The flimsy state of Falkirk Council’s finances have been laid bare by the town hall’s main money man.
Chief finance officer Bryan Smail delivered very little Christmas cheer when he gave details of the council’s bank account, potential income and the cost of paying its bills in the years ahead.
At a special meeting to consider the budget framework from next year to 2018, he made it clear the council has to take a proactive stance to meet the challenges it is facing to find savings of another £40 million in the next three years.
While conceding that dealing with budget gaps - the difference between what the council earns and receives in grants and what it spends delivering and protecting services - are “not new”, he warned councillors that continuing to rely on its reserves to balance the books will not deal with the problem.
Revealing that after eight years of using a “healthy and robust” reserves position to take the pain out of being forced to find over £70 million of savings, the council is now projecting a net overspend of £3.1 million for the current financial year at a time when the bank balance has dipped to £7.1 million - a figure councillors have agreed is the lowest it can go.
Mr Smail warned: “Use of reserves does not deal with the underlying resource shortfall and is therefore a temporary expedient. Going forward, the capacity to continue to use reserves in this manner will be very seriously constrained.
“We are now encountering a tilt in council finances, and while every effort will be made to manage projected overspends it is anticipated the era of regular and on occasion quite significant underspends is behind us. Going forward this will have profound implications for the council’s financial position and leave us with a lot less room to manoeuvre.”
The Scottish Government has already mapped out what it expects in return for its settlement next year - including the commitment to maintain a council tax freeze for the eighth year in a row. It also wants to make Scotland a more prosperous country, tackle inequality and protect and reform public services.
Mr Smail said: “I don’t use the words lightly, but the situation has been set out in pretty blunt terms. The overall assessment of the budget provided by the independent Fiscal Affairs Scotland concludes that for the next financial year the real terms cut adjusted for inflation in the new Scottish budget is -1.7 per cent, considerably lower than the -3 per cent to -5 per cent real term cuts in 2010-11 and 2011-12 and than the cuts of over -3 per cent that are likely in both 2016-17 and 2017-18.
“On that basis we have a three-year time frame to make good use of, because 2016 through to 2018 will be killer years and see gaps in levels of funding we have not seen before. What is absolutely clear and needs to be confronted is that to achieve aggregate savings of around £40 million over the three years will require significant contraction in service delivery and reduction in staffing.”
While elected members will ultimately take the crucial decisions on spending and saving, major consultation with staff, trade unions, service users and the public is planned.
Workplace briefings for employees have started, the public will be able to comment on the council’s website, every community council will be invited to the Municipal Buildings to hear a briefing on the budget position and equality and poverty impact assessments will be carried out.