Leicestershire County Council has warned that the challenge of balancing its medium-term financial strategy (MTFS) is “much more significant” than it has been in the past.
A report by Chris Tambini, director of corporate resources at the council, outlined that despite Leicestershire’s 2023/27 MTFS being balanced for 2023/24, it is predicted that there will be a budget shortfall of £13m in 2024/25, which will rise to £88m by 2026/27.
He detailed that the predicted position is after planned MTFS savings of £62m, which includes £25m from the Dedicated Schools Grant (DSG).
“The level of uncertainty in the MTFS continues to remain much higher than it was pre-Covid and the scale of the challenge faced to balance the MTFS by 2026/27 is much more significant than has been the case in the past,” Tambini said.
Funding uncertainty
In the report, Tambini highlighted that the implementation of the fair funding review and the 75% business rates retention scheme have both been postponed until at least April 2025, which contributes further to the high level of financial uncertainty.
“Although it is hoped that the county council should receive more funding as a result of the fair funding review, there is no certainty of this, especially given the wider economic pressures. Therefore, the MTFS does not include any provision for any additional funding,” he said.
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Tambini also stated that the MTFS doesn’t include any provision for a “funding floor”, as the outcome of discussions with the chancellor and the Department for Levelling Up, Housing and Communities on the subject is still pending.
Leicestershire County Council leads the cross-party group of the lowest funded authorities, known as the F20, which has campaigned for the government to introduce a “funding floor” to “quickly bring the least well-resourced local authorities up to a respectable level”.
In the report, which is to be presented to the council’s cabinet on 26 May, Tambini stated that the county council has a programme of savings under development to help close the predicted budget shortfall in the MTFS.
Earlier this week, Tambini also told Room151 that he is to leave Leicestershire County Council at the end of May after having spent 22 years at the authority in different roles.
Kingston’s £32m shortfall
Similar to Leicestershire County Council, Kingston Council also reported last week that as a result of “significant and unprecedented” financial pressures the authority’s MTFS predicts a budget gap of £32m to 2025/26.
A report outlined that alongside the financial pressures caused by the pandemic, there are several risks that the council has to continue to manage over the medium term, such as pressure on the DSG, soaring inflation and potential volatility of income streams under the business rates retention finance system.
The report stated: “The extent to which the increasing rate of inflation, rising energy costs and the ‘cost of living crisis’ has adversely impacted on the economy of Kingston and its residents remains uncertain, although it is likely to significantly increase the council’s budget requirements.
“Therefore, the full knock-on impact this will have on council services remains undetermined at this point.”
Monitoring of the council’s 2023/27 MTFS will continue, the report noted, reflecting the “significant and unprecedented pressures”.
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