Highland Council Budget: How it affects you and what to expect in a crunch week for the north
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This week Highland Council will meet to determine its £602 million budget for the upcoming financial year as it wrestles with huge costs, a huge shortfall in funding and huge responsibility to make the right choices.
Actions taken now will be decisive in the coming years, particularly those around adult social care which has been earmarked for major reform – get that wrong and NHS Highland could come under even more severe pressure.
Actions taken now will be decisive in the coming 12 months and years because if planned savings are not reached the budget will not be balanced and other options will have to be developed.
The cost of living crisis and inflation has wreaked enormous damage to the local authority’s finances but there have been warnings for years that major changes were needed – including even stopping some non-statutory services.
Former finance boss Ed Foster said in 2022 that such pressures “will require a wholesale change in the services and service levels the council provides” seem to have come true.
And he was speaking when the local authority was facing a budget gap of £40.9 million, which was larger than had ever been seen – this year the blackhole has ballooned to just over £65 million.
The risks are particularly high around adult social care that is set for major reform – get that wrong and NHS Highland could be placed under unbearable pressure as patients fit for discharge remain in hospital because they lack care packages.
It is not simply a matter of cutting costs or reducing what the council does, some areas require investment to keep future costs under control because failing to fund them can even spark their own crisis.
One such area is roads and there was little to no mention of any additional cash for roads spending so the only agreed amount for the entire region for the entire year was just over £8 million.
After reporting this, the council issued a press release claiming that if councillors agree to accept £1 million more in borrowing charges up to £60 million could be unlocked for capital investment.
For the first time job losses could be on the table too though this is unlikely to happen immediately but the fact remains that the budget refers to efforts being made to avoid compulsory redundancies.
Instead staff numbers will be slimmed down though vacancy management and redeployment – not hiring and offering employees alternative roles – but that goes right to the top team which will go from seven to four.
The risk there is that should the council fail to make some of its planned revenues or savings – and it must operate a balanced budget – then job losses will rise up the agenda.
So what the proposals are will have a spotlight shone on them like never before – can the council really make £1.5 million from a voluntary campervan passport scheme? – because people’s jobs and services are on the line.
Despite the troubled financial situation, there are ambitious proposals contained in the budget, chiefly the creation of a sustainable bus company – the key word sustainable refers as much to reliability as green energy.
If anyone at any level of government seriously wants Highlanders to get out of their cars then reasonable transport links must be provided and for a huge amount of people they are not bad – they simply do not exist.
The major points from Highland Council’s proposed budget for 2024/25 that will be debated and either approved or not on Thursday.
Council Tax
This is simple: Highland Council are proposing accepting the Scottish Government’s offer of cash to freeze the current rate of Council Tax with a sum equivalent to a 4.8 per cent rise. There has been a lot of noise about this nationally but mostly hard pressed households will be glad for this is not another rising bill.
Adult Social Care
The council says the budget “recognises the financial challenges faced in relation to Adult Social Care” and that both the local authority and NHS Highland admits “that continuing to deliver adult services the same way is not sustainable.”
The budget provides £20 million of funding from council reserves to reform the service so that it can make the planned “multi-year £12.6 million saving target”
Roads
There is not one word about increased funding for roads in the budget. So the decision made at the review of infrastructure spending last September would hold – that means just £8 million for the year.
The steady state – making sure roads get neither better nor worse is £20 million at least – so there would be deterioration unless the council changes its mind, which it is hinting at.
Following our reports, the council stated that if members were to accept an additional £1 million a year of loan charges then it would “unlock” £60 million of capital funding, including for roads. This may or may not happen.
Sustainable Bus Transport Model
Perhaps one of the strongest and best proposals to emerge from Highland Council in years. Buses, particularly for the school run have been a perennial issue in the north both for expense and reliability. If the council can emulate Lothian Buses which is owned by Edinburgh City Council then this one could take off.
There is no clarification on the cost or the potential revenues for this proposal but passing at the full council budget meeting would offer it broad support for the future.
Campervan and motorhomes voluntary passport
This is considered a potential £1.5 million revenue generation scheme but it is very difficult to gauge what appetite the public may have for this and so it is a £1.5 million risk to the budget.
It would entail visitors to the Highland voluntarily paying £40 a year as a contribution towards the upkeep of roads in the region, anyone who purchases a “passport” essentially only gets to show a “signal of support for the Highlands an intent to contribute.”
Increasing Fees and Charges
This could prove to be dramatically unpopular – though perhaps it is a necessary step – as it involves highly sensitive issues: bereavement services and school meals. The council is looking at a 4.6 per cent increase which would necessarily hit those least able to afford any additional cost most and worst.
Other areas are also affected such as garden and business waste collections – ultimately the council hopes to save or generate £4.3 million.
Area Discretionary Budgets
Another proposal that could unsettle those passionate about localising spending power because it basically removes huge amounts of cash from local area committees and puts it back in the coffers.
The council wants to retain 10 per cent of the coastal communities funding and ward discretionary budgets, which could save £234,000 while local areas simply would not get targeted funding.
One per cent efficiency target
There will be a one per cent efficient target aimed at saving £3.2 million across all council budgets except those that have their own savings or are exempt – this could entail an impact on staff – more than 130 full time equivalent (FTE) jobs are affected.
The budget states that the one per cent saving target would impact jobs with “a notional 81 FTE impact” – that means 81 FTE positions could go but “where at all possible, compulsory redundancy will be avoided.”
There will also be a corporate management team restructure because “in line with the savings being made by all services, it is anticipated that a proportionate reduction will be made to the senior team” – taking it down from seven to four.
A further 19 staff will be affected by reforming the strategic operating model to tackle a “significant variation in how services are managed” across the region to improve “consistency of oversight due to structural complexity.”
Budget Strategy
Audit Scotland called on Highland Council a number of years ago to make longer-term financial planning decisions which it did and this year’s three-year strategy “central to proposals” are focussed on a budget gap of £113 million.
The council said: “Inflation, interest rates, pay increases, wider economic factors and cost pressures in key areas such as adult social care, have had a direct and significant impact on the council’s financial position.”
Amid budget saving proposals of £54 million and revenue generation ambitions, the local authority claims that “over £100 million of investment will be possible if budget proposals are agreed.”
It outlined how budget saving proposals of £54 million are “underpinned by the need to invest in change to deliver recurring and sustainable cost reduction, income generation, redesign and efficiency savings.”
In an indication of how much more expensive it is for the local authority to operate that “an additional £37 million has been earmarked to meet inflationary and other cost pressures.”
Besides that the council wants to use £32.3 million of its reserves to support and invest in “change and redesign” and a further £1.2 million has also been set aside to build community capacity in the third sector and community groups.
And £6 million could go to property maintenance with £2 million a year funding over three years, met from reserves to service more than 3000 assets including the “school estate and depots” which “are in urgent need of repairs.”
What the council leader says
Leader of the Council Raymond Bremner said: “It has been our priority to protect jobs and services wherever possible, so you will see there is a significant focus on income generation and efficiency.
“Many of these proposals are born out of the suggestions from communities and staff and I am very grateful to everyone who submitted ideas and views and engaged with us over recent months.
“This information has been invaluable to us in preparing our proposals which will have as little impact as possible on essential services and vulnerable groups.
"Many of the proposals would see major improvements, such as generation of green energy and reducing waste, as well as generating more income from tourism.”
