Leeds council coffers were ‘inadequate’ to combat Covid crisis, auditors claim

Watch more of our videos on Shots! 
and live on Freeview channel 276
Visit Shots! now
Financial experts have warned Leeds City Council that it was not adequately prepared for the Covid-19 pandemic, compared with other large UK local authorities.

A draft audit report into the council’s accounts by finance firm Grant Thornton said the amount of money in the authority’s general reserves fund was not substantial enough to take on extra costs associated with coronavirus.

But, during a meeting of the council’s Audit Committee, one councillor suggested building up such reserves would have meant taking funding away from vital front-line services, adding that nobody could have predicted such a “peacetime disaster” as Covid-19.

Hide Ad
Hide Ad

The draft report went before the committee a meeting this week, during which it was remarked that the council had managed to decrease its costs significantly during the pandemic.

Auditors claim Leeds City Council wasn't financially prepared for Covid.Auditors claim Leeds City Council wasn't financially prepared for Covid.
Auditors claim Leeds City Council wasn't financially prepared for Covid.

Speaking to council members, Grant Thornton’s Perminder Sethi said: “Covid-19 is a significant risk that has impacted on our work and the operations of the authority.

“When Covid hit, the impact was principally on the 20/21 and 21/22 (budgets). The council, in March/April time, felt it could manage its position for 21/22, but its ability to manage the position for 20/21 was limited.

“You did undertake a range of measures – expenditure controls, stopping recruitment and reducing costs wherever you could to try and bring that budget gap down. By November they had brought that down to £30.5m, and you felt the gap was now sufficient that you could manage that position yourselves.

Hide Ad
Hide Ad

“Based on that, we felt you didn’t have sufficient general reserves and your arrangements were not sufficiently robust to manage the position and hence the ‘except for value for money’ conclusion we are proposing.

“Compare Leeds with other core cities. Leeds has one of the lowest general fund reserves of core cities.”

He added that the council’s arrangements for Brexit were “satisfactory” and that they found no issues around ethics.

The draft report states Leeds City Council’s general reserves – effectively its rainy day fund – stood at £31.5m at 31 March 2020.

Hide Ad
Hide Ad

Coun Paul Truswell (Lab) responded: “I raised this issue some time ago, and I don’t recall that the concern about the reserve position was expressed in such strident terms, and I did not get the impression that we should be losing sleep about it.

“It is pretty stark, and to describe Covid as a major event is, I think, to downplay it – all of us would accept Covid has been an unprecedented and protracted peacetime disaster of an enormity that we have never, ever witnessed before in local government.

“It could only have been anticipated by our officers and leadership gazing into a crystal ball, and/or diverting resources away from frontline services in the anticipation that we might be struck down by it.

“I do think the council is being found guilty with hindsight for not making preparations for this disaster.”

Hide Ad
Hide Ad

Gareth Mills, speaking on behalf of Grant Thornton, said: “We have highlighted that if it hadn’t been for Covid, things would have been sufficiently manageable in the year.

“We know action had been taken to build up reserves in 19/20. I think the impact of Covid in Leeds has been significant, and that terminology around weaknesses in levels of reserves, it is audit-speak in terms of how we describe the conclusion.

“While Covid has impacted on all local authorities, the impact at Leeds, proportionately, has been greater than what we have seen in others. I think a lot of that comes back to the starting point in the reserves being more challenging than the majority of other local authorities around the country.”

The report stated: “Overall, if Covid-19 had not taken place, the Council’s financial position would have continued to be sufficiently stable to manage the financial impact of small unforeseen events as in previous years, however, the financial impact of Covid-19 has been significant and highlights the inadequacy of the Council’s General Fund Reserves and balances to cushion the impact of major events, requiring the council to take a range of unplanned and short term measures to manage the additional costs.”