Council tax rise is due to 'perfect storm'
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Highland Council's leader believes it is faced with a perfect storm as it aims to address a £49.2 million budget gap.
Councillors will decide on Thursday whether to agree to increase council tax for the 2023/24 financial year by four per cent in a bid to help make ends meet.
The local authority pleaded for its actions to be seen in the context of a highly challenging financial environment with public sector pay claims and very high levels of inflation, coupled with increasing borrowing costs impacting all aspects of council activities.
Council leader Raymond Bremner said: “This is an extremely challenging context for setting a local authority budget. We are faced with a perfect storm of circumstances which have led to a significant budget gap and ongoing pressures and risk impacting on future years.
"While it is imperative we make savings, we need to invest in transformation and that is why our approach is a balance of investment and plugging the gap for the coming year.
“Highland has a great future ahead and the awarding of a green freeport presents a tremendous opportunity to attract inward investment, growth and jobs for our communities. The role of the council will be pivotal in maximising these and other opportunities in the coming years and for this reason, we will need to invest in transformation and future sustainability.
“I will be putting our budget strategy to council on Thursday and asking members across the chamber to support our proposals and work with us to enable financial stability moving forward.”
The council has a number of means of closing the budget gap which can be grouped into three main categories – increasing income, reducing expenditure and using reserves.
It aims to ensure investment in priority activities is maintained – with roads being a particular area of focus – identifying areas where savings can be taken and income maximised, and completing a comprehensive review of reserves to see how these can be used on a short-term basis to smooth the delivery of a balanced budget in the coming year and lay a path for financial sustainability in future years.
The local authority says its proposed council tax rise is "well below inflation rates and among the lowest increase in Scotland" due to the cost-of-living crisis and concerns around affordability for Highland residents.
A spokeswoman said: "The additional income will make up a small, but critical part of the budget gap."
A package of savings measures, income streams, reprioritisation of resources and the continuation of spending controls will deliver savings of £22.195 million. This is one of the highest single-year savings totals the council has ever made, but it is still not enough.
It is also proposed to use non-earmarked reserves to balance the revenue budget for 2023/24 in order to allow time to further redesign, reduce spending and increase income to deliver longer-term sustainability for the council.
A mid-year budget will be planned to address the remaining gap as the use of reserves is a one-off benefit only.
Council convener Bill Lobban said: “We live in unprecedented times and never before have the council finances been under so much pressure.
“Wherever possible we have protected Highland residents and the services they rely on. We have kept council tax rises to the absolute minimum we possibly could and have targeted our finances to ensure any impact on frontline services is minimised.
“This is a budget which, as much as possible protects jobs and services, and has only been made possible due to the sound financial management of both the current and previous administration.”
