Council’s budget gap could have ‘eyewatering’ impact

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Argyll and Bute Council’s forecasted budget gap of at least £4 million could have an ‘eyewatering’ impact on taxes and services according to councillors.

A report for one of the authority’s key committees has revealed that the forecast ‘best case’ scenario for the 2023/24 financial year is a budget gap of more than £4 million. The mid-range scenario has a gap of nearly £7 million.

The situation could worsen with council worker pay awards potentially increasing the figure before the council next sets its budget in February 2023.

At a meeting of the authority’s policy and resources committee on Thursday June 16 Councillor Kieron Green asked an executive director whether the council could face the stark decision between cutting services and raising council tax.

Kirsty Flanagan said the definitive scenario would not be known until the Scottish Government sets its budget in December.

Councillor Green said: ‘It seems to me like we may well be faced with a choice between eye-watering rises in council tax and cuts to services. Is that a fair assessment?’

Ms Flanagan replied: ‘The service concessions have helped, but we have a significant budget gap there which could increase if the pay award is settled at more than what we have budgeted for.

‘So, there could be quite a number of difficult savings to consider, or raising council tax to a level over what we have done in the past. However, we probably will not know that until budget day in December.’

Ms Flanagan had earlier written in a report: ‘When I considered the future funding assumptions as part of the budget in February, I had reflected on the UK Spending Review published in October 2021.

‘The Scottish Parliament Information Centre’s analysis of the UK Budget highlighted that the total (unadjusted) Scottish block grant will increase from £36.7 billion (excluding COVID funding) in 2021/22 to £41.8 billion by 2024/25.

‘However, this is very much front-loaded, with a big real-terms increase in 2022/23 (+7.7 per cent), followed by two years of the Scottish budget declining, slightly, in real terms.

‘While the Treasury’s published ‘block grant’ figures are notoriously difficult to translate into Scottish budget terms, as a significant number of other factors are involved, and it is also not known how the Scottish Government will allocate their block grant to priorities, it still provides some guidance as to future funding prospects.

‘The updated spending envelope figures contained in the spending review show a small increase to the total budget, with local government remaining as flat cash until 2026/27.

‘The government has chosen to prioritise health and social care and social security spending, which received 90 per cent of the increase in the resource spending budget from 2022/23 to 2025/26.’

The council’s deputy leader Councillor Gary Mulvaney  added: ‘I welcome the announcement on service concessions as it changes the budget gap a bit, but the worry is that we have a gap of £3-4million.

‘We also have the big unknown of pay awards. We potentially have two announcements, for rail workers and for health, which are five per cent.

‘My other point is that 90 per cent of the block grant increase is going to health and benefits, and 10 per cent to everything else.’