Bradford Council’s reserves are “close to exhaustion” and at “a historic low” – a new financial report has revealed.
A report into the first three months of the current financial year predicts that the Council is likely to overspend its budget by over £13m by April.
And the figure could be higher if the Bradford Children’s Trust, which runs Children’s Services but is funded by the Council, is not able to balance its books.
One reason given for the strained budget in the coming year is the fact that the Council expects income from bus lane fines to plummet as several city centre streets that have bus lanes are pedestrianised.
The first quarter financial report going before the Council’s Executive on Thursday says the Council is forecast to overspend its budget by 3 per cent in the coming financial year.
It adds: “Key issues include demand and cost pressures in adult social care and home to school transport, on-going high levels of inflation and increases in costs such as the national pay award.”
To balance the budget, the Council may need to dip into its reserve funds – as it has in recent years.
But the report notes the desperate state of the authority’s current reserves.
In the financial year 2020/21 reserves stood at £256.5m.
By April this had fallen to £118.2m, with the Council using reserves to plug budget gaps.
A further £50m of reserves will be drawn down in this year to balance the 2023-24 budget.
The report going before Executive on Thursday says: “The impact will be that Council reserves will reduce to £68m, which will be an historic low.
“The Council has managed its reserves prudently however acute on-going financial pressures have left reserves close to exhaustion and reliance upon them is unsustainable.”
In recent meetings Conservative Councillor Mike Pollard (Baildon) has warned that the Council has little chance of balancing its budget in future years if it keeps relying on the dwindling reserves.
Responsibility of Children’s Services moved from Bradford Council to a new Children’s Trust in April. Bradford Council still fund’s this trust however.
Referring to the Trust’s budget, the report says: “The Trust will submit a detailed business plan in September, and a forecast will be reflected in the Quater 2 Finance Position Statement.
“The Trust is not consequently included in the headline Council forecast, however, should a variance transpire after the Trust has exhausted all other mitigations/ alternative funding sources, the Council would have to find an equivalent amount to fund that variance under the terms of the contract.”
Among the budget pressures listed in the report are
An extra £2.5m to deal with the “increased demand for home to school transport, and increased use of costly single occupancy taxi transport”
A £3.7m forecast overspend due to an expectation that the 2023-24 pay award for Council staff will be higher than budgeted. (Expected to be 6.3 per cent vs the 4 per cent the Council had budgeted.
An extra £2m pressure on the Department of Place due to the “forecast underachievement of bus lane revenues; Markets income, and planning fees.”
The report says the drop in bus lane fines will be due to “the introduction of pedestrianised zones within the city centre.” Next week work to transform areas of the city centre will begin, and include the pedestrianisation of a section of Hall Ings and Market Street.
The report says there is likely to be £800,000 less income than budgeted from planning fee income due to “a decreasing number of planning applications and low numbers of major applications.”
Referring to the predicted overspend, Council Leader Cllr Susan Hinchcliffe, said: “The top 10 per cent of England’s most deprived councils have dealt with cuts almost three times as high as the richest 10 per cent, providing yet more evidence of deepening inequalities and regional disparities, with Bradford having 28 per cent cuts relative to Surrey at 8 per cent.
“Bradford Council has worked hard to manage these cuts as best we can whilst trying to protect services and this is reflected in data compiled by the Local Government Association nationally, that demonstrates that apart from Children’s Social Care related services, all Bradford Council services are either at or below benchmark spend levels in comparison to other similar Councils.
“We will continue to work on mitigating actions to reduce financial pressures and, along with other councils, are continuing to call on government to recognise and remedy the inequity in the Local Government finance system that has caused disproportionate pressure on Councils like Bradford.”
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