A report to Highland Council’s meeting sets out workforce planning and preparation measures to address financial pressures in-year and a forecast budget gap for the year ahead.
The Highland Council continues to project a £40.9m budget gap for the financial year 2023/24, with increasing concerns that this figure may be at a higher level.
Inflation is the highest in decades and pressures across both pay and non-pay costs are acute, and there is uncertainty around the Government’s funding settlement for 2023/24 to be published on 15 December.
A range of mitigating actions have been put into place to help reduce the £8.9m budget overspend forecast for the current financial year (2022/23).
The two key methods of financial control include a recruitment freeze, with very limited exceptions, and a mandate that all spend must be essential to ensuring the Council operates safely and meets the minimum statutory requirement for service provision.
Leader of the Council Raymond Bremner said:
“Inflation and the rising costs of living are taking a toll on families, communities and businesses across the Highlands.
“The Council is facing the same pressures in the cost of pay, energy, construction, transport, goods and services and rising interest rates.
“Urgent action is required to manage the in-year inflationary pressures and balance our budget in March.
“There will be an impact on services.
“We simply can’t continue to deliver the same services with a substantial reduction to our budget as we anticipate, and fewer staff and resources.
“Meanwhile, the Administration is working hard with officers to plan for a sustainable budget in 2023-24 which will protect jobs and avoid redundancies.
“A key theme in our new Programme is sustainability.
“Services need to be affordable and council jobs are important to the life and economy of communities.”
The strategies to mitigate the forecast overspend and next year’s budget gap include:
- A People strategy to reduce, reshape and reprioritise our workforce
- Increasing income, including new income streams
- Service prioritisation and redesign
- Asset Management to reduce our office footprint and associated costs
- Contracts management to reduce costs where possible
- Capital programme review to ensure affordability of projects in the light of rising costs and interest rates
- A review of earmarked Reserves, however this has a one-off benefit only