Leicester City Council Averts Section 114 Notice Amidst Savings Drive

Leicester City Council’s mayor, Sir Peter Soulsby, has announced that the council is now in a position to balance its finances for the upcoming three-year period. Nevertheless, Sir Peter cautioned that the authority must still identify annual savings of £20 million, a situation he characterized as “painful.” Sir Peter explained that a singular transfer of funds from capital to revenue budgets, facilitated by flexibility in central government budget rules, would contribute to the city’s financial stability. Consequently, the council will avoid issuing a section 114 effective bankruptcy notice, unlike Birmingham and Nottingham, which have done so in recent years due to their inability to balance their finances. Among this year’s proposed measures is a maximum 4.99% increase in council tax, setting the charge for a Band D property at £2,020.85 starting in April. The authority also intends to implement reductions in council tax support, potentially impacting 13,500 households negatively, also effective from April. Proposed actions include reductions in capital spending, which is allocated for enhancing council assets, alongside the sale of land and buildings and the identification of additional cuts in service expenditures. Furthermore, borrowing to address a shortfall in capital spending is projected to increase annual budget pressures by £5 million. The city council has articulated how a “decade of austerity between 2010 and 2020” has fundamentally altered its structure. According to the most recent budget documents, services excluding social care have already seen a 53% real-term reduction, and 2,000 positions, including one-third of senior management roles, have been eliminated during that period. This situation leaves limited scope for further reductions; however, the council has enumerated services it offers that are considered “above and beyond what others do,” such as local libraries, community centres, its concert hall De Montfort Hall, museums, and council-operated leisure centres. Soulsby stated that the current government is “talking sensibly with us, is listening to us.” He acknowledged that the repercussions of austerity cannot be rectified immediately. “That’s why we’re looking now to buy some time to make sure we don’t go over the cliff edge,” he remarked. The council anticipates receiving preliminary information regarding central government funding for the upcoming financial year within the next fortnight. Following this, the budget can be finalized and presented for approval at a full council meeting scheduled for next February.