Leicestershire County Council's budget gap is set to grow from £8million to £28million next year – and could even top £140million by 2026 - as the 'dire' financial situation affecting local authorities intensifies.

Ashby-based County Council leader Nick Rushton described the current financial situation as 'frightening'.

Published today (Tuesday), a key report says that the council is in new territory and explains that global events, rising inflation – expected to continue to rise despite recent interventions - surging demand for services and the continued impact of Covid, mean costs are increasing at an unprecedented rate.

It reveals that the nationally agreed pay offer alone requires the council to find an extra £8million, whilst every 50p added to the National Living Wage costs over £10milli0on.

Inflation is also expected to add another £20-to-£30million every year for the next four. 

Service demand is unrelenting, says the report, and expected to go up by £18million every year, excluding the impact of inflation.

Capital costs – for building roads, schools and other one-off projects – could grow by £45m if infrastructure price rises don't reverse.

County Hall in Glenfield

Although there are no proposals at this stage, the paper illustrates the challenge ahead by providing an initial list of potential areas to investigate for possible service changes or reductions.

This includes gritting, parks, bus subsidies, projects reducing smoking and boosting health, Beaumanor Hall and planned big road schemes.

Cllr Rushton said: "Our financial situation is frightening, worse than the years of austerity. 

"We've lost £230million a year in spending power since 2010.

"We're very lean so it's not possible to balance the books without impacting front line services.

"We pride ourselves on doing the best we can with the money we have but we will have to make some tough decisions.

"Nothing is off the table.

"As the lowest funded county council under the Government's funding system, Leicestershire will always be sensitive to financial shocks. But the challenge currently being faced will put even the best funded local authorities under pressure."

Cabinet member for finance, Lee Breckon, added: "We knew earlier in the year pressure was building, but a perfect storm of global events such as Covid, Russia's war in Ukraine and the cost of living crisis, plus spiralling service demand, means we now have to look across the board at all services.

Leicestershire County Council leader Nick Rushton

"And this will include things that affect our everyday lives such as road repairs, gritting, big road schemes and waste sites, as well as support for adults and children.

"No one wants to do this - and I'm acutely aware this comes at a time when people are increasingly struggling to make ends meet.

"Support for people who need it most will be prioritised and we're continuing to press our MPs and the new Government for a better deal for our tax payers and to reform special educational needs and disability support." 

A one per cent rise in Council Tax generates £3.6million – councils are allowed to increase rates by 1.99 per cent without holding a referendum.

The budget update is due to be discussed by the council's cabinet this Friday (23 September) – watch online HERE.

Over the autumn, residents are set to be asked to help shape plans – more information about how people can comment will be available later this month.

The council will publish its four-year budget proposals in December.