Fife Council’s reserves are set to be “wiped out” by the cost of settling historic equal pay claims – and it will still need to find millions more to meet the final bill.
The final settlement is still the subject of ongoing negotiations between the council, unions and other employee representatives.
However, it is likely the overall cost will be in excess of £50m.
With uncommitted balances at the end of this financial year (March 31) projected to be £33m, that leaves the council short by around £20m.
This latest financial blow comes on top of a greater than expected reduction in the council’s government grant, as announced by John Swinney, cabinet secretary for finance, in his budget statement last month.
Council leader David Ross said this meant there was now a need to make an additional £17m in savings next year, on top of already planned savings of £21m, and a total of £91m in savings over the next three years.
He stressed this would have “significant impact” on services and jobs.
And speaking at a council meeting earlier this week, Eileen Rowand, head of revenue and shared services, warned: “We are facing a very difficult time.
“The scale of the budget gap for the next three years, and an increase in the reduction in the grant, means it is going to be very challenging to set a budget for next year.”
In terms of the shortfall in meeting the cost settling equal pay claims, the council’s finance team is formulating a “specific funding strategy”.
Spending commitments of £6.2m on wind power projects and £5m relating to reforming Fife’s public services could be scrapped.
There has also been a review of all temporary investments that are not legally committed.
And Cllr Ross has written to Mr Swinney asking him to recognise the acute financial position facing the council and seeking consent to borrow funds to help meet the claims – although permission to do so is by no means certain to be granted.
Cllr Ross said: “The cost of settling the equal pay claims will wipe out all uncommitted balances, but we are not allowed to borrow money to pay for this.
“Previously such consent was available, but this expired two years ago.
“I have written to John Swinney asking if he can explore the possibility of consent being granted, although I understand it’s a matter that would have to be raised with the UK Treasury.”