South Ayrshire Council is facing a £69 million black hole in its books over the next eight years – but has “no clear medium-term financial plan” to prepare for it.
That’s the warning from the Accounts Commission who say the local authority must get to grips with the problem.
Details of the potentially massive gap in the council’s finances are contained within the Accounts Commission’s best value assurance report, prepared by Audit Scotland.
In the dossier, the scrutiny body says the current estimated gap of between £56m and £69m for the period to 2029/30 “still needs to be addressed” but the council’s long-term financial strategy is “outdated" – with the projected funding deficit “likely to be understated.”
The report also warns that the level of savings required to date from the council, to combat future funding deficits, “has not been significant” and they’ll be unable to “manage budget reductions” unless the situation changes.
In its recommendations, the Accounts Commission said: “The council should prepare both medium and long-term financial plans. The plans should consider changes to both income and expenditure, identify budget gaps and set out the actions necessary to address those gaps. There should also be a clear linkage to council’s priorities.”
In October 2021, South Ayrshire Council approved a new 10-year long term financial outlook (LTFO), together with a three-year medium term financial plan (MTFP) which updated the expectations in terms of “potential funding gaps”, “based on a range of revised information.”
Contained within the MTFP is a medium-term budget strategy that the council says “sets out the key principles” to ensure a more “robust and strategic approach” to financial planning.
A South Ayrshire Council spokesperson added: “The council is also still considering the detail of the Scottish Government spending review, however, a freeze on local government funding for the next few years is a significant challenge.
“If a significant proportion of our funding remains fixed, and our costs continue to rise, either the burden of this funding gap will fall to be met by the local council taxpayer, or services will need to contract within the funding available.”
Overall, though, public services at South Ayrshire Council “perform well” and residents are “satisfied” with the services they receive, according to the Accounts Commission report.
The council “responded quickly” to the Covid pandemic and ‘effectively delivered’ services to ‘meet the needs of the community,’ the report notes.
Tim McKay, interim deputy chair of the Accounts Commission, added: “Overall, services in South Ayrshire Council are currently performing well.”
The Accounts Commission admitted they’ll be maintaining a “very close interest” in how the council performs moving forward.
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