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Wednesday, May 22, 2024

Leeds council navigates budget challenges: Taps reserves, receives refunds, but children’s services still under strain

Transport refund also helps plug spending gap

The council is expecting to balance its budget after digging into cash reserves and receiving a multi-million pound refund on transport spending.

Leeds City Council was required to make £58.6m in savings by the end of 2023/24 and announced job losses, building closures and new parking charges.

In February, the authority reported a £36.3m overspend as it struggled with rising costs. But it now expects to have reached a break-even position on it general fund in month 11 of the financial year.

The council’s latest financial report said £14.7m would be used from the Merrion House Reserve.

A spokesperson said: “The Merrion House earmarked reserve was established to fund future unforeseen budget pressures and complements the council’s Strategic Contingency Reserve, which was established for a similar purpose.

“It is therefore an appropriate use of the Merrion House Reserve to fund the 2023/24 projected overspend.

“The current balance on the Merrion House Reserve is £22.3m and after the estimated use of £14.7m in 2023/24, this will leave a balance of  £7.6m for budget pressures which may materialise in future years.”

The council also benefited from a £17.7m refund in unspent transport funding from the West Yorkshire Combined Authority, agreed in October.

The report said that while the overall situation had improved, there was still a £12m shortfall in the required savings, mainly due to rising costs for children’s social care.

Freezes on non-essential spending, recruitment, agency and overtime spend remained in place.

The report said: “Any adverse variation to a balanced budget position at the year-end will require further savings to be identified for 2024/25.”

Councils must balance their annual budgets to avoid having to issue a section 114 notice, effectively declaring themselves bankrupt.

The report added: “This current and future financial climate for local government represents a significant risk to Leeds City Council’s priorities and ambitions.”

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