Comhairle take tough decisions to balance the books

The Comhairle met in February to agree its budget for the coming financial year.

Elected members were presented with an estimated budget deficit of £6.4m and were asked to support £2.7m of service cuts and charge increases, as well as an unprecedented drawdown of Comhairle Reserves to ensure a balanced book.

The Comhairle says that Scottish Government’s financial settlement represented a real term reduction in allocation once ring fenced commitments, pay awards and inflationary pressures were accounted for.

Scottish Government’s allocation for the Western Isles in 2023/24 is £108.6m, a £4.9m (4.7%) increase on last year’s settlement. Inflation is still running at over 10%, a very slight reduction on the previous two months but still significantly more than the standard inflation allowances of between 2‐3%, included in the Comhairle budget.

The Comhairle says a 59% hike in electricity bills and substantial increases across other charges equated to £2.5m of additional expenditure.

The Budget Report set out a raft of individual projects and services targeted for cost savings, including the ‘removal of 4 posts in Secondary Schools without backfill’, a ‘reduction to the number of Support for Learning Staff in Schools’, a ‘review of the lease for the Old Carinish School’, a ‘review of the need for Library Vans’, and an ‘above inflation increase to charges at Stornoway Abattoir’.

The Comhairle also said it would ‘explore options to reduce arts grants to partners over three financial years: An Lanntair, Taigh Chersabhaigh, HebCelt, Eilean Dorcha and Fèisean nan Gaidheal – to be followed up for future years.’

To help fund the service, the Comhairle agreed a 5% uplift in Council Tax, increasing annual charges by £61.46 for a Band D property. Scottish Water also determined a 5% increase in its charges, taking Band D water rates to £502.29. Together these charges will see bills of £1793.04 per year for Band D homes.

The planned use of reserves forms the third peg in the Comhairle’s budget strategy. The usual policy of keeping back an emergency fund of £3.5m to mitigate against risks and unforeseen expenditure remains in place, but the pressures of the last few years have reduced the levels of uncommitted reserves. From a Reserves position of £4m last year, the Budget now sees uncommitted reserves of around £1m, which the Report concludes is a risk:

“The rapid increase in costs in the current financial year continues to require significant revisions to the budget, which can in the short term be funded mainly from reserves. The Comhairle’s Budget Strategy, for a number of years, has depended on a phased use of reserves, together with service savings, to achieve a balanced budget. This approach has been effective but with the use of these reserves in the current year, the reserves available to support future years are diminishing to levels which render future support questionable.”

Cllr Susan Thomson put forward an amendment to the Comhairle’s budget, asking that the rate of Council Tax be frozen at current levels. Cllr Thomson’s amendment stated: “This Council, recognising the real hardship faced by many members of our community working hard to strive for their families to have a warm home and decent food on the table, wishes to support them, and for this reason will not add to their financial burden by increasing their Council Tax bills.”

Speaking in defence of the Council Tax rise, Leader, Cllr Paul Steele said: “None of us wish to see a rise in Council Tax charges, but equally we do not want to see our services cut further. Not progressing a 5% increase in charges will severely risk our ability to protect those who are hardest pressed and most in need of our services.”

A further amendment was out forward by Stornoway Cllr Dr Frances Murray, who asked that proposals to cut secondary teaching posts and reduce the Support for Learning service be rejected and that cuts to the library service be held back until a full review was completed.

Both amendments were debated but not upheld, and the budget was passed as presented.
Cllr Steele said: “This budget comes before the Comhairle at a time of unprecedented pressures on both our revenue and capital budgets, and on public sector finance in Scotland generally.

“Added to these pressures have been significant and fluctuating increases in the costs of, well, everything: fuel, energy, commodities, construction materials, food and travel, in fact everything which contributes to people’s wellbeing and to a functioning economy.

“All of these have conspired to bring about a cost-of-living crisis not just for individuals and households but also for the organisations and authorities such as the Comhairle which support the community with our jobs, our services and our political advocacy.

“Having managed the largest funding reduction of any Local Authority in Scotland during the last term we have protected frontline services to the public as much as possible with a prudent, sensible approach to the realities of the financial situation we have found ourselves in but it’s been a process of transformation and cuts that has left many services stretched.”

The Comhairle has tried and failed to recruit a Strategic Finance Director and has now engaged the services of a consultant to progress its financial strategy.