Leeds Council digs into cash reserves to balance budget following sweeping cuts

Leeds City Council was required to make £58.6m in savings by the end of 2023/24 and announced job losses, building closures and new parking charges.

In February, the authority reported a £36.3m overspend as it struggled with rising costs. But it now expects to have reached a break-even position on its general fund in month 11 of the financial year.£58.6m

The council’s latest financial report said £14.7m would be used from the Merrion House Reserve.

A spokesperson said: “The Merrion House earmarked reserve was established to fund future unforeseen budget pressures and complements the council’s Strategic Contingency Reserve, which was established for a similar purpose.

“It is therefore an appropriate use of the Merrion House Reserve to fund the 2023/24 projected overspend.

“The current balance on the Merrion House Reserve is £22.3m and after the estimated use of £14.7m in 2023/24, this will leave a balance of £7.6m for budget pressures which may materialise in future years.”

The council also benefited from a £17.7m refund in unspent transport funding from the West Yorkshire Combined Authority, agreed in October.

The report said that while the overall situation had improved, there was still a £12m shortfall in the required savings, mainly due to rising costs for children’s social care.

Freezes on non-essential spending, recruitment, agency and overtime spend remained in place.

The report said: “Any adverse variation to a balanced budget position at the year-end will require further savings to be identified for 2024/25.”

Councils must balance their annual budgets to avoid having to issue a section 114 notice, effectively declaring themselves bankrupt.

The report added: “This current and future financial climate for local government represents a significant risk to Leeds City Council’s priorities and ambitions.”