Leicestershire’s financial situation is ‘frightening’ and ‘tough decisions’ need to be made, warns county council leader

A sobering report into the council’s financial situation shows its budget gap is set to grow by £20million next year.

The council’s budget update was released today (Tuesday) and reveals the gap will grow from £8million to £28million - and could top £140million by 2026.

Council chiefs say the key report shows the authority is in new territory with costs rising at an ‘unprecedented’ rate. They said it is due to global events, rising inflation – which is expected to continue rising – a surge in demand for services and continued impact of Covid.

The nationally agreed pay offer requires the council to find an extra £8million, and every 50p added to the National Living Wage costs it £10million. Officers say inflation is also expected to add another £20million to £30million every year for the next four years.

Service demand is also expected to take a toll on the authority’s finances, with it expected to rise by £18million annually.

Capital costs – for building roads, schools and other one-off projects – could grow by £45m if infrastructure price rises don’t reduce.

Council leader Nick Rushton says residents can expect cuts to frontline services like waste sites, road repairs and adult and children provision.

It comes despite no proposals being made so far, but recommendations by the paper to investigate changes or reductions to areas including gritting, parks, bus subsidies, projects reducing smoking and boosting health, Beaumanor Hall and planned big road schemes.

Mr Rushton said: “Our financial situation is frightening, worse than the years of austerity. We’ve lost £230m a year in spending power since 2010. We’re very lean so it’s not possible to balance the books without impacting front line services. We pride ourselves on doing the best we can with the money we have but we will have to make some tough decisions. Nothing is off the table.

“As the lowest funded county council under the government’s funding system, Leicestershire will always be sensitive to financial shocks. But the challenge currently being faced will put even the best funded local authorities under pressure."

Cabinet member for finance, Lee Breckon, added: “We knew earlier in the year pressure was building, but a perfect storm of global events such as Covid, Russia’s war in Ukraine and the cost of living crisis, plus spiralling service demand, means we now have to look across the board at all services. And this will include things that affect our everyday lives such as road repairs, gritting, big road schemes and waste sites, as well as support for adults and children.

“No one wants to do this - and I’m acutely aware this comes at a time when people are increasingly struggling to make ends meet. Support for people who need it most will be prioritised and we’re continuing to press our MPs and the new government for a better deal for our tax payers and to reform special educational needs and disability support.”

Throughout autumn residents will be invited to shape plans ahead of the council releasing its four-year budget proposals in December.