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Daily Record
Daily Record
National
Stuart Sommerville

'Staff cuts, council tax hikes and services slashed' as budget black hole widens by £10m in just four months

The scale and speed of the financial crisis facing West Lothian Council was laid bare today with the news that the budget gap it faces has grown £10m in just four months.

Financial officers had predicted difficulties based on calculations which showed a five year deficit of £47 million in September.

At a meeting of the council’s Executive on Tuesday, Director of Finance Donald Forrest revealed that the deficit was now predicted to be £57.7 million by 2027- 28.

In the short term, within three years, the deficit will be £44.7m. The five year deficit prediction before the elections in May was £45m.

Councillors will have to consider cutbacks in staffing, hikes in the council tax and diminished services across the board from education to waste collection. And in the face of surging inflation and material costs, no council - including West Lothian at this point - looks set to be able to balance its budget five years from now.

Mr Forrest joined his 32 Director of Finance colleagues from councils of every political hue last week in signing a letter to John Swinney, calling on the deputy First Minister to address the looming funding crisis facing local authorities.

The directors warned that services provided by councils could grind to a halt because of the shortfalls facing councils and the demands to balance budgets.

In his report to the Executive Mr Forrest said the council needed to take “urgent action”, and detailed a range of cost cutting measures and rises in council tax.

He told the meeting: “The forecast budget gap has increased substantially from the position considered in September 2022, with the risk that this will worsen further as more assumptions are clarified.

“The magnitude of the pressures faced, with constrained funding in a time of extremely high inflation, should not be underestimated and represents the most severe financial position ever faced by the council.

“This means that urgent action is required to help ensure the council’s continued financial sustainability.”

Among the options councillors will have to consider are an increase beyond 3.5% in the council tax. The council’s current planning assumption for council tax is an annual increase of 3.5%. Given the unprecedented scale of the challenges, one option could be to increase council tax by a higher figure each year, for example a 4.5% increase per annum. This would generate a further £5.7 million over the five years to offset against the increased budget gap.

A range of staff cost savings could be delivered in areas such as reduced use of agency staff, ceasing use of overtime unless business critical, postponement of non-essential staff training, stopping non-essential travel and stopping discretionary spend on supplies and services.

Other service specific temporary cost reduction options include reduced use of seasonal staff, re-prioritisation of road works in relation to variable costs, reduced opening hours of facilities at council venues and the scrapping of non-essential property repairs and maintenance.

As yet unquantifiable costs including fuel prices and building materials also threaten to push the deficit even higher. Financial officers will continue to monitor costs before delivering details to the council in January.

By then they will have learned how much the Scottish Government has agreed to provide for its annual budget, following a meeting at Holyrood next week.

SNP depute group leader Robert De Bold said: “It is unfortunate that the funding from Westminster to the Scottish government has not kept pace with inflation or the costs of living crisis. It is quite clear where this deficit has come from.”

Referring to the letter from financial directors, Depute council leader Councillor Kirsteen Sulllivan said: “I think most if not all elected members in this chamber will be very alarmed. I think we all have to be making a plea to the Scottish Government to fairly fund councils across this country to continue to provide the services so badly needed by our local communities.

She added that the SNP government had to reconsider its priorities including their war chest “for an Indyref2 that’s never going to happen, and the £2bn underspend”.

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