Leicester City Council’s financial situation has deteriorated.
Leicester City Council is suffering financial challenges, which are expected to increase over the next few years.
The authority expects to exceed its budget by £12.7 million in fiscal year 2023/24, owing mostly to overspending in various departments totaling around £17 million.
Although the £12.7m overspend can be covered by departmental reserves this year, these reserves are not a long-term solution for a bright financial picture.
Nearly £10 million of the overspending is related to education and children’s services.
Specifically, £9.2 million is likely to be spent on children’s well-being, owing to higher-than-forecast increases in placement expenses.
Another £4.9m excess is predicted in the city development and neighborhood budget, owing mostly to the pressing issue of homelessness, which is a major national concern.
Around £3 million of this increased expenditure is due to spending on temporary housing in the city, and this strain is expected to continue.
Furthermore, this year’s budget is set to rise by £2.2 million due to a higher-than-planned wage increase for council employees.
The budget for this year was adopted in February, with considerable council tax hikes for Leicester households and a dependence on central reserves to preserve financial balance.
Using these reserves allowed the council to avoid “crisis cuts” to key services, as described by the city mayor, Sir Peter Soulsby.
The council warned that using about £34 million of the available £55 million reserves will deplete the money in the middle of the fiscal year 2024/25.
They have discovered some cuts that will relieve the pressure on reserves by around £2.8 million this year.
According to officials, this matter will be considered at the next budget planning meeting.
