Glasgow City Council is facing massive cuts next year with the scale of 'savings' expected to be higher than that seen in recent years.
The local authority has predicted a budget shortfall of £119.4 million unless more money is allocated by the Scottish Government. The figure is ten times higher than the £12m shortfall reported last year and doesn't account for any increase in demand or services as a result of the cost of living crisis.
Due to the measures already put in place to save the council money in recent years, the local authority is now struggling to find further ways to cut costs.
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A report by Executive Director of Finance, Martin Booth, outlines: "For many years the council has had to identify savings in order to balance its budget. As a result, the ability to identify opportunities for efficiency savings and service reform was becoming increasingly difficult.
"However, the current levels of inflation are significant and are forecast to have a profound effect on the finances of the council family over the next three years. This will severely affect the type and range of savings the council family are able to identify for the period of this financial forecast."
The report adds: "With the current inflationary pressures within the system, the scale of savings which will be required are considerably higher than have been faced in previous years."
The four political groups in the council have been asked to prepare budgets that will identify savings to address the shortfall.
Inflation, and pay inflation in particular, is the main cause of the black hole creating £87.2m of the deficit.
The equal pay settlement is expected to be no lower than this year's. We previously reported how the council agreed on plans to sell the City Chambers and Kelvingrove Art Gallery to settle the long-running dispute. A sale-and-lease-back arrangement of some of the city’s most iconic buildings first brought forward in 2019 will raise over £200m of an anticipated £270m to settle the claims.
Adding the future implications of this year’s higher-than-expected settlement and deducting additional Scottish Government funding means that pay inflation is expected to be £80.1m.
Budget pressures including the increase in utility costs and the revenue consequences of capital investment have created a shortfall of £26.7m.
Part of that figure is the rental cost of operational properties included in the most recent sale and leaseback arrangements which will fund the equal pay liabilities. This rental payment is £11.7 million.
There will be a general increase of two per cent in fees and charges across some council services. The increase is slower than inflation to 'recognise the challenges households are already facing'.
The financial forecast assumes no increase in council tax, as that is a decision to be taken at the council’s budget meeting, and assumes no increases in spending.
The Scottish Government is due to set its budget on December 15, following a statement from the UK Chancellor later this month.
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