By Graham Brown

A NEAR-£30 MILLION black hole in Angus Council’s finances could open up in a worst-case scenario over the next five years.

The massive shortfall is the top-line figure in an uncompromising assessment of the unprecedented medium-term financial abyss the authority could be sitting on the edge of and, even with the most rose-tinted fiscal spectacles on, the council’s top officers say the optimistic outcome will be an £11.5 million funding gap which itself will bring a “major culture shock” for the area.

They have delivered a clear warning that service cuts may be inevitable in 2010-14, but make no apology for the blunt portrayal of the testing times ahead and say that a “wait and see” philosophy would be an irresponsible approach that may lead the financially-prudent authority into the disastrous situation other Scots councils are struggling with.

Chief executive David Sawers delivered the medium-term financial strategy report to the final full council meeting before the summer recess and although elected members noted it almost without comment, the severity of the message in the 50-page paper will not have been lost on them.

Within its pages were a trio of 2010-14 funding gap projections based on a range of sensitivity testing calculations.

The optimistic view predicts a shortfall of £11.5 million, a situation requiring 5.5% departmental budget savings.

In the base projection midpoint the figure of £19.2 million would require 9.3% savings, whilst the warning of a £27.4 million “pessimistic view” position equates to a 13.2% departmental budget figure.

“Angus Council has a proven track record in financial management and currently sits in a fairly strong and stable financial position,” said the chief executive.

“It is, however, essential that the council commence planning for the difficult times which are ahead so that finance remain strong and so that it can protect service provision as far as possible.

“There is accordingly now a need for the council to have a clear financial strategy for the medium term which sets out the financial challenges which it will face and also begins to map out how the council may meet those challenges through efficiency reviews and cost reduction strategies.”

Mr Sawers continued, “Based on assumptions made the revenue budget financial projections clearly indicate that significant cost savings will need to be made in future years.

“In order that some of these savings can be made with least impact on service delivery it is essential that the council continue to deliver an effective programme of efficiency reviews.”

The report said the “challenge of finding further significant efficiency savings should also not be underestimated given the efficiencies which Angus Council has already driven out of its services and budgets.

Mr Sawers said, “However, if services are to be protected as much as possible, then efficiency savings will be an increasingly important part of the council’s business in the next few years.”

Areas highlighted in the report ranged from and public transport costs to the county’s developing demographic and what was described as the “major concern” of older peoples’ services.

Within the sub-headings was an early warning that the authority’s 5000-plus staff may come under pay freeze pressures.

The range of projections assume pay awards of 1.5-2% over the period, with teachers’ and chief officers’ for 2010/11 already agreed at 2.4% and 2.5%.

“Pressure from government on public sector pay and concerns about affordability could, however, bring pressures for pay freezes or minimal awards being applied,” the report continued.

“The financial projections work included in the financial strategy is the most detailed attempt at such an exercise as has been undertaken during the life of Angus Council.”

Mr Sawers added, “Notwithstanding the need to use the projections with caution they do provide a broad indication of the serious financial challenges which Angus Council faces over the next few years.”

Th document says, “Under the pessimistic assessment the council could be faced with a cumulative funding gap between costs and incomes of as much as £27.4 million in the period to 2013-14.

“There is no prospect of this level of finding gap being met without service provision being affected but by undertaking an ambitious programme of efficiency reviews and planning well ahead on how departmental budgets will be made it is hoped that the effects on service provision of these financial difficulties can be mitigated.

“The contrast between spending growth and policy development in the recent past with the prospects for public spending in the next few years could not be more stark and this will be a major culture shock to politicians, policy-makers and stakeholders alike.

“In Angus the council will need to be clearer than ever about its policy priorities and be prepared to stop providing some services as well as curtailing others.”