Highland Council Budget Leader Announces Further Squeeze on Spending

23rd August 2018

Budget Leader highlights early action required to address overspend.

The Corporate Revenue Monitoring Statement for Quarter 1 (Apr - June 18), which will go to the Council's Corporate Resources Committee next week, is projecting a £5.1 m overspend for the year.

Budget Leader Cllr Alister Mackinnon said: "The Council's reserves, at around £8m, are well below the minimum level recommended by Audit Scotland and it is vital that they are not depleted further by a year end overspend.

"Urgent action is required now to address the situation and to bring expenditure back under control by next March. This is an early warning and we are determined to take the necessary corrective actions, in a business-like manner, recognising the seriousness of the situation. We also face the risk of another hard winter which would eat into our reserves, so early and decisive action to address the projected overspend is vital."

He went on to say: "Staff and Trade Unions have already proved their worth in recent times to help with the overall effort to find savings and be more efficient and they will be working along side us to deliver a balanced budget in exceptionally difficult times.

"We understand that the Scottish Government will be tabling a one year settlement yet again, however, we intend to bring forward a 3 year plan to provide certainty for our staff and communities. It is clear that there are harder times ahead. It is more important than ever to find every possible means of income generation to avoid job losses and protect essential services."

Staff have been asked to take action now to avoid non-essential expenditure and to consider deferral of non-priority activity. These controls include:-

Escalation of recruitment controls.

Escalation of controls on overtime and extra hours beyond those contracted.

Review of all agency appointments

Tighter controls on travel

Each of the Council's Service management teams have developed proposals to reduce expenditure and to increase income which will be reported to the Corporate Resources Committee next week.

The position at this stage last year was a projected overspend of £2.678m.

Forecasting so early in the year is difficult and we have historically seen an improvement between the Q1 forecast figures and the actual position seen at year end.

That said, the level of improvement we have previously seen has been partially due to one-off items that we are not expecting to recur this year. Last year only saw an improvement of £1.6m between Q1 and the year-end position- if that happened again this year we would still be facing a significant overspend.

The projected overspend represents under 1% of the revenue budget and this has been identified early in the year. However with 7 months of the year remaining it must be recognised that at this point the challenge is in effect nearer to 2%.

There are 3 main areas of projected overspend:-

1.- Care and Learning £2.772m largely relating to high cost placements for "Looked After Children".

2. - Community Services £0.611m which includes shortfalls against savings in car parking and public conveniences not yet taken

3. - Unallocated Corporate Savings £1.745m mainly in Service Redesign but also including unallocated procurement and asset management savings.

Highland council has been looking at ways to change many ways of working since 2016 and setup a Redesign Group to look closely at how services could change. That process is still ongoing and minutes of meetings can be found at

https://www.highland.gov.uk/meetings/committee/132/re-design_of_the_highland_council_board

Information about the work of the group since it was set up can be seen at

https://www.highland.gov.uk/info/20003/committee_information/696/redesign_of_the_highland_council_board

Caithness councillor Matthew Reiss is vice-chair of the redesign board with Councillor Bill Lobban as chairman - both independents. All parties are represented on the group.

The Highland Council 12018/18 Revenue Budget approved on 15 February 2018 can be seen at -

https://www.highland.gov.uk/meetings/meeting/3934/highland_council

Photo - Councillor Alister Mackinnon (Independent), Budget Leader of Highland Council.