Balancing the books is becoming increasingly challenging without funding reform, says Leicestershire County Council, as new proposals show a growing financial gap is looming.
Published today (Friday), the council’s latest plan shows the difference between income and expenditure will reach £92m in 2025 meaning that significant savings will be required.
The proposals show that coronavirus has generated around £85m in extra costs and lost income in the current year alone and is likely to impact services, including public transport and adult social care, for years to come.
For the first time in many years, the budget is only balanced for one year. This results from uncertainty surrounding Government funding.
A Council Tax increase of 1.99 per cent is included and equates to £2.25 a month for a band D house.
Government has also confirmed the option of an additional three per cent precept for adult social care that can be deferred over two years, though no decisions have been made as yet to accept this.
The combination of lack of reform, coronavirus and rising demand for services is pushing us very close to the edge.Person:Councillor Byron Rhodes, cabinet member for finance
Growing pressure on services totals £60m alone - including £14m next year – and a lack of reform in key long-standing issues such as special educational needs and disabilities compounds the financial challenge. The lack of clarity on whether the Government’s fair funding review will happen is very disappointing given that we remain in the unenviable position as the lowest funded county in the country.
And although extra funding may be made available to reduce the £92m gap, it’s clear that significant savings will still be required.
Taking tough decisions early has put us in a relatively sound position compared to other councils who are effectively about to run out of money.
And that’s why we’re able to set out a budget that delivers the services residents depend on. Building on what residents told us last year, it focuses on protecting support for vulnerable children and adults, investment in green and environmental projects to take effective action on climate change and carbon reduction, as well as investment in roads and schools to support new homes.
For every one per cent increase in Council Tax, an extra £3.1m is generated to reduce the impact on services.
The £450m four-year capital pot sets out plans for sustainable investment across the county including:
• £70m to improve and maintain existing roads and bridges
• £120m for improving transport infrastructure
• £72m for extra school places, including specialist provision for SEND students
• £25m to boost adult social care accommodation that supports people to live independently
• £23m for recycling and household waste initiatives and specific carbon and energy reduction projects
• £71m to invest in property to generate money for front line services
New homes are needed across Leicestershire and building the roads, schools and other community facilities required will cost many hundreds of millions of pounds over the next 15 years. This means the council must seek to secure Government funding before securing the money back from developers - and in some instances, forward-fund the projects.
The council’s cabinet will discuss the report on Tuesday (15 December) and a consultation, set to run from 16 December to 17 January – watch the meeting online
The final budget proposals will be agreed by the county council at its meeting on 17 February.
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Growing demand for services is expected to increase costs by £60m, including:
• Children and Family Services (£23m) - this is mainly due to pressures on the budget for social care places, which are rising by over 10 per cent a year, and growing social worker caseloads
• Adult Social Care (£13m) - this is largely the result of an ageing population with increasing care needs and a growing number of people with learning disabilities
• Environment and Transport (£4.3m) - this primarily relates to more SEND pupils requiring transport
The £92m savings are made up of:
• £30m of detailed savings – reducing children and family costs by re-shaping how services are delivered, reducing adult social care costs by simplifying processes and speeding up support, bringing together early help and prevention services - and delivering some in-house and reducing disposal costs by recycling and re-using more waste
• A ‘high needs development plan’ which will reduce SEND costs by £26m
• A £36m gap
The capital budget is to invest in infrastructure or buy assets that support service delivery over a number of years.
It’s estimated the savings would lead to a reduction of around 150 full-time equivalent posts over four years although it’s expected the number of compulsory redundancies will be lower, given the scope to manage the position through staff turnover and vacancy control.