The soaring cost of utilities could see East Renfrewshire Council’s education department spend almost £2million more than planned this year.
Rising inflation, which hit a 40-year high of 9.4% in June, is impacting the council’s finances, with energy costs increasing.
A report to councillors ahead of a Cabinet meeting on Thursday revealed the council’s current projected revenue outturn for 2022/23, based on the financial position at the end of June, is a net overspend of £1,389,000.
READ MORE: Energy bills set to hit £4,200 in January as Scotland households issued advice
For the education department, the forecast overspend is £1.98m and is mainly due to “increased costs within utilities, PFI/PPP contracts and transport contracts due to inflationary pressures”.
A council spokesman said: “Across the UK, inflation has reached its highest level in 40 years and councils are not immune from these cost rises.
“The reported forecast overspend is mainly due to increased costs within utilities and PFI/PPP contracts as a result of higher than budgeted inflationary uplifts.
“This is an initial forecast of increased inflationary pressures and work is now ongoing to consider all sources of internal and external funding available to minimise the impact on operational budgets.”
The report added, in education, overspends related to the “increased costs of utilities (£1.27m) and PFI/PPP contracts (£497,000) as a result of higher than budgeted inflation and increased transport costs (£482,000) as a result of both demand and anticipated inflationary impact”.
PFI (Private Finance Initiative) and PPP (Public-Private Partnerships) are deals between the public and private sector for the delivery of public services and infrastructure. With PFI, the projects are initially funded by the private sector and then paid off by the public over time.
Utility cost forecasts have been based upon prior year consumption at the current prices but will be reviewed throughout the year as “more information on current consumption becomes available”.
A £184,000 overspend has been forecast in the environment department due to “increased costs within waste management and transport contracts”.
Council officials reported departments “should continue to closely monitor and manage their budget, ensure that spending up to budget levels does not take place and take immediate steps to avoid all non-essential expenditure”.
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