Perth and Kinross Council is facing a £30 million funding gap.
PKC’s finance chief Stewart Mackenzie told councillors it was the most difficult medium-term financial plan he had ever had to present.
The council's Medium-Term Financial Plan 2023–29 was presented to Perth and Kinross Council when it met on Wednesday, September 28.
The plan outlines how PKC looks to manage its finances over the coming years. And the report - written by PKC’s chief accountant Scott Walker - made grim reading.
In his report he highlighted how Covid, Russia’s invasion of Ukraine, Brexit and a global energy crisis were all impacting the UK economy and the public purse.
Mr Walker’s report stated: “The United Kingdom economy and public finances are currently experiencing the impact of the global COVID-19 pandemic, a global security crisis following the invasion of Ukraine and a global energy crisis. The impact of the UK’s decision to leave the European Union has also led to further uncertainty.”
An optimistic forecast predicts a £17.4 million reduction between PKC’s forecast expenditure in 2023/24 and PKC’s estimated funding. The mid-range forecast is £30 million and the pessimistic prediction is a whopping £42.1 million reduction.
At Wednesday’s meeting Lib Dem councillor Liz Barrett said her instinct was PKC should adopt “a more pessimistic view” in managing the council’s finances. She asked PKC’s finance chief if he agreed.
Head of finance Stewart Mackenzie said: “The projections in the report - as they stand - are the most challenging I’ve ever had to present to council in terms of medium-term financial plan. I suspect that’s the case in the 31 other local authorities.
“I think the situation is highly uncertain at the moment and we need to be aware of the potential for the position to worsen.”
A table in Mr Walker’s report showed the current varying optimistic, mid-range and pessimistic scenarios for the next six years with cumulative potential savings targets of up to £193.6 million.
Mr Mackenzie said there was “an absolute challenge for the council in managing its finances over the coming years” and financial assumptions would be revised over the coming months. He said it was a “watching brief”.
Lib Dem councillor Willie Robertson asked if the dismal forecasts could result in Perth City Hall not opening.
The Kinross-shire councillor asked: “Given the anticipated running costs of Perth City Hall, is there a strong possibility it might not open?”
SNP council leader Grant Laing assured him a project board meeting had been held the previous day and it was “fully on plan to open in 2024”.
Moving the Medium-Term Financial Plan, Cllr Laing pointed councillors to a return to setting a three-year budget in February 2022 and to “prudent use of reserves”.
The Strathtay councillor pledged to apply PKC’s resources to “support our citizens when they need it most”.
PKC’s leader added: “As far as possible, we stand ready to apply more reserves if that’s what our citizens need to get through this cost of living crisis.”
It was seconded by SNP councillor Stewart Donaldson.
The Strathearn councillor thanked PKC’s finance team for their work in “what are unbelievingly challenging times and I’m afraid to say in the months ahead they may become more challenging yet”.
