'Significant' service cuts in county expected as council's budget shortfall bites harder
Residents might soon have to 'pay more for less' in the face of Leicestershire County Council's “dire” financial position. The Conservative-run local authority has long been among the worst-funded in the country, and has already had to cut £262 million from its spending on services since 2010 to keep itself afloat.
But it has warned in a new report that its position is getting increasingly "challenging", and that measures would need to be taken in the near future to help balance the books. Local authorities are legally bound to balance their books every year or file a Section 114 notice – essentially declaring themselves bankrupt.
The county council is expecting a £33 million budget gap next financial year, documents show, but council officers said that that “pales to insignificance” when they look further ahead. They are predicting a £100 million gap that will have to be closed by 2028/29 – almost one fifth of the authority's current budget.
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This is a problem the council “will not be able to resolve [...] on its own”, officers said. They added: “Either expectations of what can be delivered will have to reduce or new funding found.”
Without changes around local government funding and councils' responsibilities to deliver certain services, officers warned, “it will not be possible to balance the council’s financial position without impacting on front line service delivery”. The county council will also “need to give serious consideration to further council tax increases”, they said. No information has yet been released publicly about which services could be cut and by how much.
Officers said: “The medium- to long-term financial position remains dire, and an initial estimate of the challenge is that the current projected gap of £83m will rise above £100m. Whilst this forecast will undoubtedly change, the scale of the challenge is highly unlikely to diminish to the point that the county council would not need to take significant corrective action.”
Much of the financial pressure for the authority is coming from its responsibilities towards children and young people, documents state. It is predicting around a £23 million overspend on special needs education, in part because it is supporting more pupils in this bracket than it was expecting. This demand is expected to continue to increase, and creates a “significant and unresolved financial risk” for the authority, the council said.
The costs of children's social care placements has also increased due to higher demand, documents show. The council was expecting to be looking after 86 children by March next year when it set this year’s budget, but officers now predict that to be 112 children.
However, increased costs for children are offset somewhat by lower-than-anticipated spending in adult social care services. This is primarily down to fewer service users, the authority said. There is currently an underspend of around £12.7 million in the department.
Capital spending – money that is spent on infrastructure projects – is also under pressure. Officers have said there is “no room for additional schemes” in the coming years’ budget unless they are “invest to save” - which means that spending money on them now would enable savings to be made later - are related to assets needed for essential service delivery and which are at the end of their life, or are fully funded by external sources.
The council said one of its key projects, the Melton Mowbray Distributor Road scheme, was proving more expensive than expected, due to a need to carry out archaeological work, poor weather leading to flooding and unstable ground. The council had held an extra £11.6 million in reserve for the £127.7 million scheme, but has now said that that money would likely need to be used on the project, and that costs could go over that by another £6 million. Officers said the authority was working with the contractor to attempt to reduce the overspend.
The authority is also looking to sell or lease land it was planning to see developed into a huge solar farm, saying it had "not been able to get comfortable" with the financial "risks" associated with proceeding with the scheme itself. The decision has thrown the future use of the land into doubt, with officers saying they “hoped” that whoever took on the site would go ahead with the solar farm project, but adding that other options might “need to be considered”.
The update on the council’s financial position was presented at its cabinet meeting last week. Speaking at the meeting, councillors said they needed clarity from the new Government over funding going forwards.
Lead member for resources Lee Breckon said: “We need a clear roadmap of plans to allow all upper tier authorities to plan and deliver our services. […] We cannot deliver services such as social care, improve roads and public health services and improve bus services without the right funding to those departments. We still need fair funding.”