Cash set aside for wind power projects will form part of Fife Council’s elaborate plan to address a massive equal pay black hole in its finances, it has emerged.
Aside from the £91 million budget gap being faced over the next three years, the local authority has been presented with the prospect of having to settle equal pay claims likely to total more than £50m after a deal was reached with unions over historical discriminatory pay practices.
As the liability is significantly greater than previously thought, councillors will be asked to approve a series of drastic actions next week designed to help balance the books including borrowing, the use of capital receipts and other options to fund the settlement.
A report to Tuesday’s executive committee recommends the council should withdraw £6.2m of funding previously earmarked for wind power projects amid concern about the commercial viability of developments at this time.
Around £12m of capital receipts could similarly be used to fund the back pay element of the equal pay claims between now and 2019, while a further £12m could be gleaned if items of capital expenditure usually funded from revenue are financed using borrowing.
A review has also concluded that the council’s commitment towards the ‘Reforming Fife’s Public Services Fund’, which was previously used to support the council’s Shared Support Services programme, could be reduced from £6.327m to £1.327m, while a further £2.5m could be freed up from service carry forwards.
Council finance director Brian Livingston will urge councillors to back the funding strategy on Tuesday “on the grounds of urgency”. His report will highlight how the Scottish Government has previously given permission to borrow to fund equal pay costs but this consent no longer exists.
“On this basis the council is proposing a funding strategy which will draw on funding from various sources,” he said.
“The council will utilise the provisions which already exist, a level of uncommitted balances, as well as undertaking a review of some of the commitments against balances.
“In addition, the council will use capital receipts and revenue budgets which had been earmarked to fund capital expenditure.”
The report highlights that the level of uncommitted General Fund balances is around £32.7m, but Mr Livingston continued: “As the likely cost of equal pay exceeds by some margin the level of uncommitted balances, a review of all commitments against balances has been undertaken to establish the likelihood of expenditure going ahead, whether costs have been legally committed or otherwise to establish if it is feasible to de-commit any funds to contribute to the costs of equal pay.”