Highland Council's financial crisis is so dire a 'fundamental reassessment' of its 'role in providing public services' and its 'capacity to do so' is needed as the local authority leader Raymond Bremner warns 'we will be faced with tough decisions'
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Highland Council has declared that it is in a financial crisis so severe that it will have to reassess not just what services it provides and its role in providing them but even if it can deliver them at all.
The effect of budget shortfalls on the local authority is so large that officers and members are openly talking about some of the biggest changes since its inception in 1995.
The local authority has made the depth of the problem explicit in a paper titled Financial Crisis – Our Council and Our Communities which estimates it will be in the red by more than £9 million this year – a figure expected to quadruple to over £40 million by next year.
The paper states: “Over a ‘normal’ five-year period the council might expect to have to deliver £75 million to £100 million of budget savings or additional income generation in order to balance its budget.
“Current circumstances suggest the gap for the next five years could be significantly higher, so large that a fundamental reassessment of the role of the council in providing public services, and its capacity to do so, is required.”
In terms of what has put the council in this position it blames massively increased costs in almost every area including food, energy and fuel costs along with national pay hikes and landfill taxes.
The summary of the £40.9 million gap based on a flat cash grant from the Scottish Government – no increase from the previous year – assesses that non-pay cost increases will hit at least £20 million.
But deals struck after industrial action have taken their toll too, as this year’s unfunded pay rise for council workers is worth £5 million and next year’s (assumed 3.5 per cent) and increments will cost £15.9 million.
Though it is impossible to specifically say what will be faced next year, an estimate of “sizeable budget pressures” makes it clear that the following are all areas of concern: increased cost of bus contracts; utility cost increases; increased care home provision costs; rising interest rates affecting loans charges; indexation clauses on existing contracts; and general food and fuel costs. There could also be more taxes to pay for landfill or business rates; running and operating costs for new buildings/facilities; recurring Covid budget pressures; and recurring budget pressures.
Council leader Raymond Bremner said: “This is one of the toughest times that our communities of the Highlands will have been facing in many years. As a local authority, we are not alone in facing a financial crisis.
“Every local authority is facing the same challenge and that’s something that all our communities are seeing around us in terms of the prices that we are paying at the shops; the fuel that we are putting in our vehicles and the cost of energy at our workplaces and at home.
“Those cost increase challenges are also affecting the council where we are seeing increased costs and financial challenges in all sectors. This affects the delivery of the services that our communities want.
“We really need to do all we can to protect as many jobs and services as possible and to do that we need to save money by being more efficient and finding ways for the council to increase its income.
“However, greater efficiencies and increased income are only part of the mitigation of the financial challenges we face.
“It goes without saying that we will be faced with tough decisions to make in where the council can reduce its spending and any impact that will have on the service levels we provide.
“That means we need to watch every pound we spend and make sure it supports those who most need it at the same time as delivering value for money.”
