CITY council chiefs have hit big money troubles just three months into the financial year.
Figures being presented to councillors today reveal the authority is projected to overspend in a series of key areas by £11 million by the end of the financial year. This was reduced to £5m by savings elsewhere of £6.1m.
And there are also warnings that even more savings than expected will be required over the next five years.
Officials have been ordered to find urgent savings to make up the gap for this year.
And finance convener Alasdair Rankin admitted that in the longer term the council may have to seek more redundancies, reduce services and increase charges.
The Greens said the reality of repeated spending cuts were “coming home too roost” while Tories claimed the figures suggested problems with financial management inside the council.
A report to today’s finance and resources committee shows a total overspend in the first three months of 2017-18 of £11.1m on roads, waste collection, temporary accommodation for the homeless and health and social care. This was reduced to £5m by savings elsewhere of £6.1m.
But it is unusual to have such a high overspend at this stage in the financial year.
The council’s budget for the current year already incorporates £39.5m of savings.
But another report to the committee reveals estimates of grant funding, pay awards, inflation, demographic changes and other factors has led to a calculation of an increasing demand for savings in the near future.
“Across the five-year period of the council’s business plan, this suggests an overall savings requirement of some £140m by 2022-23.”
Green finance spokesman Cllr Gavin Corbett said: “In my experience it is very unusual for the alarm bells to be going off this early in the financial year. The reality of year-on-year cuts in funding are coming home to roost and coming home earlier.
“That is something for the Scottish Government to take seriously as it prepares its 2018-19 budget.
“More immediately, however, the council needs to take charge of its own destiny. Many of the budgets under most stress – social care, waste services and temporary accommodation for homeless people – seem locked into high-cost crisis responses. For example, dealing with delays in the social care system would be cheaper as well as better for service users. Getting bin services right first time and reducing waste going to landfill would cost less too. And getting out of high-cost, low-quality bed and breakfast hostels for homeless people would be a win-win.”
And on the longer-term need for more savings, Cllr Corbett said: “The scale of the funding gap is not something we can easily bridge just by saving a bit here and there. It will take a significant rethink about how we prioritise and plan for local government services.”
Tory group leader Iain Whyte described the overspend as “very concerning” and said it suggested some of the savings planned at the start of the financial year were not working.
He pointed to health and social care and the highly critical inspection report on care of the elderly earlier this year. He said: “The whole point of integrating health and social care was to allow us to find efficiencies and provide more care for the same money, but we have not seen any change at a practical level.”
He said £140m would be hard for the council to find. “They will have to look at options they have previously ruled out. If you want a more efficient bin service, for example, we have show you could do more with outsourcing.”
Finance convener, SNP councillor Alasdair Rankin said most of the overspend was demand-led – more people being made homeless because of UK government welfare reforms and the benefit cap; more elderly people needing care; and more roads needing repaired. And he said the waste collection service was improving. “We have invested quite a bit in technology to get refuse lorries out again when there is a reported incident.”
He said if further savings could not be found in the areas where overspend had occurred, other departments might have to be asked to identify savings on top of ones they had already made.
On the projected £140m savings required over the next five years he said the council was in “very difficult financial territory”.
“We have asked the senior management to come up with a set of proposals spread over the next few years to get us to where we need to be to maintain financial stability.
“The outlook over the next few years is obviously challenging.”
He said a clearer picture would emerge once Scottish Government funding was announced.
The council has already made cuts of around £230m over the past five years, including a large programme of voluntary redundancies.
And there are fears a demand for further large savings could mean more jobs going, as well as cuts in services and increased charges.
Cllr Rankin said: “There are no proposals yet for voluntary redundancies or stopping or reducing services, but in the long term I would not be surprised if those things come into view.”