Savings of £3.1m are needed in next year's Edinburgh City Council budget to fund the wage rise that has averted more bin strikes from going ahead.
Weeks of negotiation drew to a close last week after unions accepted an offer that will give the lowest paid local government workers a 10 per cent pay increase.
And while it came as a relief that further strike action planned by the capital's waste and cleansing staff was called off, difficult decisions lie ahead for council bosses who need to find around £13 million over the next five years to cover the pay deal—meaning cuts elsewhere will be necessary.
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A report to this week's finance committee notes the council is already facing "significant" financial pressures with a £70.4m hole in next year's budget.
The eye-watering sum, which includes an additional £1.9m to meet the cost of rising energy prices, has increased by more than £10m since February when a balanced budget for 2022/23 was agreed by councillors.
The report adds this has been caused by continuing impact from Covid-19, increased demand for services, inflation, legislative reform and "increased citizen expectations".
The staff pay deal, announced at the weekend following intensive talks led by the First Minister between unions and council body Cosla, includes:
- A £2,000 increase for workers earning up to £20,500
- A £1,925 increase for staff making between £20,500 to £39,000
- A 5% increase for those earning between £39,000 to £60,000
- A maximum £3,000 increase for workers on over £60,000 a year
- Social care registration fees scrapped
- One extra day of annual leave
It will be funded partly by the Scottish Government and partly by the council itself, which has already budgeted for a 3% rise, however, an annual £3.1m shortfall remains which could rise to £3.4m by 2026/27 if high inflation rates continue.
Nicola Sturgeon warned her Government will have to "take money from elsewhere in the budget" to finance the settlement and the same will be the case for the local authority.
Discussions about which departments will be faced with cuts to plug the gap are already underway and will be ramped-up in the coming months as proposals are drawn up ahead of February's budget meeting.
Work on an "urgent" medium term financial plan is looking at "opportunities to deliver better outcomes for local people but in a way that is more efficient or minimises costs".
A report to Edinburgh City Council's finance committee, which meets on Thursday (September 8), said: "While the Council has approved a balanced budget for 2022/23, it faces significant financial challenges going forward. The revised projections in this report indicate a need to deliver at least £70m of recurring savings in 2023/24, increasing to £153m over the period to 2026/27.
"There is an urgent need to identify and develop potential options to address increasing future years’ savings gaps. Given the previous low rates of delivery associated with generic Council-wide savings, these proposals need to detail specific steps and measures to support delivery within each Directorate."
It added that specific budget proposals will be presented to the committee on November 10.
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