Fife Council: £18m overspend warning – and this is why it could get much worse

Although the local authority has balanced its books without cuts for the last several years, Eileen Rowland, executive finance director, said that may not be possible for the coming year.

“It is a very challenging position,” she said. “We’ve been able to manage over recent years without taking difficult decisions but we’re most definitely in that territory now.”

Ms Rowland presented the latest revenue monitoring report to Cabinet Committee councillors on Thursday morning.

During the meeting, councillors agreed to instruct Fife service directors to “identify plans to mitigate overspends in order to manage within overall service budgets in the current year and ensure strong financial management”.

They were also asked to “note the worsening high-level financial position”.

“We’re asking service directors to identify plans to reduce the level of overspend because we clearly cannot operate from a position where we have this level of overspend,” Ms Rowland said.

Fife Council services are currently predicting an £18.6 million total overspend by the end of the financial year in March.

“The current forecast suggests an overspend in the current year of £16.7 million,” the committee report said. “This is a combined result of service overspends of £18.6 million and an underspend of £1.9 million [in Contingencies].”

Fife’ Health and Social Care Partnership is responsible for more than half of the predicted overspend – by the end of the year, it is expected to be £11 million in the red.

Part of the tab will be picked up by NHS Fife under its partnership arrangement, but the council is expected to be on the hook for nearly £7.2 million. Education services are expecting a £4.5 million overspend; Fife’s Place Directorate is reporting a £3.5 million gap; and the Communities Directorate has forecast overspend of £4.5 million, which is mainly within the children and families service.

Going forward, councillors have dictated that Fife’s executive directors should “identify plans to reduce the level of overspends to within budget”.

“Some services are managing large overspends and actions to minimise or mitigate these should be taken," the report said. “Further control measures will also be considered."

The council is also expecting to see a significant budget gap from the outset of 2025/26.

At this stage, they are a lot of guesswork, but assuming that Holyrood gives Fife the same amount of funding as it did last year – and assuming a 3% council tax increase – Ms Rowland said Fife is looking at a £17 million budget gap for 2025/26, and that could rise to £46 million by 2027/28.

However, those numbers ultimately come down to Fife’s funding package from the Scottish Government, which in turn depends on Holyrood’s funding package from the UK Government in Westminster.

“I think the position is difficult at both levels of government and the level of resource that comes to Scotland from the UK Government will influence the level of funds that is allocated to Local Government from Holyrood,” Ms Rowand said.

SNP group leader David Alexander added: “We kin of know the Scottish Government’s position, and we know how bad that is, but what we don’t know is how much worse things are going to get from the UK Government. That is going to be a big decisive factor here with how bad things are going to get.”

No one will know for sure what the council is facing until the Scottish Government budget is unveiled in early December and the local Government settlement is announced thereafter.

However, Ms Rowland said officers are currently working on budget proposals for the coming year.

“We will share those with political groups towards the end of October,” she said. “That will put groups in a position to come forward with budget proposals to close the budget gap in February.”