Leeds City Council has published an update on its five-year medium term financial strategy, outlining the severe difficulties it faces to deliver balanced budgets in the face of the continued need to make significant savings.
The report, discussed at the council’s executive board meeting, explains how the council needs to find £273.7million in further savings over the next five financial years.
Leeds and all councils across the country are facing extreme financial challenges as a result of significantly increased costs to provide services and rising demand, especially for vulnerable young people and adults.
This is being seen in supporting looked after children, especially the most vulnerable with high levels of need requiring costly external placements, as well as for adult social care with increases in demand for older people, adults with learning difficulties and those needing support with mental health.
The need to find further significant savings in the coming years follows on from the council having had to deliver savings totalling £794.1million from 2010 to the end of the current 2024/25 financial year.
Commenting on the report and the ongoing position facing local authorities, 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 fifteen 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 per cent over those fifteen years. Whilst we’ve made significant savings already of £730.2million, including reducing the council’s workforce by nearly a fifth, we need to find a further £63.9million of savings this year and then in addition to that over £273million more across the next five years. It is an incredibly difficult situation.”
The medium term financial strategy outlines further savings totalling £273.7million needed across the next five financial years. The pressures of £63.9m for this year alone equate to 10% of the council’s annual net revenue budget.
The annual breakdown for those 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.
Council tax in Leeds remains the second-lowest of the eight core cities in England, with an increase of 4.98 per cent (including 1.99 per cent dedicated to adult social care) in this financial year.
Whilst funding from council tax and business rates in recent years has increased, these have been outweighed by reductions in funding from the government grant alongside increases in pay, service delivery prices, the impact of the cost of living and demand pressures.
