Fife facing £58m gap in council funding

Monday 8.2.10

FIFE COUNCIL is facing a budget black hole of over £58 million by 2012-13, the authority’s finance chief has warned.

Brian Lawrie’s grim prediction—and he admits it could be even worse—comes just days ahead of the council’s crucial meeting to decide on spending for the next financial year.

Councils are increasingly being forced to tighten their belts as the recession hits the amount of grant aid available, although on a like-for-like basis Fife will receive £22.4 million more in 2010-11 than it did this year.

In a report to councillors on Thursday, the executive director of finance and resources will state, “In setting the 2010-11 budget, members need to consider the longer term context for the council and the financial pressures and challenges facing the public sector.

“The council has, over the past year, received a number of reports outlining the immediate impact of the recession on the council and its response to that, along with projects for future resources.

“These have indicated a potential funding gap of approximately £58 million by 2012-13.

“In light of these projections, members are advised to give full consideration to the longer term consequences of any commitments made in setting the 2010-11 budget.”

Mr Lawrie says that, with total net expenditure of £846.479 million outstripping the income of £840.204 million (£689.834 million from grants and £150.370 million from council tax) next year, there will be a budget gap of £6.275 million.

One way of addressing this would be to increase council tax, but this is almost certain to be frozen for the third year in a row. Fife Council will receive £4.690 million from the Scottish Government if this is the case, equivalent to a 3.12% tax rise.

The shortfall will therefore have to come from other avenues such as savings, and this may well impact on existing services.

For instance, The Courier understands that Thursday’s meeting will be asked to change the current rail concessionary travel scheme to Fife only, resulting in a saving of £664,134.

Projecting ahead, Mr Lawrie estimates that the deficit in 2011-12 will be £28.568 million and a further £23.773 million in 2012-13—a potential gap of £58.616 million over the next three years.

He adds, “These figures make certain assumptions about council tax levels, a modest provision to meet service pressures and future grant levels.

“Based on latest economic projections, there is a possibility that the level of grant reduction could be greater than I have estimated and that public finances will be severely constrained for many years beyond 2010-11.

“A major area of uncertainty relates to the national economic picture and the outcome of the Westminster parliamentary election.”

IT’S NOT just the day-to-day running of the council and its various services that is struggling for cash, capital expenditure is also being constrained.

Next year, Fife’s capital grant has been reduced by a net £11.358 million and Mr Lawrie has stated that the potential loss of grant over the period to March 2017 could be £45 million.

A review of the capital plan will be carried out later this year.

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