Cap On Council Tax Abolished - Highland Council Will Decide Soon But The Budget Gap Is Still Serious

5th December 2024

Will hard pressed councils in Scotland go for big rises now that the Scottish Budget has scrapped the cap on increases.

Most councils have a budget deficit as already announced in releases in past weeks.

Closing the council budget gaps could be partially managed by increasing council tax along with more squeeze on spending.

The worry for unions will be if cuts are used meaning reduction in staffing over the next two or three years. Councils often have no redundancy policies in place but pressure could mount is recruitment is slowed or changes to staff numbers over time.

A revised financial forecast for the Highland Council, taking account of already agreed savings and other measures, suggests a remaining budget gap of £38m-£54m over the coming three years, 2025/26 to 2027/28.

As part of the Council's Medium-Term Financial Plan, agreed in February 2024, and taking into account feedback by the public and staff, Council agreed a package of £54.6m of budget savings, and the use of a range of financial flexibilities and use of reserves, to address the projected £113m gap over a 3-year period 2024/25 - 2026/27.

A revised forecast, before taking account of agreed savings and other measures, and factoring in financial assumptions, is a budget gap over the next three years (2025/26 to 2027/28) ranging from £116m-£132m. After allowing for budget savings and other decisions already made by the Council, and other assumptions, these scenarios suggest the figure of a residual budget gap of £38m-£54m over the three years.

Leader, Raymond Bremner said: "Public and staff engagement in the lead up to our last budget was extremely helpful in shaping our thinking and decisions and I would encourage everyone to get involved in how the Council spends our money.

"At the same time as making savings, and making best use of public funds, we will continue to support our ambitious Highland Investment Plan through our revenue budget decisions, which should see £2bn of capital investment across the Highlands over the next 20 years and which will leave a valuable legacy for communities well into the future."

Convener of the Highland Council, Bill Lobban said: “Decisions already made by the Council in February 2024 provide a very solid foundation to the Council's financial planning. It is essential the Council continues to apply a multi-year, strategic approach to its financial planning and financial sustainability, and makes the necessary decisions to ensure expenditure plans are in line with funding levels."

Chair of the Council’s Resources Committee, Cllr Derek Louden commented: “There remains uncertainty regarding the impact of national budget decisions, which will be analysed to update the Council’s forecast revenue budget for 25-26.

“While inflation and cost pressure estimates are expected to exceed the likely level of funding that may be available to the Council, there is an inevitable need to plan for further additional savings.

“It is important to listen to the views of our service users, our staff and community representatives, as we prepare our budget proposals.”

A financial update will be brought to the Council meeting in December.

Highland communities and staff are invited to take part in the next round of budget engagement. Links to the Council’s engagement platform can be found on our budget webpage highland.gov.uk/budget