Perth and Kinross Council faces an estimated structural deficit of £12 million.
Councillors were this week told the 2020s were “turning out to be a very
risky era for the public finances” due to the triple whammy of the Covid pandemic, the energy/cost of living crisis and inflation.
A report on PKC’s medium term financial plan, which went before Wednesday’s full council meeting, made for grim reading.
But one councillor suggested it was “not pessimistic enough”.
Perth City South Liberal Democrat councillor Liz Barrett said: “Our failure for years to grasp the nettle on realistic increases in council tax is perpetuating our structural deficit which now stands at nearly £12 million and may increase.
“We resorted to the one-off service concession scheme last year, but this will have to be unwound, and we just cannot keep propping up revenue and capital spending, even for the best of reasons, by dipping into reserves and not increasing our income.
“I’m very concerned that the pessimistic scenario shown here is not pessimistic enough, and hope that we as a council will take the brave pill and face up to more hard decisions in the coming months.”
£12m council deficit ‘didn’t come from nowhere’
Bailie Alasdair Bailey also pointed the finger of blame at councillors for the estimated £12 million hole in PKC’s budget.
The Labour councillor said: “The structural deficit didn’t just come from nowhere and it certainly didn’t come from Holyrood or Westminster.
“Nor did it stop growing after the 2022 local elections. It’s us in this chamber who keep on voting to grow it.
“It’s £1.6 million higher next year because of the funding gap in the agreed budget.”
He added: “The reality is that if we keep plugging revenue gaps with one-off funding solutions the deficit will always be with us.
“Only the budget from Brian [Leishman] and I balanced the books for next financial year.”
Leader defends financial management
But SNP council leader Grant Laing defended PKC’s financial management when tabling his motion.
He said: “This council has a reputation for strong financial management which has drawn praise from external audit.
“The continued reviewing and updating of our medium-term financial plan is key to us maintaining that strong financial management.”
He later added: “When this administration took over the reserves were sitting about 2.3/2.4 per cent.
“They’re now sitting at 3.8 per cent so we’ve not been using reserves up. We’ve actually built reserves up.”
Two factors behind £12m deficit
Outlining the reasons for the deficit in his report, PKC’s chief accountant Scott Walker said: “The structural deficit brought forward from 2023/24 is currently estimated at £11.954 million. This is a consequence of two factors.
“Firstly, the unwinding of the service concession scheme that applied £10
million of non-recurring funding in 2023/24.
“Secondly, the recurring impact of decisions taken on 1 March 2023 in setting the 2023/24 final revenue budget and 2024/25 and 2025/26 provisional revenue budgets.”
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