Forecasts reveal the budget gap is set to rise to £77m
Financial forecasts have revealed Fife Council’s massive budget gap could be wider than had been anticipated earlier this year.
A wide-ranging package of £29m worth of savings had been expected to reduce the gap to £62m.
But the latest report from Brian Livingston, the Council’s executive director of finance and resources, has revealed the gap is likely to be £77.2m by 2017/18 – £15m more than previous estimates.
Despite cuts made earlier this year, increasing costs and rising demand for services have wiped out half of the expected savings.
And there’s a renewed warning that continuing the existing level of services is not sustainable.
Mr Livingston told members of the Council’s executive committee: “Against a background of a real terms reduction in resources, the Council is facing increasing demand for services, rising customer expectations and cost increases that combine to exert upward pressure on the Council’s expenditure, resulting in a significant and increasing potential budget gap.”
He reported that the Council’s grant from the Scottish Government had been £2m less than expected.
He has also revised budget figures for the provision of inflation, mainly in relation to pay and energy costs.
And he’s updated demographic and cost trend pressures, mainly due to increasing demand for social work services, particularly in relation to caring for the elderly and vulnerable children.
Mr Livingston stressed his latest forecasts could be influenced by factors outwith the Council’s control.
“There are clear risks and uncertainties regarding future projections and their underlying assumptions, particularly over the longer term where external factors and political policies can change.
“As far as Scotland is concerned, the biggest risk/uncertainty is the outcome of the independence referendum and the impact that would have on Scotland’s finances, and in particular those of local government.”
However, he highlighted the view of the Accounts Commission that “irrespective of the outcome of the 2014 referendum on Scottish independence, pressure on finances will remain”.
He added: “Those leading and managing public services will face increasingly difficult choices about how to spend the money that is available. Making best use of that money is paramount.”
A draft budget, outlining potential areas for savings, is expected to be published by the Council’s administration at the end of October.
This will go out for consultation before the budget is set in February next year.
The Council has to find a way to shift towards early intervention and preventative spend, to reduce demand on services in the future.
But trying to do that while still meeting current demands is easier said than done.
Leader insists council tax freeze adds to difficulties
Fife Council leader David Ross has vowed to continue to work to find solutions to reduce the budget gap.
He said was extremely frustrated when he first saw the revised figures of the budget gap, especially considering the efforts made to reduce the deficit.
But he also insisted the efforts of the Council to balance the books were being hindered by the council tax freeze.
Cllr Ross said: “None of us came into local government to make the kind of cuts in services we are being asked to make here.
“We made £29m worth of savings and had reduced the budget gap to £62m. Now we’re being told that due to revisions in income, in terms of a reduction of £2m from the Scottish Government, and updated demographic and cost pressures, we’re now facing a gap of £77m.
“That means half of the saving we made in the budget has been wiped out.”
He continued: “The administration is taking this extremely seriously and we are working daily on budget proposals, and we would welcome any proposals or suggestions from the other political groups.”
Cllr Ross stressed a lot of good work was being done.
Hundreds of apprenticeships were being created for young people, more houses were being built to provide people with decent homes, and significant investment was being made in early years to give youngsters a better start in life – all initiatives designed to reduce reliance on Council service in the future.
But he insisted the council tax freeze was adding to the financial difficulties.
“I know it is popular, but it is a myth that it is fully funded.
“The £70m from the Scottish Government for freezing the council tax – of which we received £4.6m – could have been given to local government anyway.
“Inflation increases in council tax could have brought in £30m to the Council. That would have wiped out half our deficit.”
Council can’t go on as before
Cllr Peter Grant (SNP)
“We’ve got to change the way we do things. Move away from the Council will look after people, to the Council will make sure people get looked after. Being a caring society doesn’t mean that the Council has to do everything, but it does mean that everything that needs to get done, gets done.”
Cllr Andrew Rodger (IND)
“Despite the cuts in funding, we still have a statutory responsibility to continue some level of services, particularly in health and social care.”
Cllr Tim Brett (Lib Dem)
“We are being asked to do the impossible here.”
Cllr Kay Morrison (Labour)
“Figures showing the widening gap between costs and revenue are very sobering. It makes us focus on the need for change and the need to do things differently. There should be more focus on early intervention and prevention.”