Dundee City Council has cited wage rises as a major factor in the need to cut £45 million from its budget.
A report agreed at the authority’s policy and resources committee on Monday revealed the huge figure would likely need to be slashed by the 2027/28 financial year.
Finance officials describe it as a “best estimate” but warn it could rise as high as £74 million.
Wage rises set to cost council
The most significant driver of the bleak forecast is due to the expected pay increase offered to council workers earlier this month.
The offer was made to put a stop to strikes among refuse workers and school support staff in Dundee and other areas in Scotland.
It amounts to around half of the estimated total rise in costs.
The £45 million in savings would account for almost 11% of the council’s net revenue budget for 2022/23.
Factors including soaring inflation, spiralling energy prices and the pound’s record low against the dollar were also identified as major contributors and mean the council’s finances now hinge on rough calculations.
The projection was part of the medium-term-financial strategy brought before the committee.
Councillors agreed to back the objectives of the budgeting strategy but Labour and SNP members disagreed on where the burden of blame sits.
‘Best estimate at the moment’
Councillor Daniel Coleman asked: “There are projections on energy costs to 2026/27. Are officers confident, given the volatile situation, that these going forward to 2026/27 will be robust?”
Robert Emmott, executive director of the council’s corporate services replied: “It’s our best estimate on what we’ve got at the moment…we’ve singled out energy because it is one of the areas where there is a greater risk that the figures will change.
“As we move towards setting the budget in February, we should get increased certainty as we bring things together and we’ll come back and give you updates as that goes.”
‘Increased cost of borrowing’
The report states that inflation rises will impact “pay settlements” and “increase the cost of new borrowing for the capital plan.”
This indicates that costs of any new building developments in Dundee would likely be impacted.
Additionally the report continues: “COSLA is working with the Scottish Government to develop a framework which will provide flexibility for councils to exercise local flexibility to raise revenues.”
But the text continues that the plan “does not include any assumptions that additional revenues will be generated.”
‘Savage cuts predicted’
Kevin Keenan, Labour councillor for Strathmartine put forward an amendment to the report asking that the council’s chief executive write to the Scottish Government “for a financial settlement for local government”.
This, Mr Keenan added would be to “off-set the need for savage cuts that this report predicts would be required.”
Another from SNP councillor for North East Willie Sawers stated: “(This is) caused by 12 years of austerity economics imposed on Scotland against our will, exacerbated by Brexit, by a right wing Conservative government that Scotland never voted for.”
This amendment was agreed after a vote.
SNP council leader, John Alexander said: “It’s safe to say that all of the assumptions are based upon best estimates, projections and information that’s provided by national bodies.
“It’s fair to say that officers are making their best assumptions that is possible at this point in time.”
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