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Daily Record
Daily Record
National
Kevin Dyson

South Ayrshire councillors facing toughest ever budget this week

South Ayrshire Council faces one of its toughest ever budgets this week, in the knowledge that it must find £37.8m over the next three years.

While the authority is braced for some difficult decisions, not least the level of council tax residents pay, the pressure is eased by a change to public private partnership (PPP) repayments for new schools.

However, the council has warned of the difficulties it faces, given it has already been forced to spend around £7.5m more than it budgeted for last March.

This is largely ascribed to spiralling inflation and a 50 percent increase in energy prices as well as higher than expected staff pay settlements.

The council has kept its cards close to its chest in the run up to the budget on Wednesday, but a number of councils, including neighbouring East Ayrshire have increased council tax by five percent.

Since 2017-18, SAC has made cuts of £40 million with £13m of reserves used to meet the budget shortfall.

While the council expects to face further tough decisions around cuts to services and increases to charges, there has been some positive news.

Councils are now able to spread their PPP contract payments over a longer period.

In practice, this will give South Ayrshire Council a one-off repayment of £21.7m, along with an annual saving of £2m.

Of this, £14m is due to be set aside to ‘smooth’ the identified budget gap over the next four years, with £5m allocated for 2023/24. The following years would see allocations of £4m, £3m and £2m.

The council’s finance team say this is mainly a way to identify and implement permanent savings in the future.

A further £5m would also be used for a ‘workforce change fund’, which it says would be set up to pay for ‘severance and other employee-related costs arising from any service reduction’.

Like other authorities, SAC has found itself constrained by the Scottish Government’s late change in guidance over teachers, who make up a quarter of the council workforce.

In the past, councils have been required to maintain certain ratios of pupil to teacher numbers, meaning a drop in pupil numbers could allow a reduction in teachers.

However, just weeks ago, the Scottish Government told councils they would have to maintain the same number of teachers they had in September, whether pupil numbers were going down or not.

Any council not following this guidance faces millions in penalties to their external funding.

The capital budget will also be decided on Wednesday, with observers keeping an eye on increasing construction costs.

With the likes of Ayr Leisure Centre being scrapped, the amount of money being allocated to the refurbishment of the Citadel, along with the administration’s plans for Ayr esplanade.

There will also be consideration of funding for the new airshow planned for September, with both the SNP and Labour questioning the financial planning for the event.

A spokesperson for the council said: “Just like many families across the country at the moment, the council is dealing with unprecedented rising costs due to high inflation, high interest rates, increasing energy costs and the overall cost-of-living crisis, which is having an impact on everyone.

“Our electricity and gas bills alone have gone up this year by almost 50 per cent. This means that we estimate we’ll spend £4.8 million this year, compared to £3.2 million last year. We also expect this to go up by a similar amount next year.

“While our costs continue to rise, the 80 per cent of our funding that comes from the Scottish Government is expected to remain static. In reality, this is a real terms cut to our funding. This funding challenge is faced by all councils and has been made even worse by rising inflation.

“Our estimated funding shortfall, or “gap”, is £37.8 million over the next three years. We don’t want to make cuts, however due to the scale of the challenge, we are having to consider making some difficult decisions.”

South Ayrshire Council meets on Wednesday, March 1 with all parties expected to outline their own take on the budget.

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