Latest Public Sector News

31.08.18

Biggest UK council defers spending and recruitment to handle ‘serious’ looming deficit

The geographically largest local authority in the UK will be forced to defer non-essential spending, accelerate savings and cut back further on staff recruitment in order to tackle an urgent projected deficit.

In papers submitted to its Corporate Resources Committee this week, Highland Council—which serves a third of the land area of Scotland—revealed a plan to reduce expenditure in face of an expected overspend of £5.1m.

To make matters worse, the council’s reserves, at around £8m, are “well below the minimum level” recommended by Audit Scotland. Budget leader Cllr Alister Mackinnon stressed that it is vital this money isn’t depleted further by a year-end deficit.

“Services need to work within their budgets and the measures set out are designed to ensure that this happens,” she added. “I am confident however that we can deliver an improved situation by addressing the issues thoroughly now.

“We must remember that, although this is a serious issue which must be corrected urgently, this is 1% variance on our budget and it is common to expect a small deviation early in the financial year. We are not alone – all Scottish councils are facing financial problems.”

The local authority’s leader, Margaret Davidson, said the biggest area of concern is around children’s services, particularly looked-after children accommodated out of Highland. “A plan to bring some of the children back to the Highlands and to improve the outcomes for these children needs to be accelerated,” she urged. “We need to simultaneously be more efficient and make the best decisions for some of our most vulnerable children.”

In the report submitted to the council’s committee, deputy CEO Derek Yule wrote that addressing the deficit is doable, but will require an “immediate correction to normal business.” Leaders will have to present a “clear and balanced message which alerts budget-holders to the need to change spending immediately.”

Namely, this will include urgently cutting back further on recruitment, use of agency workers, travel, and overtime. A suite of tighter control measures will be developed for these areas of concern to reduce spending. Cllr Mackinnon did emphasise, however, that the budget was set to avoid job losses.

Highland Council is the latest in a string of Scottish local authorities struggling to balance the books. Earlier this year, Audit Scotland said more councils have drawn on reserves than in previous years to fund change programmes and routine service delivery in what indicates “increasing financial stress.” Some risk running out of general reserves within two to three years if they continue to use them at current levels.

The situation in England is no different, with several councils reaching breaking point and proposing hefty service and job cuts in order to manage this year.

 

(Top image c. Gannet77)

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