Angus Council’s finance chief has delivered a stark warning local services are under threat if its budget gap continues to widen.
The authority is looking at a near £5m overspend this year.
And that is before the massive financial impact of Storm Babet is fully known.
There is little Christmas cheer in director Ian Lorimer’s budget forecast to councillors when they meet on Thursday for the last time in 2023.
He warns that unless Scottish Government support climbs in line with inflation then Angus residents are in for a shock.
Mr Lorimer says it’s the result of a “broken system” for funding local government.
Bleak forecast
Earlier this month, the finance director set out the projected £4.97m overspend on the authority’s £320m budget.
It includes a £2m-plus deficit around waste management.
That is the result of a double whammy of lower income and increased costs.
Councillors recently approved major changes to Angus bin collections to try to balance the books.
However, three-year forecasts lay bare the scale of the fiscal challenge facing the council.
And there is no change in the pessimistic scenario of a near £60m black hole between now and 2027.
Even the best case projection – requiring budget savings of more than 12% – will leave Angus £37m short.
Grant questions
Mr Lorimer adds: “It is important to remember the projected funding gaps are best estimates rather than facts and the position would be much less severe if Scottish Government grant funding for existing service provision were to rise in line with inflation.
“However, if the budget position being projected is what happens in practice over the next three years I must advise members that I cannot currently see how it will be possible to make further savings on the scale required whilst continuing to fulfil all of the council’s many statutory duties by the end of that three-year period.”
And he warns the picture is only likely to worsen when the full extent of Storm Babet’s impact on the council coffers becomes clearer.
“Only a very small element of that overspend is associated with Storm Babet – most of it is due to demand and inflationary pressures within budgets.
“In the absence of other options it would be necessary to use the council’s corporate contingency allocation within reserves (£5m) to meet such an overspend.
“The contingency would however need to be replenished as part of the 2024/25 budget setting.”
Radical change required
He adds: “The current system of local government services and funding is an unsustainable model – a broken system.
“This points towards a need for radical changes in how the money needed to provide council services is raised through national and local taxation as well as through local service charges.
“Ultimately there is a need to have a system which better matches the funding available to the scope of services to be provided and how they can be provided.
“At present councils are being asked to do too much with too little resources to the point some areas are at the point of crisis and much of our core infrastructure is in managed decline.
“The medium term budget strategy should leave councillors and members of the public in no doubt about the severity of the challenges the council faces in the years ahead.”
Scottish Government challenges
Last week First Minister Humza Yousaf and his cabinet met to discuss “options” for the upcoming Scottish budget.
The Scottish Government is said to be facing a £1 billion funding gap and SNP ministers branded the UK Chancellor’s recent autumn statement as the “worst case scenario.”
Deputy First Minister and finance secretary Shona Robison is due to unveil the tax and spending plans for next year to MSPs on December 19.
While the budget will include a freeze in council tax for all Scots, no details have yet been revealed of how much money will be given to councils to compensate them for the freeze.
But on Tuesday Ms Robison said she had been forced to make “tough decisions” on spending up until the end of the financial year.
It includes £391.4 million in resource savings and £288.9 million in capital.
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