Fife Council: what are the tough choices facing councillors, and how significant is the budget gap?

Councillors have long known that money troubles are on the horizon. Even as Fife set a balanced budget for the current financial year, Eileen Rowand, executive finance director, has been warning of a £16 million shortfall next year.

She will reinforce that message at next week’s meeting of the Cabinet Committee.

> The national picture

Prime Minister Keir Starmer has said October’s UK budget will be “painful” with “difficult decisions” to be made.

From Holyrood, Scottish First Minister John Swinney has also warned of a bleak picture.

Back in August, as Mr Swinney committed funds to avert the looming bin strikes, he warned that the Scottish government did “not have any spare money sitting about”.

In order to fund the pay increase for Scotland’s lowest paid council workers, Holyrood will need to make approximately £77.5m worth of cuts elsewhere from other budgets and services.

“We will have to make reductions in other programmes to enable this offer to be made because things are so tight and so tough within the public finances,” he stated.

> What does that mean for Fife?

Fife Council has long anticipated a £16 million budget gap for next year (2025/26). However, Ms Rowand is now warning that national challenges could point towards “potential further challenges to local government budgets in the current and future” years.

“There is a great deal of uncertainty for local government funding given the wider economic situation, the continuing effect of inflation, and the unknown scale of future UK and Scottish Government budget decisions,” Ms Rowand’s Cabinet Committee report states.

“Although the Local Government line increased over time, the Scottish Government is facing an overall shortfall, and that shortfall could be partly met from the Local Government outlook.”

> What next?

Going forward, the council is assuming an annual increase of 3% Council Tax. Although Ms Rowand acknowledged that rises are “ultimately a political decision”, she highlighted that each 1% increase would generate approximately £1.9 million in additional income.

In addition, the council could also be looking at “significant change” to balance its books.

“The financial outlook continues to be extremely challenging and significant change will be needed to safeguard the financial sustainability of the council,” Ms Rowand’s report states.

The financial challenge that the council faces in the coming years has increased given there is little scope to close the budget gap using a more corporate approach. Work is continuing to provide a sustainable response to the challenge.”

The report will be discussed on Thursday (September 12). The meeting will be available to view via livestream from the council’s website.