Kirklees Council spends £7m over budget as ‘local government finances are in crisis’

Kirklees Council spent more than £7m by the end of the last financial year – and Leader Cllr Cathy Scott says there is “no time for complacency”.

Towards the start of the 2023/24 financial year, the council was projecting a £20.3m overspend on its £380m annual budget, with the threat of effective bankruptcy hanging over the local authority.

A combination of inflation, increased demand for services such as social care and child protection and the cost of living crisis were highlighted as the driving forces behind the council’s financial situation.

Read more: Huddersfield rapist who preyed on boys who got more jail time

A report to this week’s cabinet meeting showed the local authority had overspended by £7.3m by the end of the previous financial year – £13m less than originally forecast – and a balance of reserves of £61.2 million.

Although the council managed to avoid a Section 114 notice last year, difficult decisions had to be made. Non-essential spending and recruitment were frozen, building closures were planned and layoffs were on the cards. Residents also saw the maximum increase applied to their municipal tax bills.

At the meeting, Councilor Scott said it was important to note the positive news in the report, but that the council “still has a long way to go”.

She said: “As the report says, our overspending has come down from £20m at the start of the year to £7.3m at the end of the year. Although this improvement in our bottom line is positive, local government finances are still in crisis.

Read more: ‘Urgent and essential’ plans to restore Kirklees buildings

“Five councils have effectively declared bankruptcy in the last two years and a further 19 have additional government support to bring them back from the brink. Overall, the Local Government Association estimates a £6 billion black hole in council finances over the next two years.

“Increasing demand for essential services such as social care for adults and children is putting pressure on councils like Kirklees – this is clear from the report – demand for home care support for older residents, placements for children in need of vital care and provision of a nursing home. .

“These are just some of the factors that put Kirklees and councils across the country under immense pressure year on year.”

Read more: Sorry state of Kirklees roads revealed as council must find £250m for needed work

Councilor Scott told the meeting that while inflation had slowed, costs were still “much higher” than anticipated, with the effects of the cost of living crisis still being felt. The councilor also said Kirklees “remains underfunded” compared to other local authorities, putting further pressure on council budgets.

She said: “That is why this council has taken decisive action to reduce the costs of transforming services. This action was successful in stabilizing our position. Not every board can say that.

“This is not the time for complacency. Those with underlying pressures, particularly social care, will continue to put pressure on our budgets. We must maintain our focus on good financial management and continue to be open with our residents about the challenges.”

Get all the latest and breaking news from Yorkshire via Sign up for our newsletter here.