HIGHLAND Council has been praised for closing significant budget gaps in recent years, but auditors warned “savings challenges” lie ahead.
A report from the Accounts Commission, released on Thursday, showed the authority had closed a £54.7 million black hole, with nearly £38 million of savings and almost £10 million of its reserves paired with cash for the council tax freeze.
When the council’s budget was set for the coming year in March, the gap was just £13 million between now and the end of 2027-28, with £12.9 million in savings proposed to counter it.
But the agency warned of the authority’s use of its reserves to counter the issue.
The 17-page report said: “The council has worked hard to close significant budget gaps in recent years, but we note this has relied heavily on the use of reserves, financial flexibilities and achieving savings targets.
“Savings challenges and financial risks still lie ahead, including in relation to adult social care, where transformation is needed to meet demand pressures.”
The council has also announced a 10-year, £1 billion capital plan to improve local services, roads and schools in what is the largest single local authority area in the country, covering more than 9,600 square miles.
The agency noted its “concern” that projected borrowing costs were 11.6% of overall revenue, but noted the plan was subject to review of “affordability and prudence”, including “understanding the full impact of these plans given ongoing revenue budget challenges”.
Jo Armstrong, the chair of the Accounts Commission, said: “The Highland Council is benefiting from a culture of transformation, and we’re pleased to see progress since we last reported in 2020.
“Now challenges to making savings lie ahead – it’s vital that the council’s workforce, digital and IT strategies are developed, embedded and monitored.
“The pace at which some services are improving is now slower compared to other councils. Using robust data, the council needs to keep things moving forward and look for new ways to improve.
“Communities and staff must continue to be an integral part of the conversation to determine the future of council priorities and services.”
Highland Council convener Bill Lobban said: “The council notes the recent report by the Accounts Commission which we consider broadly positive. In particular, we note the comments that the council has significantly improved since 2020.
“We also note the positive comments in the report about the ways in which Highland Council is taking steps to transform its delivery of services.”
