‘Worst of both worlds’ with council tax rise AND cuts to services in Leicester
People in Leicester have been warned to expect the ‘worst of both worlds’ next year with a council tax hike but also cuts to services.
The city council has produced what it describes as a ‘stop-gap’ budget which it says will avoid the need for crisis cuts for a year but only by plugging an anticipated gap in its funding with £20.2 million from reserves.
At the same time the authority plans to increase its share of the precept by the five per cent maximum allowable by the Government cap.
That means the bill for a Band D property in the city will increase to £1,694.92 for the year from April 1.
Leicester mayor Sir Peter Soulsby told LeicestershireLive the coronavirus pandemic has had a huge impact on the income the council generates itself through charges like parking while its grants from the Government have been falling year after year.
He said: “It has been a very difficult year but we have been able to produce a budget that will get us through the next 12 months.
“That is only possible because we have been managing our budgets carefully for 10 years putting money into reserves.
“That means we are not at the crisis point some other authorities are arriving at.
“However you can only take from reserves once and there is much uncertainty about our resources in the future.
“This year we can manage things but there will be the worst of both worlds – higher council tax bills but still less money to spend on services beyond children’s and adult social care.”
He added: “ Our difficulties have been compounded by the coronavirus pandemic.
“We have worked hard to support businesses and vulnerable residents during this time, and do not know how much we will still need to spend. Nor do we know what spending cuts the Government will make in future to repay the extra debt it has incurred. When this is all over, I greatly fear a damaging new round of austerity.”
Sir Peter added: “We set out to make minimal changes this year. We are only able to do this because of the firm action we have taken to make savings in the past.
“This is enabling us to weather the Covid storm without crisis cuts.”
The council says extra £10 million will need to be found to meet the rising costs of adult social care.
The Government is expected to provide an additional £2 million and has allowed councils to increase council tax by up to five per cent, with three per cent ringfenced to help meet the shortfall in the social care budget.
Some £10 million has been set aside for one-off costs associated with the pandemic in 2021/22. This is likely to include income losses which are expected to persist, particularly car parking, sports and De Montfort Hall.
The Government will make some grant funding available to local authorities for costs in 2021/22, but at this stage the council says it has no way of knowing whether this will be sufficient.
Sir Peter said: “We obviously want to provide properly for the growing numbers of older people needing social care.
“The Government should be fully funding these extra costs, not passing the buck to local taxpayers.
“Even when the extra three per cent tax is taken into account, we are still well short of £10million. I hope that we will now start to see progress on the long-delayed reform of social care funding which the Government has promised for next year”
Council director of finance Alison Greenhill added: “The legacy of the pandemic will have a major impact on what the council needs to provide in the future, and how we provide it.
“It is too soon to look at this sensibly while we are still subject to restrictions and uncertainty, and the budget is a temporary measure until we can properly plan for 2022.
“We are fortunate in having savings from earlier years that we can use to balance the budget, and give us time to review what we need to do.
“My expectation is that we will also face a number of years of spending cuts which we will need to plan for.”
The final council tax bills going out next year will also include sums to pay for policing and the fire service.