Council leader warns “austerity not over” as £87m Leeds funding gap revealed

The Leader of Leeds City Council has warned “austerity is not over, another incredibly difficult year lies ahead” after proposals to address a funding gap of approximately £87million next year were revealed today.

The comments by council leader Councillor Judith Blake came in response to a report outlining initial budget proposals for 2016/17 which will be discussed by senior councillors on the executive board at Civic Hall next week (Wednesday 16 December).

The report details the council’s financial position for next year, which is expected to see further cuts to core funding received from the government of approximately £24m together with rising costs and demand for services leaving an overall funding gap of £87.2m for next year.

The reduction of government funding continues the trend which has seen Leeds City Council receive more than £180m less in core funding, a drop of more than 40 per cent, since 2010. This is expected to continue with a further reduction in core funding of approximately 30 per cent by 2019/20.

In the current financial year the council has already seen its public health funding reduced by £2.8m. The government has now indicated this cut will continue and it will make further cuts over the next five years. This will mean an estimated reduction in the council’s public health grant of £3.9m in 2016/17, and over the next five years the council estimates it will have £25m less to spend on public health priorities in Leeds.

The initial budget figures for Leeds for 2016/17 are best estimates as the full position will not be known until the council receives it government grant settlement details later this month.

Leader of Leeds City Council Councillor Judith Blake said:

“These figures are worse than we feared and should make clear to everyone in Leeds that although in many ways the city is performing fantastically well, if anyone believes austerity is over it most definitely is not. We still face another incredibly difficult year in Leeds for public services, which will mean more very tough decisions to come.”

In order to meet the funding gap, all areas of the council will be asked to make savings and efficiencies, although services for vulnerable young and older people will be prioritised with funding in these two areas accounting for 64.1 per cent of the council budget for 2016/17.

This approach is part of the council’s focus on being a compassionate city, looking to tackle inequalities through improving people’s health, skills and a commitment to supporting the vulnerable and encouraging opportunity for all.

The council is still awaiting more details from the government before making a final recommendation on council tax, but given the anticipated financial position it is proposed to rise by 1.99 per cent, plus the two per cent social care precept suggested by the government.

Social housing rents will reduce by one per cent next year in line with government policy, while it is anticipated there will be a general rise in council fees and charges in addition to specific increases in some areas.

The council itself will continue to get smaller in size, with a reduction in staff numbers of 259 full-time equivalent posts (ftes) next year as part of a further loss of 1,000 to 2,000 ftes by 2020. These will add to more than 2,500 full-time equivalent posts the council has reduced by since 2010, saving £55m a year as a result. The council will also continue to move to becoming a Real Living Wage employer, with a minimum £8.01 per hour rate paid to all staff from April 2016.

In order to realise the savings required to address the funding gap, further efficiencies and reductions will be considered across all services, while new and additional potential income streams will be explored and developed. These include the council adopting a more commercial approach with a focus on increasing income from trading services.

Despite the ongoing financial challenges, the council is committed to continuing the ambitious economic approach that has helped the city create new private sector jobs at the fastest rate in the UK. Major milestones for the city next year will be the much-anticipated opening of Victoria Gate and the completion of the Leeds Kirkgate Market refurbishment. In terms of events in 2016, the city will again be showcased to the world by hosting the Columbia Threadneedle World Triathlon Leeds and the Tour de Yorkshire, as well as continuing to develop its bid to become European Capital of Culture 2023.

Given the council’s reducing size and financial position, it is keen to engage with all parts of the city as well as all groups and communities to discuss ideas and alternative ways of providing or supporting services which the council has previously delivered. This will include looking at opportunities around using new innovations and technologies.

Councillor Blake added:

“In terms of job and apprenticeship creation, economic investment, global profile and hosting an increasing number of world-class events, Leeds as a city is flourishing which is something we should all be very proud of. These successes reflect a focused effort to make Leeds the most attractive place it can be to do business, which will become vitally important when we retain all business rates in the city from 2020 onwards.

“The difficulty we now face is that with less and less government funding, council tax and other funding streams open to us have to be stretched further and further and even with the new social care precept we still have a significant gap in our public health and social care budgets which is a major concern. The council simply cannot continue to operate the way it has traditionally as the resource is no longer there, so we need to look at new ways of delivering services or helping people to help themselves, be that through working differently with partners or making the most of new innovations and technology.

“So more difficult discussions and decisions lie ahead, but we are committed to being a compassionate city with a strong economy and I continue to have the utmost confidence in the resilience of the people of Leeds to meet this challenge.”

The council’s initial budget proposals for 2016/17 will now be discussed and consulted on before being finalised at the meeting of full council in February.

Following the executive board meeting, consultation information will be available from Thursday 17 December onwards at www.leeds.gov.uk/budget

ENDS

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