the end of the next financial year.

“Following 15 years of sustained reductions in local government funding, we are now reaching a stage where councils simply cannot continue to balance their budgets in the face of escalating demand for some of the most costly services for our most vulnerable adults and children.

“In Leeds the reductions equate to a real-terms decrease in funding of £465.9m or 70% over those 15 years.

“Whilst we’ve made significant savings already of £730.2m, including reducing the council’s workforce by nearly a fifth, we need to find a further £63.9m of savings this year and then in addition to that over £273m more across the next five years. It is an incredibly difficult situation.”

She said the pressures of having to find £63.9m of savings for this year alone equate to 10% of the council’s annual net revenue budget.

The annual breakdown for the five following years is: £106.7m in 2025/26, £45.7m in 2026/27, £42.1m in 2027/28, £37.3m in 2028/29 and £41.9m in 2029/30.

All council assets and services are being continuously assessed and reviewed to see how they can help mitigate the financial position.

The council will also continue its current freeze on recruitment, as well as on non-essential spending except where necessary for health and safety or statutory reasons.