Leeds City Council Deputy Leader sets out the scale of financial challenges facing the council and local authority sector

The report, discussed today 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 main pressures being faced include:

• Increases in the number of children looked after due to more children with more significant needs requiring care, along with significant increases in the cost of these placements through private providers, resulting in an average cost of external residential placements of £350,000 per year per placement.

• Continued rising demand pressures within adult social care for older people showing an increased cost of £600,000 to date this year.

• Demand for support for adults with learning disabilities and those with mental health needs continuing to rise sharply.

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.

Despite the financial challenge, the council remains committed to the Best City Ambition for Leeds to be a welcoming city with a strong economy offering opportunities for all, tackling poverty and inequality through the key pillars of health and wellbeing, inclusive growth and zero carbon.

This ambition will be delivered through a continuation of the ‘Team Leeds’ approach, working strategically with partners, stakeholders and communities to maximise all available resources across the city. It recognises the strengths and opportunities in the city for Leeds to be a place that prioritises people, partners and businesses working together to achieve a shared vision.

To see the council’s medium term financial strategy report visit Council and democracy (leeds.gov.uk) - agenda item 14.

Notes to editors:

Seven councils in England have issued section 114 notices since February 2018 as a result of being unable to achieve a balanced budget.   

The LGA’s survey of local councils on their financial positions undertaken in December 2023 can be seen at Section 114 fear for almost 1 in 5 council leaders and chief executives after cashless Autumn Statement | Local Government Association

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