Agenda item

The Director of Finance submits a report detailing the proposed Revenue

Budget for 2024/25.

The Director of Finance submitted a report detailing the proposed Revenue Budget for 2024/25.

The Chair directed the Commission to the relevant parts of the document to Culture and Neighbourhoods.

The Head of Finance (CDN) then presented the report.

Key points included:

• The budget was very challenging for the 2024/25 financial year and was the worst outlook that the Council had ever faced.
• Without drastic action, the Council would not be able to balance the budget in the 2025/26 financial year.
• A Section 114 notice would not mean that the Council was bankrupt, as Councils cannot technically go bankrupt.  A Section 114 notice would state that the Council’s resources could not meet its commitments and as such it could mean a freeze on commitments and government interventions.
• Many other Councils were in a similar position to Leicester.
• Whilst not directly linked to Culture and Neighbourhoods, a growth in statutory services had put pressure on the budget, for example, the costs of Adult and Children’s Social Care, pressure on home-to-school transport and the homelessness budget.
• The budget was in a volatile position and there was expected to be a need to add a further £11m to the final budget, largely due to an increase in minimum wage which had raised care costs and homelessness.
• The growth in statutory services and the failure of the government to provide adequate funding had meant it was difficult for local authorities to keep up.  Despite pressures and inflation increasing since 2021, the government had only just announced additional finding for local governments, however, this may only amount to around £3m for Leicester City Council.
• There was £10m of savings in the budget, but this still left a large sum to be met from the reserves.
• A further austerity drive from the government was signalled from 2025-26.  Analysis from the Institute of Fiscal Studies showed that there would be a real-terms cut of 3.4% per year for services other than the NHS, aid and defence.
• The Council approach to budget reductions had been to use a managed reserves strategy, however, the proposed budget would make use of all reserves available.
• Some local authorities had been offered exceptional financial support from the government which in some cases allowed them to use the proceeds from the sale of assets to balance the revenue budget, and in some cases allowed councils to increase their council tax above the 5% permitted.  However, no local authority had been offered extra money.  No exceptional financial support would be offered to Leicester City Council in 24/25 as it was able to balance the budget.

The Committee were invited to ask questions and make comments. Key points included:

• The situation was expected, and it was possible that many services would be cut or lost.  The Council was doing what it could with what it had.
• The Council were doing everything possible to deliver services and statutory duties.  It was noted that people in need of statutory duties such as social care also benefitted from services such as libraries and leisure centres.  Credit was given to officers for their work on preventing a Section 114 notice which would take control of such services away from the Council.
• The information on savings was the impact on the 2024/25 budget of decisions that had already been taken.
• With regard to parks, a number of savings decisions had been made across many areas, including street cleansing and grounds maintenance.  A number of options had been explored in a wide review.  Work had been undertaken on statutory services and discretionary functions.  Parks involved many discretionary functions and many efficiencies had been identified such as removing back-office overheads, consolidating depots which had given a capital receipt to the Council and saved a revenue cost.
• Workforces were shrinking as staff who left the service were not being replaced, however, capacity was being maintained in order to maintain standards and as such there was minimal visible impact to the public due to the work of the team to balance the service.  Capacity was also being maintained by introducing technology to deal with reports from the public, allowing more efficient triage of issues and allowing more targeted work and allowing a quicker response.
• Opportunities were being explored for new income on discretionary services.
• Regulatory services had many statutory functions and where they were delivered above a statutory level, the service looked to deliver them to a statutory level.
• In terms of trading standards, each case was assessed on its own merits.
• In the case of many regulatory services, such as Houses of Multiple Occupation licencing or selective licencing, there was no scope for cutting back as the services needed to be sustained and the budget is ring fenced to the scheme.
• It was requested that a breakdown of which services were impacted by savings and how be produced.
• Reviews of discretionary services would be on-going.  Savings needed for 2025/26 would impact upon all areas of the Council, in some places this would be very significant.
• The allocation of Government grant funding was based on data that was out of date and did not reflect the current pressures on the city.  Issues such as population increase would need to be reflected in the Fair Funding Review in order to produce more equitable funding. It was not clear when the government would conclude this work.

AGREED:

1)    That the elements of the report pertaining to Culture and Neighbourhoods be noted.

2)    That a report how services would be impacted by savings be produced.

3)    That comments made by members of this commission to be taken into account by the lead officers.

4)    That the report be brought to Overview Select Committee prior to Full Council.