The City Council met: How Leipzig is now being hit hard by ever-rising social welfare expenditure

On 2 September, late in the evening, the City Council also voted on a proposal in which the Social Affairs Department reported unplanned additional expenditure of around 50 million euros, which the city can now only finance through new cash advances – in other words, debt. And the debate on the matter took a bizarre turn, at times descending into the gutter and even becoming completely out of touch with reality. This is despite the fact that Leipzig is now having to foot the bill for the spiralling costs resulting from the reforms that the federal government, in particular, has failed to implement for years. The demographic hammer is striking relentlessly.

Agenda Item 19.1

The German media are all too keen to blame this on the ‘baby boomers’. As if to suggest that they somehow brought this predicament upon themselves through their own misguided personal behaviour. Which is, of course, nonsense. The boomers aren’t in charge. In Germany, that role has been played for years by the ‘top politicians’, primarily from the CDU/CSU and the SPD. And – as Green Party city councillor Katharina Krefft is right to point out – it is exactly the same as with the climate crisis: it has been known for decades that this would happen.

One federal government after another could have reformed the German social security system and ensured that, in financially better times, the state made provisions for the day when the baby boomers would gradually retire and more and more elderly people would require long-term care.https://vg06.met.vgwort.de/na/9628fa97722045849e8fc2ec26923945

And they become a burden on the state because their meagre pensions, following paltry working incomes, are simply not enough to pay for increasingly expensive care places. And it is pensioners in eastern Germany in particular who are ‘blessed’ with these inadequate pensions, as SPD city councillor Pia Heine highlighted on 2 September.

The imbalance that is now throwing Leipzig’s budget – and others – so far off course could have been calculated decades ago. Instead, the Union thought in exactly the same way all those years as Leipzig CDU city councillor Lucas Schopphoven, who justified the CDU parliamentary group’s rejection of the proposal by arguing that the German welfare state was no longer financially viable. As if this headlong rush into debt were, of all things, the fault of precisely those people who are now dependent on urgent support from the state. Take, for example, care assistance, where the social services department has to step in when those in need of care simply do not have the money to pay for their care place.

Demographics are taking their toll

And it is precisely these figures that are spiralling out of control with such demographic force, as Dr Martina Münch, Councillor for Social Affairs, explained in her opening speech: in this area alone, costs rose by 23 million euros above the budget forecast. Behind this – as Pia Heine noted – lies an 8 per cent increase in the number of care cases. Leipzig is now feeling the full financial brunt of the fact that tens of thousands of citizens never built up a truly sustainable pension that could have covered the costs of old age. And they certainly haven’t accumulated any assets from which care places could have been financed.

And it goes on. Because even today, over 30,000 households in Leipzig are still destitute and rely on social security benefits as a joint household. How on earth are they supposed to build up savings for their old age?

And once again: Katharina Krefft is right. German finance ministers have known all this for over 30 years. And no one – absolutely no one – has made provisions.

418 million euros uncovered

As for the completely misguided arguments put forward by BSW city councillor Eric Recke, there is no need to comment on them here. He simply cited everything that the BSW despises anyway as the cause of the financial difficulties. According to him, climate and geopolitics are to blame for the situation, not to mention energy and transport policy. His speech certainly did not demonstrate any engagement with Leipzig’s financial situation.

The Left are looking into this much more closely; for the past year, they have been bombarding the finance councillor with questions about just how big the gap actually is between the city’s expenditure on mandatory social services mandated by the federal government and the funds actually transferred by the federal government. An initial interim report has now been issued by the social affairs department.

According to this, the shortfall – which the city must cover out of its own pocket – amounts to at least 418 million euros, as Volker Külow gathered from the latest response from the Finance Department
. That is not all. Finance Councillor Torsten Bonew intends to provide a full breakdown in the autumn.

But it is already becoming apparent that Leipzig’s additional expenditure in the social sector will continue to rise in 2027 and 2028. And anything that the federal government, in particular, does not pay for will then have to be financed through cash-flow loans.

A dilemma that has given the AfD
group pause for thought this time round. What would happen if the City Council were to reject the proposal? In that case, according to Mayor Burkhard Jung
, he would have to lodge an objection. The Saxon Municipal Code obliges the Mayor to submit such additional borrowing to the city council. And Jung said he could see no other way of finding the approximately 50 million euros from somewhere. Nor did any parliamentary group propose such an alternative on 2 September.

Silence at federal level

But what about his efforts within the German Association of Cities to halt this undesirable trend at federal level? According to Jung, these efforts have failed time and again for the past 20 years. The federal government is blocking progress. And in doing so, it is making the problem ever worse. Martina Münch also hinted at this, forecasting a further rise in social spending for 2027 and 2028 and an even wider gap between actual expenditure and the funds allocated by the federal government.

The outcome after a rather confusing discussion?

With a heavy heart, the majority of the council approved the proposal for additional borrowing by 40 votes to 12, with 11 councillors abstaining. And the nagging question remains: will this year’s figure remain at the 48.5 million euros determined by the Social Affairs Department on 30 June? Or will there be yet another meeting at which such a substantial sum will have to be approved once more?