Kirklees Council £34.3m overspend: Heated discussion as the council outlines its financial position

At a meeting of the council’s corporate scrutiny panel on Monday, January 16, finance director Eamonn Croston provided an update on the council’s finances.

As was reported in November last year, the council has a £34.3m overspend for this financial year. This equates to almost 10 per cent of the council’s £335m budget.

Mr Croston explained that through the measures put in place such as recruitment freezes and mothballing certain buildings across the borough, the council believes it can save £4m. He added that the council hopes to exceed that target though he was unable to give certain figures due to a number of unknown factors.

The remaining £30m would be paid off with the council’s reserves. Coun Paul Davies (Labour, Holme Valley South) described this as a “significant burn” on the council’s backup funds.

He said: “If we recall, not so long ago, we were having conversations about the fact that we had too much reserves and that we should be spending them. Now, we are having to, unfortunately, use reserves in line with government expectation because government has been very clear that councils should be using their reserves to meet some of these demands.

“However, that’s not sustainable going forward and certainly, for next financial year, there has to be tougher cost-saving approaches taken next year in order to meet our budget gap for next year.

“For this year what we’ve tried to do is to try and make sure that balance of preserving the level of services in an extremely difficult time for our citizens with cost savings and the additional use of reserves to make sure that we have that balanced budget and that we’ve actually set a foundation for the work going forward in the next financial year in terms of ensuring there’s already initiatives and work taking place that we’ve built on for next financial year.”

The council’s financial position was said to be heavily influenced by the cost of living crisis, rising energy costs, and the inflation of wages with council staff having an average wage increase of 7.6 per cent compared to the 2 per cent increase anticipated by the council.

On Monday, December 19, the government announced an approximately 9.2 per cent national cash increase for local authorities with Kirklees receiving slightly more than the national average at 9.6 per cent. This will add around £34m to its £335m budget.

Coun Tyler Hawkins (Labour, Dalton) spoke of the financial difficulties felt by the council and said: “I want the message to be loud and clear to the public that this is affecting everyone.

“Every local authority from Kirklees to Kensington has been affected by the challenges we’re facing. We’re all in the same boat, it’s just at the minute the boat feels a bit like the Titanic.”

Coun John Taylor (Con, Kirkburton) felt that the council wasn’t ambitious enough with its target to save £4m and felt disappointed that the council could have acted faster when faced with financial difficulties.

He said: “I’m going to express my disappointment if I’m honest. We’ve known since September. My expectation would be that we’d move much faster and harder because the longer you allow things to run in the long term it has an adverse impact both on the financial position of the council put also the financial position of our residents because the only way we can recoup our reserves, in reality, is by collecting more council tax.

“If we had from September recognised there was a red light flashing here and taken some of these actions that we’re talking about taking now much quicker, more swiftly. If we’d reacted in the same way we reacted as we did during the pandemic where we pivoted very quickly, our staff were superb at the way in which they adapted and worked in different ways.

“But we haven’t done that this time and we’ve taken far too long and now we’re a month and a half before the year ends and you still can’t really tell me exactly how much we think we’re going to save this year and that for me is disappointing. I think we need to look at why we haven’t reacted in the same way as we did during the pandemic – at speed, at pace, taking the decisions we need to take.”

The Coun added: “You can only spend reserves once, they take a long time to build up but they get spent very quickly.”

In response, Coun Davies said: “That’s an opinion. It’s certainly not as far as I’m concerned, one based on fact. There’s been a huge amount of work and certainly, in terms of the directorates, they’ve responded very quickly and the amount of effort that’s been taking place to put together plans which are balanced, which do achieve savings, which do put in place the foundations for further savings for the next financial year has certainly been rigorous.

“The other thing I would say is I absolutely agree with you – once you spend reserves, those reserves are gone. Again, I’ll just recall conversations and discussions in the town hall not so long ago when the Conservative party were telling us that we have far too high a level of reserves and we should be spending it, so you can’t have it both ways. You can’t say a little bit previously you should be spending them and now safeguarding our reserves and I understand those are political points but I think both of us are making those political opinions.”