Highland Council redundancies risk due to massive £46 million to £70 million budget gap
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FURTHER redundancies and even the spectre of local authority bankruptcy have been discussed by Highland councillors as they seek to tackle a budget blackhole amounting to tens of millions of pounds.
At last week’s full council meeting members came face to face with the sheer size of the cuts that would need to be made to day-to-day revenue budget spending to address an estimated £46 million to £70 million gap for this year alone.
Projections suggest that, up to 2028, that shortfall could soar as high as £153.9 million in a worst case scenario or £127 million in a mid-case scenario.
At best, it was reported, the shortfall could still reach £102.4 million.
And that is on top of the £223 million gap in the council’s capital (infrastructure) budget already reported, which saw 10 schools building projects across the Highlands effectively parked for the foreseeable future.
The revenue and capital budgets are inextricably linked as the cost of financing loan charges for the latter comes from the former – and one reason the schools cannot go ahead is the loan costs.
The council blamed pay settlements, inflation, energy and infrastructure costs as well as higher interest rates for the current situation.
In February the council said it would be sticking to a no redundancies policy.
Last week, however, opposition leader Councillor Alasdair Christie said: “If you look at the mid-case scenario, and if you take the three years in there, that comes to £108 million down.
“You don’t close a £108 million gap without severe loss of personnel.
“We are not going to get renewable energy benefits kicking in by then and we are not going to get transient visitor levy (tourist tax) revenue to kick in fully by then.
“So we are in very difficult, challenging times – the gap is almost insurmountable.”
Referring to the recent fates of both Birmingham City Council and Northamptonshire County Council south of the border, he added: “It is only a question of time before an authority in Scotland goes bankrupt.”
Council leader Raymond Bremner warned that savings and service reductions aimed at closing the budget gap would “yet again be unprecedented”.
He said: “The level of gap into future years continues to be significant and a multi-year approach was needed in order that the council will achieve a financially sustainable position.
“As elected members, we all want to invest as much as we possibly can in our schools and infrastructure.
“With the current financial position that continues to prevail, the council isn’t able to afford everything it would like to do.
“What we have agreed to do is allocate finance to areas where we need to spend money until future funding becomes more readily available.”
Of the rollback on school building commitments, he added: “The council remains totally committed to building the named schools, but, as has been the case to date, this is contingent on funding being made available from the Scottish Government.
“We will continue to progress these projects as far as the council can to ensure that they are deliverable should Scottish Government funding be forthcoming.
“Reserves are limited and can’t simply replace the need for sustainable and recurring funding solutions.
“They need to be carefully managed and help us in the budget process, allowing more time for the delivery of necessary cost reductions and transformative change to achieve financial sustainability. But this needs to be done on a clear and planned basis, while ensuring the council maintains an appropriate and prudent level of reserves going forward.”
