Funding shortfall of over £20m feared by Argyll and Bute Council

Budget gaps totalling more than £23m could be facing Argyll and Bute Council over the next five years, a report has predicted.

And a gap of almost £2.5m is forecast for the 2022/23 financial year – more than nine months before that budget is set.

The figure for the next five financial years is the mid-range forecast by council executive director Kirsty Flanagan, who says that even the best-case scenario is a budget gap of £5.7m over the next five years.

The worst case five-year scenario is over £43m, while the best and worst case scenarios for 2022/23 are £1.7m and £6.3m respectively.

The forecasts are published in a report to go before a virtual meeting of the council’s policy and resources committee on Thursday.

In a section of the report referring to central government funding, Ms Flanagan said: “The Scottish Government had given a commitment to provide a three-year settlement from 2020/21 but both 2020/21 and 2021/22 have been one-year settlements.

“It is accepted that due to the uncertainties surrounding the EU exit and the Covid-19 pandemic that it has been difficult for the Scottish Government to honour that commitment, but it is hoped that a three-year settlement will be announced next year, as this would provide much more certainty to allow councils to agree a medium term budget.

“It can be seen that the settlements in 2020/21 and 2021/22 have been much more favourable than in previous years and it is hoped that this is due to the Scottish Government recognising the pressures being faced by local government.

“It is extremely difficult to estimate future years’ funding and it is likely that the Chancellor will have to increase taxes or cut spending in the future in order to pay for the significant borrowing that has been taken out in the response to the Covid pandemic.

“It cannot therefore be assumed that the more favourable settlements will continue into future years.”

Turning attention to future council tax budgeting, Ms Flanagan added: “The council tax budget for 2021/22 was set at £52.859m which reflects the council tax freeze agreed by the council in February 2021 and an assumption there will be no increase in the council tax base due to the impact of Covid.

“In terms of future growth in the council tax base it has been assumed that it will grow by 0.1% in the worst case scenario, 0.25% in the mid-range scenario and 0.4% in the best case.”