Watchdog says Highland Council has the largest budget gap in Scotland this year
Audit Scotland has warned “it's getting harder for councils to do more with less” as it confirmed that Highland Council had the biggest budget gap of any local authority in Scotland this year.
The picture is far from simple according to the Accounts Commission report for the 2024/25 as most of the additional Scottish Government cash was ring-fenced for its policies.
The commission stated that the “almost six per cent increase” in funding to councils “totalling £13.25 billion – masks significant underlying financial challenges and strain.”
Councils got £147 million from the government to cover the council tax freeze this year which has “longer-term financial consequences as future rises will provide less income for councils.”
The report stated: “The full impact of proposed savings by councils on service delivery and communities is unclear. There has been significant public opposition in some council areas to cuts to services, with new and increased charges also affecting people.
“We will continue to monitor this area closely, as councils must meet savings in full this year. Failing to do so will intensify and exacerbate the impacts on services in future years, as further savings will be needed.”
The Accounts Commission of Scotland’s public sector watchdog aims to hold councils and other local government bodies to “account and help them improve by reporting to the public on their performance.”
One essential recommendation made by Derek Yule, a member of the commission was that councils across Scotland was to “to increase the accessibility and transparency of publicly available budget information.”
He added: “This will allow for improved comparison between councils, particularly around key information including actions to tackle existing and future budget gaps, as well as savings plans.”
And he would know from experience too because he was Highland Council’s deputy chief executive and financial boss before retiring in 2019.
The commission revealed the council had the biggest gap in both real terms £65.6 million – Shetland was a close second with just under £60 million – as well as a proportion of its total revenue budget at 8.5 per cent.
The report stated: “Their gap is largely due to pay increase assumptions (£16.9 million), service pressures (£15 million) as well as the need to address the use of £23 million of reserves in 2023/24 in a sustainable way.”
Mr Yule continued: “They have to find and then deliver significant levels of savings to address budget gaps.
“Fully engaging with local people and being clear about the different and difficult budget choices is vital, whilst understanding the impacts on the most vulnerable.
“Councils need to improve the way in which they present financial information, and do this in a clear, consistent and accessible way.
“The Accounts Commission calls on councils to increase the accessibility and transparency of publicly available budget information.
“This will allow for improved comparison between councils, particularly around key information including actions to tackle existing and future budget gaps, as well as savings plans.”
The council is in fact on its way to delivering on some of those recommendations after asking the public what it thought should be the budget priorities as was noted by the commission.
It said: “Six councils (Midlothian, City of Edinburgh, Dumfries and Galloway, Eilean Siar, East Renfrewshire and Fife) did not consult residents this year and a further three (Highland, East Dunbartonshire and West Lothian) did not provide information within the auditor data return.”
However, there were some question marks about how that information was handled in-house as it involved reducing the number of principle – as distinct from head – teachers, which was highly disputed by opposition members.
