'Dire' picture of Leicestershire County Council finances as funding gap expected to exceed £100m

Leicestershire County Council’s funding gap could exceed £100 million by the 2027/28 financial year, officers have said.

The county council has long warned that, without more money, it will be faced with no choice but to keep cutting services and increasing taxes.

Now, it is warning that even those measures might not be enough to plug the hole in its finances. Previous predictions for spending this year are now thought to have been £8.9 million too low, with the main pressure points on spending being adult social care and children’s services.

Next year, funding is not going to keep up with spending if both remain at current levels, with the gap already sat at £13 million, said a council report. This figure comes despite £17 million of savings having already been identified by the authority.

Council officers have said it is “concerning” and “unusual” that more savings need to be found for next year this close to the standard autumn “refresh” of spending plans. Councils are legally obliged to present a balanced budget each year.

Even this challenge “pales into insignificance”, however, compared to that which is likely to be faced fours years down the line, officers have warned. The financial hole could “realistically exceed” £100 million by 2027. This is equivalent of roughly one fifth of the council’s annual spending power.

A report submitted to the council’s cabinet meeting last week said “significantly more savings” would need to be added when the council reviewed its financial plan for the next four years – known as a Medium Term Financial Strategy (MTFS) – this autumn. However, officers warned that whatever additional savings are agreed now would be “insufficient to address the financial challenges ahead”.

There are also questions over where those savings can be made. Since 2010, the council, which is responsible for services such as education, highways, social care, waste sites and keeping the street lights on, has already made £250 million of cuts.

It will “not be possible to to balance the council’s financial position without affecting front line service delivery”, the officers’ report stated. Focus will be on options around cheaper provision, increased “efficiencies”, increased income and reduced demand, it added. However, work will “also need to involve looking at service reductions across all service areas”.

“Any non-statutory services, or those where service levels are above statutory minimum levels, will need to be considered for reduction or for being stopped following appropriate consultation being undertaken,” the report added. Earlier this year, the county council carried out a consultation into dimming street lighting throughout the county in a bid to cut costs.

There will also be no new spending on infrastructure projects unless the schemes are considered “invest to save”, or relate to assets needed for essential services but which are at the end of their life, or are fully funded from external sources.

The council has long been calling for “fairer funding” from the Government. The Conservative-run authority is among the worst funded councils in the country. It said it was continuing to press the Government on the issue. However, the report stated that officers did not expect changes to funding levels until after a general election.