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Covid pressures could lead to 400 Leeds Council job losses by next year, authority warns

Leeds City Council may have to face the biggest test to its services in a generation if no further government help is made available to local authorities, it has been claimed, writes Richard Beecham.

With the authority’s financial shortfall for this year expected to hit £200m amid the Covid-19 crisis, the authority’s top civil servants have warned hundreds of redundancies may have to take place before next year if no further financial help was forthcoming.

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

The council’s chief executive Tom Riordan also hinted that culture and events may have to take a hit, as this was one of the few non-compulsory areas of council spending left to be cut.

Speaking to a virtual press conference this week, Mr Riordan said:

“We are a well-run council that has a track record of making significant savings for the taxpayer. If we are in the position that we are then this is a pretty serious situation for the UK as a whole.

“Up until now, the treasury has recognised the situation councils are in with the first two payments, but the issue now is stabilising council budgets across the country.

“I came into Leeds just after austerity had started in 2010, and was faced with huge reductions in our budget. That is the closest that we have been to this situation, but this is more severe than that, because it’s in-year, it’s a collapse in income and is in an unprecedented situation in terms of the country having to lock down.

“The potential implications are as severe as it gets because we have a statutory duty to balance our budget and to do it on March 31.

“If we anticipate that we can’t balance our budget, we have to take steps to pair our spending right back to the things we just have a legal duty to provide. That would rule out many of the services we provide today, for example the cultural institutions that we fund in the city are non-statutory.

“We would have to take very draconian measures.

“I understand the government is putting together a financial assessment of some sort, and in that time there is the opportunity to stabilise the finances of councils.

“The risk of all I have said is not next year, or the year after, it is this year.”

Victoria Bradshaw, the council’s chief finance officer, outlined the scale of the situation, claiming the overspend position for the current year stood at around £197.6m, of which £61m was made up of losses in council tax and business rates alone. Around £43m in Covid relief grants have been made available from government.

She added the main issue was around the loss of income the authority was facing as a result of Covid-19, and that the authority was talking to government around potential finding and the costs of borrowing. She said:

“If we didn’t get any underwriting or further funding from government, we would be looking at the position of having to have an emergency budget around late August/September time.

“Within those savings proposals, there will be a requirement to reduce staffing numbers for the council, therefore we have had to issue a section 118 notice today. We would maybe have to have compulsory redundancies, although we would do everything within our power to avoid that situation.

“The current gap that we have would result in a reduction of around 415 full time equivalent during the current financial year.”

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. 

Leeds City Council deputy leader Coun James Lewis said that if government is unwilling to help plug the gap, it should ease restrictions on these rules. He said:

“We know we received £43m from the government for our services, but this is a long way short from the £200m we are predicting.

“We would like them to get the £43m of grants up to £200m of grants so that we are not facing this. If that is not possible, we are hoping for some more flexibilities around requirements on councils like us to balance the budget each year.”

Council leader Judith Blake added:

“There has been consternation and extreme disappointment from that very first letter that said we would get the compensation that will enable us to continue doing the work that we do – there has been a significant drawing back of that support.

“It’s exceptionally galling when we have had ministers standing up and repeating how much they value the work we do in local government and how we hold our communities together. Then we are faced with a position where we have to issue S118 notices today.

“What sort of reward would that be for the people who have gone above and beyond to make sure we are safe?

“I hope we can get through to government so they can understand the severity of problems around this sector.”

Detailed reports into the council’s financial situation will be discussed by the authority’s executive board at its meeting to be held online from 1pm on Wednesday 24 June.

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