Skip to content

City council fears looming budget crisis

Published on Monday, October 18, 2021

City Hall

LEICESTER City Council is facing the prospect of huge budget cuts within 18 months, big council tax rises – or both – it was announced today.

City Mayor Peter Soulsby said: “For the last two years, we have been in the dark about the Government’s plans for funding local authorities. As things become clearer, it is obvious that the Government wants to rein in public spending. While some public services will be protected, I fear that once again local authorities will be bottom of the pile.”

The city council has been forced to make massive budget reductions since 2010 due to Government austerity, while also having to make more money available for social care.  This has meant that budgets for other services – such as parks, libraries, children’s centres and street cleaning – have been cut by around half after inflation.

The independent Institute of Fiscal Studies has demonstrated that deprived areas such as Leicester were particularly badly hit by the Government’s cuts.

The City Mayor has written to the Secretary of State Michael Gove, to express his concerns about the effect cuts will have on levelling up, and to ask for support. It is also felt that recent announcements on adult social care will worsen the council’s budget pressures.

Peter Soulsby explained: “It is essential that the Government recognises the position deprived local authorities are in when the new funding settlement is prepared.

“The Government’s reforms to social care are welcome and long overdue. Councils have been promised money to pay for these reforms, including more support for the workforce and limits to the amounts people will have to pay for their own care. But none of the extra money will be available to help councils address the growing numbers of people needing care and the cost of that care.”

He added: “The public are being asked to pay more national insurance and people will rightly expect that this will result in a properly funded social care system. Alas, it won’t. The Government is suggesting that costs of growing numbers of older people needing care could be met from council tax – in our case, this would mean adding 13% to next year’s bills (£170 on a band B property).”

Alison Greenhill, chief operating officer at Leicester City Council, said: “At present, we have had no announcement about Government funding for Leicester, but indications are that we can expect severe problems.

“We believe we will have twelve months to overhaul our finances if the Government does what we fear. Previously, the Government has only allowed us to add 5% to tax bills. They have suggested that they will allow more next year, which would give councillors a very difficult choice between high tax rises or big cuts to services.

“In the meantime, I have asked directors to help identify £40m worth of potential savings which could be implemented from 2023 if the worst comes to the worst.”

The Government’s Comprehensive Spending Review will provide total spending figures for local government in aggregate, for the next three years. It is due to be published on Wednesday 27 October.

As yet, there is no confirmed date when Leicester’s figures will be announced. It is usually late November/early December.

The Government plans to increase national insurance which will be specifically for social care and the NHS. Over the next 3 years, most of the money will go to the NHS with £5.4bn available for reforms to the social care system.

A one per cent council tax rise would raise £1.3m for the council.