Raising council tax in Falkirk by more than 3% could help the council bridge its unprecedented £29 million budget gap.
Chief finance officer Bryan Smail told members of Falkirk Council’s executive on Tuesday that in recent years the district has lost out on millions of pounds, thanks to having one of the lowest levels of council tax in mainland Scotland.
The SNP government’s long freeze on council tax proved a major headache for Falkirk as it was imposed at a time when the council was already keeping the tax as low as possible.
That has left it with an income that is £4 million lower than the Scottish average every year – nearly £3 million less than neighbouring West Lothian and nearly £7 million less than Stirling Council.
This year, the Scottish Government has left it to councils to set their own rate of council tax, although an extra £120 million for local government that was announced recently came with the clear expectation it would help councils avoid “inflation-busting” rises.
However, with inflation currently sitting at 5 per cent – and set to rise further – that still gives the council some leeway should it choose to use it.
Initially, the budget figures had assumed there would be a 3 per cent council tax rise.
But a disappointing budget settlement this year left all councils, including Falkirk, struggling to make ends meet as the grant from the Scottish Government will not cover the cost of recent pay rises for staff as well as general inflation.
In addition, the council has not been given the £2 million it needs to fund a rise in National Insurance payments or the estimated £2 million it will need for rising energy costs.
Mr Smail’s clear message to councillors was that there are three options open to them – and it is highly probably that a mixture of all three will be needed when they make their final decision.
The most difficult options will be reducing expenditure – which would almost certainly mean job losses – or increasing income, which would mean raising council tax by more than 3 per cent.
The third option, using reserves, would buy them some time but would leave them facing the same headache next year.
Mr Smail also made clear that the picture does not look any better for the years ahead – indeed, this year should have been the most positive as the UK government’s three-year block grant gave more cash this year than it will in the following two.
Councillors will not make their final decision until the budget-setting meeting on March 2.
