A meeting of Highland Council on 2 March will consider a budget strategy to address a £49.2m budget gap for 2023-24.
The development of the budget for the coming financial year needs to be seen in the context of a highly challenging financial environment with public sector pay claims and very high levels of inflation, coupled with increasing borrowing costs impacting all aspects of Council activities.
The Council has a number of means of closing the budget gap which can be grouped into three main categories- increasing income, reducing expenditure and using reserves.
The Future Highland budget strategy sets out a balanced approach to addressing the challenges ahead, ensuring investment in priority activities is maintained – with roads being a particular area of focus – identifying areas where savings can be taken and income maximised; and completing a comprehensive review of reserves to see how these can be used on a short-term basis to smooth the delivery of a balanced budget in the coming year and lay a path for financial sustainability in future years.
Due to the cost of living crisis and concerns around affordability for Highland residents, the budget proposals include an increase to Council Tax rates for financial year 2023/24 of 4%, which is well below inflation rates and amongst the lowest increase in Scotland.
The additional income will make up a small, but critical part of the budget gap.
A package of savings measures, income streams, reprioritisation of resources and the continuation of spending controls will deliver savings of £22.195m.
This is one of the highest single year savings total the Highland Council has ever made.
However, it is still not enough to meet the size of gap that the Council is facing
Consequently, it is also proposed to use non-earmarked reserves to balance the revenue budget for 2023/24 in order to allow time to further redesign, reduce spending and increase income to deliver longer term sustainability for the Council.
A mid-year budget will be planned to address the remaining gap as the use of reserves is a one-off benefit only.
Leader of the Council Raymond Bremner said:
“This is an extremely challenging context for setting a local authority budget.
“We are faced with a perfect storm of circumstances which have led to a significant budget gap and ongoing pressures and risk impacting on future years.
“While it is imperative we make savings, we need to invest in transformation and that is why our approach is a balance of investment and plugging the gap for the coming year.
“Highland has a great future ahead and the awarding of a green freeport presents a tremendous opportunity to attract inward investment, growth and jobs for our communities.
“The role of the Council will be pivotal in maximising these and other opportunities in the coming years and for this reason, we will need to invest in transformation and future sustainability.
“I will be putting our budget strategy to Council on Thursday and asking members across the chamber to support our proposals and work with us to enable financial stability moving forward.”
Convener Bill Lobban added:
“We live in unprecedented times and never before have the Council finances been under so much pressure.
“Wherever possible we have protected Highland residents and the services they rely on.
“We have kept Council Tax rises to the absolute minimum we possibly could and have targeted our finances to ensure any impact on front line services is minimised.
“This is a budget which, as much as possible protects jobs and services, and has only been made possible due to the sound financial management of both the current and previous Administration.”