Highland Council Revises Budget Figures But Still Anticipates Big Cuts

12th January 2018

At Highland Council work has been ongoing for some months to prepare a Revenue and Capital Budget for 2018/19 and beyond, with the anticipation of a significant cut to available funds.

The Scottish Government's proposed grant settlement was announced on 14 December 2017. Whilst this provided greater certainty over proposed figures there are still a few queries that remain to be resolved and there is the potential for amendment to secure parliamentary approval. Notwithstanding this, over the last few weeks, work has been ongoing with the Administration Budget Team of elected Members to prepare a list of savings options for all members to consider.

The Council is facing a Budget Gap for 2018/19 of £25.8m. This comprises:



Provision for Pay, Price and Contract Inflation £8.1m

Budget pressures £8.3m

Cut in Scottish Government Grant Funding £9.4m

Total Gap £25.8m

What the detail shows is that it costs more each year to continue to provide the wide range of services that the Council does. The cut in core grant funding represents an additional challenge.

The Council has been working for some time to identify savings and income opportunities through a five workstreams including Efficiencies, Prioritisation, Income Generation, Commercialisation and Redesign. Staff from across the Council have been involved in identifying ideas for savings and redesign to make our services more affordable.

Budget Leader Councillor Alister Mackinnon said: "The Administration Budget Team is considering a range of proposals to achieve a balanced budget and these are being discussed with Members and Trade Unions. These proposals consist of additional income totalling £6.9m (including a 3% Council Tax increase) and reductions in spending totalling £14.1m. This still leaves a residual balance of savings to be identified of £4.8m.

"£25.8 million is a huge cut to our budget and comes after we have already managed a cut of £20 million to our budget in efficiencies over the past year. We are also unable to increase council tax beyond 3% without Scottish Government penalties. This leaves us very few places to turn to find more savings of this magnitude. There will be no option but to cut services and to charge more for what we provide."

Leader of the Council, Margaret Davidson added: "Although every effort is being made to achieve a balanced budget without impact on staff numbers, unfortunately this will not be achievable across the whole organisation. I appreciate this is a worrying time for everyone, however, we are committed to do all that we can to avoid compulsory redundancies wherever possible. The Council has a very good track record of minimising compulsory redundancies. This has been achieved by working in partnership with Trade Unions to optimise the use of vacancies and turnover to achieve successful redeployment outcomes."

No final decision on budget proposals will be made until the Council meets on 15 February 2018.

In December 2017 the Highland council was looking at a budget gap of £33.5 million and now it is down to £25.8 million but that is still a huge amount and following previous years cuts cannot but see some very hard decision for councillors.

Previously in December 2017 a statement form the council said "The budget gap has consequently been estimated to be in the range of £129.7 million to £186.9 million between 2018 and 2023. Based on the scenario of a 3.5% reduction in Scottish Government funding, a budget gap of £159.2 million is forecast, split over the next 5 years, with a budget gap in the region of £33.5 million in 2018-19."

The Scottish Government Budget Process includes the settlement for Local Government. Derek Mackay (SNP) made his proposals and these are now working through the process. There is still time to make changes and for example the Scottish Greens have said they want to see another £150 million for local government. The Scottish Government under the SNP needs support from a few other MSP's to getits budget passed and it could be the Green party.

Draft Budget Scrutiny Phase

The Draft Budget for the following year is published in September or October and sets out the Government's detailed spending plans for the following year. Again, Parliamentary Committees and the public are consulted for their views. At this stage, the Finance Committee may propose changes to the budget, but only if they net to zero (i.e. proposed increases must be offset by savings elsewhere in the budget). The Finance Committee then makes a report which pulls together recommendations from the various subject committees' reports, and this is debated in Parliament in December, marking the end of this phase.

Budget Bill Phase

This stage of the budget process starts with the laying of the Budget Bill in Parliament in January. The Budget Bill sets out Ministers' spending plans for the following year, taking into account comments made at Draft Budget Scrutiny Phase. The Budget Bill must be laid by 20 January each year, or the first day thereafter on which Parliament sits, and must complete all of its stages by 14 February. Only Ministers can propose amendments at this stage and, once enacted, the Bill provides the statutory authority for expenditure by the Government. Parliament's consideration of the Budget Bill consists of three stages. Stage 1 is a debate in the Parliament, Stage 2 is an evidence session with the Minister for Finance at the Finance Committee and Stage 3 is a further debate in the Parliament.

Budget Strategy Phase

This will take place in the spring prior to the next UK Spending Review and is intended to allow the Parliament to scrutinise the progress which the Scottish Government is making in delivering its own targets through its spending priorities and to take a strategic overview of the public finances around the mid-point of the current Parliament. The parliamentary committees will have the opportunity to scrutinise both the Scottish Government's performance and its spending priorities, and will report to the Finance Committee in sufficient time to allow a report to be published prior to Summer recess and debated by the Parliament.

The Scottish budget process is designed to encourage participation by the people of Scotland in the debate about how the budget is spent. To this end, the budget documents are freely available and are published on the Scottish Government website. The Draft Budget Scrutiny Phase is a consultation, and all interested parties have an opportunity to make their views known, either in writing or at specially-arranged consultation sessions. The aim is to have a budget process that increases transparency and ensures that Scotland's budget is spent efficiently and effectively.

The budget scrutiny papers for Scottish Government can be found at http://www.parliament.scot/parliamentarybusiness/CurrentCommittees/106078.aspx