Council budget savings challenges will mean tough decisions

Leeds City Council is facing further severe reductions in its funding over the next three years so challenging that it will have no choice but to make tough decisions that will impact on services.

After six years of major cuts, financial planners are having to work increasingly hard to identify areas where savings can be made. This is after the significant efficiencies to cope with the cuts of previous years and on top of more than 80% of savings so far identified this time.

Officers are going through the same process as they have done every year since 2010 of hunting for more ways to raise income and make savings as the annual budget shrinks. They examine everything from buildings and back office costs to staffing and streamlining services to combat sustained severe cuts to the council’s funding.

But with six years of repeatedly saving, trying to raise cash with new innovations and cutting without impacting the most vulnerable people in the city it has become a major challenge to repeat the process yet again.

In a report to be considered by the council’s executive board next week, it is revealed that despite “considerable work”, it has not yet been possible to find sufficient savings or income- generating opportunities to close the gap in finances for the next three years.

Councillors will be asked to approve the current draft strategy with the proviso that further proposals on how to meet the shortfall will be brought back to them at a future meeting.

Leeds City Council Leader Councillor Judith Blake said:

“After six years of continuous cuts to the council’s budget, we’re now at a point where something has to give. It’s become almost impossible to make sensible savings without significantly affecting front line services that the people of Leeds rely on. Leeds City Council’s core funding from Whitehall has already been cut by £214m since 2010.

“Over the last six years we have done everything we can to streamline spending and find back office efficiencies, while still doing our best to protect council services for the people of the city.

“But even such a responsible approach has its limits. If we don’t see a change of direction from Government in the Autumn Statement we will be left with no choice but to make some very hard decisions that will inevitably affect front line services in Leeds.

“When our new Prime Minister took over she promised to ensure a country fair for all. It’s now time for those holding the purse-strings nationally to re-examine whether sustained austerity is capable of delivering that.”

The report from deputy chief executive Alan Gay explains that the extent of savings identified to date represents around 83% of those required. Further work is ongoing to close this gap, and officers will continue working on proposals for members’ consideration.

Members will also be asked to decide whether to accept the government’s four-year funding offer, which is set to be reduced by a further £53m, £25m of this in 2017/18. This would follow the reduction in £214m core funding between the council’s 2010/11 and 2016/17 budgets.

Adding this to increased demand for services, the impact of business rates appeals, increasing cost pressures and other specific grant cuts, the report reveals an estimated funding gap for the period 2017/18 to 2019/20 of £110m.

This will have a massive impact in the coming year as £82m of this is front-loaded into 2017/18. For planning purposes, this estimated budget gap is net of annual increases of 1.99% for council tax and 2% for the adult social care precept through to 2019/20.

The report explains that the gap will have to be addressed by continuing the ongoing processes of regularly reviewing and reassessing services. This helps identify how those that are no longer affordable and a lesser priority than others can be provided differently or even in some cases stopped. This, says the report, is necessary in order to continue to protect vital services that support vulnerable people.

Almost 65% of the council’s net annual revenue budget supports critical adult social care and children’s services. In 2016/17 the net revenue budget in Leeds will be £496.4m, which is funded by council tax, locally-retained business rates and the revenue support grant.

Potential savings have already been identified of £91m over the three-year plan in areas such as support services, further reducing the numbers of senior management posts and better integration of community services.

A lot of work has also gone into finding more income-generating opportunities, alongside looking at deciding whether to charge for currently free services that other councils traditionally make residents pay for.

This all still leaves a current gap over the three year plan of £18.5m, with £12.8m being the forecast level of the shortfall in 2017/18. Further work will be required to close this gap and officers will continue to work on proposals for members’ consideration.

Once firm budget proposals are drawn up they will be subject to wide public consultation before finally being put to a meeting of the full council for decision.

ends

For media enquiries contact:

Donna Cox, Leeds City Council press office (0113) 224 3335

Email: donna.cox@leeds.gov.uk