Looming council shake up already denting Leicestershire budgets by £30m

Government plans to shake up the structure of local authorities by abolishing district and borough councils across the country are up for consultation, with decisions set to be finalised this summer.

In anticipation of the news, councils across Leicestershire are collectively putting aside £29,735,000 to pay for the transition, according to this year’s host of new budgets.

No money is expected from central government, which ordered the reshuffle.

Officers anticipate costs will arise from streamlining services, investing in new IT, and managing the programme.

Paying for staff redundancies is also forecast, with nearly £7m in redundancy costs expected for the county council if ministers accept their vision for a single authority for Leicestershire and Rutland.

The council making the biggest provision for LGR costs is Leicester City Council, which is reserving a “prudent” £14m for the transition.

Its proposal would split Leicestershire into two councils, with one running an expanded city area and the other running the county around it.

They say if this vision is accepted, the one-off transition cost will be repaid within two years, with £46m saved across both councils yearly for the first four years.

Alternatively, in a vision proposed by the county’s district and borough councils, £44m could be saved annually if the government chooses three new councils: North, City, and South.

Backing this plan is Oadby & Wigston Borough Council, whose councillors are expected to approve a reserve of just over £1m.

Teresa Neal, strategic director at the borough council, said: “Local Government Reform is being driven by national Government, with one of the key arguments being the long‑term savings it will deliver. The North, City, South proposal, backed by the district and borough councils, anticipates £44 million in savings each year.

“To achieve these savings, there will inevitably be transitional costs across all councils – including senior‑level redundancies, the need to streamline and merge services, and the integration of different IT systems, among other changes.

“While these upfront costs are relatively small compared to the £40‑plus million in annual savings expected, they are still significant.

“All councils will need to contribute to this and we’re planning ahead by steadily setting reserves aside over the next few years, in a way that will have no negative impact on services.”

Across Leicestershire, LGR savings pots ranged from £250,000 to £14m, with the lowest amount set aside by Melton Borough Council and Hinckley and Bosworth Borough Council (HBBC).

A spokesperson from HBBC said: “The Government’s Local Government Reorganisation programme is being imposed on all councils. While this council does not believe the current system is broken, it is now required to deliver a complex and costly reorganisation while continuing to provide day‑to‑day services for residents.

“A draft budget of £250,000 has been set aside so that it is available if required for significant one-off transition costs such as ICT integration, workforce harmonisation, and service aggregation across the councils involved.”

Leicestershire County Council is set to discuss a supplementary budget next week that would make provision for £10m of LGR costs, with North West Leicestershire Council putting aside £2m and Harborough District Council £1m.

Blaby District Council, which says that “future financial burden remains uncertain”, have reserved £700,000 and Charnwood Borough Council (CBC) has put aside £500,000.

While redundancies are forecast for some council officer roles across the county, part of CBC’s funds will go towards creating a new senior role – the Director of Transformation, Strategy and Performance.

A CBC spokesperson said: “The Government’s Local Government Reorganisation programme has placed additional demands on councils, and this demand is expected to grow as bringing together large organisations which deliver public services is highly complex and challenging.

“Therefore, we are allocating funding to ensure we can deliver reorganisation without impacting any existing services.

“The funding will be used to create additional staffing capacity through creating a senior management role.

“It could also be used to bring in temporary additional support, but no decisions have been taken on this yet. This is about ensuring the budget is available should it be required.”

Councils said the reserves will not mean making cuts to any current services, with some even creating a separate pot of money to ensure business as usual once the shake-up has happened.

Residents have until Thursday, March 26, to share their comments on their preferred LGR approach with the government.