Council funding deficit more than doubles to £22m

The council hopes to make money by generating energy from solar panels like these near Edinburgh College. Picture: Phil Wilkinson
The council hopes to make money by generating energy from solar panels like these near Edinburgh College. Picture: Phil Wilkinson
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THE FUNDING black hole facing city council chiefs has more than doubled to £22 million, it has emerged.

The deficit in the 2015/16 budget will heap greater pressure on finance chiefs struggling to plug an overall £120m funding gap over the next four years to ensure the books balance.

It is thought procurement savings – gained through “smart” purchasing or block-buying services with other authorities – had failed to match expectations while the Capital’s projected population growth was nearly four per cent lower than had been estimated in the 2001 census.

This means the city earns less money from council tax and from Scottish Government grants which are partly determined by population size.

Increased strain on budgets for schools meals, home to school transport and home care as well as the recent impact of welfare reform – or bedroom tax – will demand even greater belt-tightening in the coming years.

A bleak report into city finances revealed that “change is required across all services if a sustainable way forward is to be found”.

And it predicted spending demands will increase by around 15 per cent by 2018 but income will remain static, forcing the city to consider “more transformational options” to ensure services continue rather than the current trend towards “salami-slicing” departments.

The widening hole in the revenue budget comes just months after the News revealed how the city’s bank balance had become so stretched there would be no cash left to fund new building and maintenance projects. Plans where money had not already been allocated could face major challenges getting off the ground, it emerged in January.

Green finance spokesman Cllr Gavin Corbett said that increased borrowing was inevitable to fund vital services and repairs.

And he called for an end to the council tax freeze so the local authority could raise its own funds to get back into the black.

He said: “The budget process for 2015-16 has barely started and already we are looking at a £22m funding gap, increasing to over £50m the following year.

“Even with a radical transformation in spending and even greater efficiencies I don’t see how the gap can be bridged while still keeping a council tax freeze.

“The alternative is repairs undone, services lost and communities let down.”

Finance convenor Alasdair Rankin said the funding shortfall was not “unexpected” but he was reluctant to increase borrowing. Instead, cash could be made from generating renewable energy from banks of solar panels or selling off swathes of council properties

He said: “I don’t think we are in anything like an emergency situation. We have a clear picture of where we need to go in terms of our priorities and what the options open to us are in terms of savings and investment.”