Edinburgh reserves to help plug budget hole

Tuesday August 13th 2019

Edinburgh Council

Written by Local Democracy Reporter, David Bol

Edinburgh council finance leaders hope to draw on £1m of reserves to help bridge a “looming gap” in this year’s budget – amid fears that “local government funding is broken”.

The city council’s finance and resources committee will consider a progress update on meeting savings and efficiencies targets in order to balance the books in the 2019/20 financial year.

But the report, just three months into the financial year, highlights that the full council will be asked for permission to use an additional £1m from the council priorities fund to fill the gap. Council documents state “there is therefore a residual gap, after applying this risk contingency, of £11.416m”.

Green finance spokesperson, Councillor Gavin Corbett, said:

“When the budget was set back in February it was obvious that there were a number of proposals which were really optimistic. And only three months into the year there is already a looming gap which will only get bigger. The council can bridge some of the gap but only as a stop gap.

“This is no way to run a capital city. The council urgently needs to get a fairer funding deal from Holyrood but also to have more powers to make its own budget choices. Local government funding is broken.”

Council leaders insist that other options in order to provide a balanced budget by the end of the financial year will be investigated by finance officials.

Councillor Alasdair Rankin, the council’s finance and resources convener, said: “Assuming approval of the use of a further £1m from the council priorities fund, this will bring down the projected in-year overspend to £5.4m, around 0.5 per cent of the council’s net expenditure.

“As in previous years, officers will continue to examine potential options to address the remaining gap to allow a balanced position to be achieved by the year-end.”

The report by officers to the council’s finance and resources committee highlights a “continuing assumption” that the Edinburgh Integration Joint Board (IJB), a council and NHS Lothian partnership that oversees the provision of health and social care services, will only spend what is made available to it from the partners – with no indication that extra money will be offered.

The IJB currently has a funding gap of £7.15m after £11.9m of savings have been identified. The board is yet to agree a balanced budget for this financial year. Analysis indicates that around 70 per cent of savings targets are currently assessed as “green or amber”.

Council finance chiefs believe that the IJB savings programme “will therefore be critical in ensuring a balanced outturn position in 2019/20”. But opposition councillors have warned that the financial problems in health and social care services are being used as a “scape goat”.

Conservative Councillor Andrew Johnson said: “I’m really concerned that at this stage in the financial year, already they have essentially given up and admitted defeat that they are not going to make the savings required to balance the budget.

“Although the Scottish Government has under-funded everything, the tone of this report is quite down. We need to get some of the detail as to what the plan is to sort it out.
“Health and social care has been in crisis since I was elected. The council really needs to be honest with people and say these proposed cuts are highly unachievable.”

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