Still no sign of government rescue cash as Leeds council faces emergency budget

Top civil servants and decision-makers in the city warned this week that the council faced unprecedented financial trouble due to increased costs and loss of income resulting from the lockdown.

The authority has so far received £43.7m from the government to help cover extra Covid-19-related costs, but it claims this only partially fixes a predicted £200m shortfall, most of which resulted from lost income over the last few months.

Now the Local Government Association and local MPs have added their voice to calls for extra cash to be made available for councils, with Leeds Northwest MP Alex Sobel claiming he will pressure government on the issue in Parliament.

The Ministry for Housing, Communities and Local Government (MHCLG) stopped short of committing extra cash for local authorities, instead claiming that it was working on a plan to help local authorities with their “financial stability”.

An MHCLG spokesperson said: “We’re giving councils an unprecedented package of support, including £3.2bn emergency funding, to tackle the pressures they have told us they’re facing.

“Leeds City Council has received a total of over £43m of emergency funding to tackle the pressures they have told us they’re facing while their core spending power rose by more than £35m overall this financial year even before the additional funding was announced.

“We will continue to work closely with councils as they support their communities through this national emergency and we are working on a comprehensive plan to ensure councils’ financial sustainability over the coming year.”

During a press conference this week, the council’s chief executive, Tom Riordan, warned “draconian” cuts may have to take place in the Autumn if further financial aid from government was not made available soon.

While he stopped short of confirming which areas of its work would be affected, it was claimed this could mean a loss of more than 400 full-time equivalent jobs.

Leeds Northwest MP Alex Sobel said: “The Government have given councils £3.2 billion to support councils. However, this translates as only £43.7 million for Leeds leaving our city with a black hole of £154.6 million.

“The Local Government Association (LGA) estimated that a further £6 billion was needed to support councils across the country in this year alone. Without this, the council will be forced again to find cuts to services—which after 10 years of austerity will hit hard everyone with a stake in our city.

“I will be doing what I can in Parliament to press the Government to make good on their commitment to tackle the harm caused by coronavirus.

“Our residents and businesses need a financially viable council to ensure our recovery and protect public health. Never has there been a time where local government matters more.”

Leeds East MP Richard Burgon said: “The Conservative government took the political choice to make Leeds City Council – and therefore our communities here in Leeds – pay the price for the 2008 bankers’ crisis.

“The Tories’ decade of unnecessary austerity saw government funding to Leeds City Council cut by more than half. Hot on the heels of this comes the huge financial impact of the coronavirus crisis.

“The government has a moral obligation to provide the support the people of Leeds need and deserve by assisting our council through this incredibly challenging time. Anything less than this would be a further show of Conservative contempt for local government and for communities here in Leeds.”

Unlike other branches of the public sector, such as the NHS, councils are legally required to balance their budgets each year, meaning any unexpected costs faced by local authorities have to be resolved before the end of the tax year.

The LGA claimed it was standing by a statement it released last month, which stated: ” Without certainty of further funding and flexibility around budget setting, the LGA said many councils will have to take measures in anticipation of future funding shortfalls. This could mean in-year cuts to vital local services that are supporting communities through this crisis and the national effort to beat this deadly disease.

“The LGA wants to work with government to ensure a package of measures are put in place to address funding pressures and provide the certainty councils need to keep responding fully to the COVID-19 emergency and help prepare for the recovery. This is also vital as they look to meet their legal obligation to balance their budgets each year.”