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Highland Council service cuts warning flagged amid appeal to Scottish Government Finance Secretary Kate Forbes over local authority budget settlement


By Scott Maclennan

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Council leader Margaret Davidson: 'Each percentage increase in council tax raises only £1.3 million of revenue, meaning that it would require an increase of some 30 per cent to close the gap, which we simply will not expect our communities to afford. This leaves us with no option but to reduce or cut core council services.'
Council leader Margaret Davidson: 'Each percentage increase in council tax raises only £1.3 million of revenue, meaning that it would require an increase of some 30 per cent to close the gap, which we simply will not expect our communities to afford. This leaves us with no option but to reduce or cut core council services.'

Highland Council bosses have made a desperate appeal to the Finance Secretary Kate Forbes to reverse the Scottish Government’s budget cuts to local authorities saying that otherwise there will be no choice but to "cut core council services."

Council leader Margaret Davidson met with Ms Forbes – who is also a Highland MSP whose constituency includes Dingwall and the Black Isle – last week to tell her that current estimates indicate the potential for an overall budget shortfall of around £38 million.

The impact of that would be so severe and substantial that, according to Cllr Davidson, if the council were to plug such a gap with Council Tax it would have to go up by 30 per cent, which is untenable.

The figure of £38 million stems from five main areas: pay pressures – £12.5 million; National Insurance – £3.5 million; costs or reduced income due to Covid – £6 million; and a reduction in core funding settlement from government – £3.9 million.

The remaining balance comes from other cost pressures – inflationary increases in contract costs, demographic/demand cost increases, managing existing budget pressures, and additional costs arising from legislative change.

Cllr Davidson recognised the additional funding from government to support areas such as adult social care, teacher numbers, free school meal expansion and free music tuition are also part of the problem. That investment is ring-fenced and cannot be used for anything other than those specific government priorities so the actual amount the council has to spend is cut further.

So the council is now calling on the government to provide greater transparency in relation to its budget settlement and is seeking further funding to address the range of external budget pressures.

The government was asked to examine the analysis of the budget settlement which shows less money will be flowing into the Highlands from Edinburgh.

Indicating how large the block grant from the government fell short, Cllr Davidson said that the Council could look at raising council tax but to close the gap it would have to go up by 30 per cent – which is not tenable.

She said: “Each percentage increase in council tax raises only £1.3 million of revenue, meaning that it would require an increase of some 30 per cent to close the gap, which we simply will not expect our communities to afford. This leaves us with no option but to reduce or cut core council services.

“It is particularly concerning that the settlement does not include funding for the increased National Insurance employer contributions for which the Scottish Government received compensatory funding from the UK Government through the Barnett consequentials.

“This funding has indeed been passed directly to the NHS in Scotland and to local governments in England, Wales and Northern Ireland. We need fairness in Scotland too.

“I am pleased we have a continuing dialogue with the government on our budget and welcome the fact that Ms Forbes has offered one of her finance officers to work through the budget with us and to be clear we have a shared understanding of what is being proposed.

“I am always happy to meet with Ms Forbes because, as a local MSP, she understands the impact of local authority service cuts on Highland communities.

“I will be following up our meeting with a letter setting out the full impact to Highland of this settlement. In particular, we want to know why we have not received the funding to cover National Insurance Employer contributions and why the Scottish Government is not taking account of the enormous inflationary pressures which local authorities are facing as well as the impact on families and businesses. We will be seeking greater transparency regarding the nature of new funding streams and the many gaps remaining in terms of how existing Covid pressures and the Government’s new requirements are to be funded.”

Deputy council leader Alasdair Christie said: “The council continues to feel the impact of Covid on its budget and the increased costs and reduced income expected in the next 12 months – with additional pressures arising from the hidden longer term harms of Covid expected to be with us for many years to come.

“With no funding to support those costs the Council will have to reduce services elsewhere to pay for them and this will impact further on hard hit Highland communities.

“We are at the crossroads of our recovery and a little bit more support and investment in local government from the Scottish Government would go a long way to improving the everyday lives of Highland folk

Cllr Jimmy Gray added: “Highland Council like the other 31 local authorities in Scotland are in cross-party agreement that this budget settlement is bad news for local government and that councils cannot accommodate the significant cuts and pressures, without impacting on services, jobs and communities in our region.

"This comes at a time when local government has stepped in to deliver existing and new critical services throughout the pandemic.”


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