East Ayrshire Council faces 'worst case' £61m financial gap over next five years

dailyrecord.co.uk:

East Ayrshire Council faces a financial gap of up to £61m over the next five years.That is the worst case scenario identified by the council’s finance team as it reported to the full council.However, the council will develop its financial strategy based on an average shortfall of £39m over the same period.The next financial year, 2023/24, is acknowledged to be ‘far higher’ than council services have previously faced.The tightening of resources was magnified by the pay settlement agreed with council staff recently.

That saw an additional recurring annual cost of £2.6m brought into the budget, a situation described as ‘unusual’.Julie Jamieson, East Ayrshire Council’s chief accountant, told councillors that external auditors had praised the council for its strong financial governance and management, adding that EAC was in a ‘solid’ position to deal with the inevitable challenges.She also acknowledged that the next few years would be ‘uncertain and unpredictable’ thanks to the impact of Covid, Brexit and the cost of living crisis.Earlier this year, the Scottish Government published its spending review, including a freeze on local government funding.This, stated a report to the full council, means a real terms reduction of seven per cent by 2026/27.Three scenarios identify 2024/25 as being the most challenging, with shortfalls of between £17m and £8m.The report states: “Identifying the funds to close the £2.6m in-year pay gap will be extremely important given that if sourced early then it will reduce the future years' funding gap. “However, if it is not sourced until later years then not only will it cause drag in the financial plans but it will require the use of balances to close the gap until such time as recurring funds