The outcome of the independence referendum poses the biggest risk and uncertainty to local government finances in Scotland, it has been claimed.
Fife Council’s executive director for finance, Brian Livingston, also said that, irrespective of the outcome of the September 18 vote, pressures on local government finance will continue with a prolonged period of austerity likely way beyond 2018.
His bleak prediction echoed the view of the Accounts Commission that those leading and managing public services will face “increasingly difficult choices” about how to spend money that is available.
With rising demand for public services coupled with a reduction in resources in real terms, he warned it was not sustainable for Fife Council to “continue doing what it is currently doing” in the long run.
He said it was important to formulate a budget strategy that recognises the issues and deals with them in a way that protects frontline services and priority areas.
Mr Livingston, whose role is non-political, said: “As far as Scotland is concerned the biggest risk/uncertainty is the outcome of the independence referendum and the impact that would have on Scotland’s finances and in particular those of local government.
“Notwithstanding this, the view of the Accounts Commission is “irrespective of the outcome of the 2014 referendum on Scottish independence, pressures on finances will remain.”
Mr Livingston’s grim update on Fife Council’s forecast financial position for 2015/16 to 2017/18 came as council leader David Ross again warned he did not think the Scottish Government’s ongoing council tax freeze is sustainable.
To a chorus of boos from SNP councillors who blame Westminster austerity cuts, the Labour council leader also warned the outcome of the referendum could have a detrimental financial impact on the future of the council.
A Scottish Government spokesman said: “Discussions between the Scottish Government and Cosla, representing our local government partners, on the local government finance settlement for next year are currently under way. Those discussions will continue after the referendum.
“The Scottish Government’s preference will always be to have a fair and equitable financial settlement for all councils that is based on local needs and gives the maximum opportunity to deliver strong local services for local people and we will continue to work closely with Cosla to ensure that is achieved.”
Irrespective of the referendum, the council’s executive committee was told that Fife Council is now facing a budget gap of £3.5 million in 2015/16, rising to £77.2m in 2017/18. This represents a reduction of £15.4 million from the budget report in February and reflects the savings of £29m approved in February.
But Councillor Ross said Fife’s latest deficit figures felt like a “slap in the face”.
Having made £29m savings, initially reducing the predicted deficit to £63m, he said the rise to £77m through rising demand and a £2.5m reduction in Scottish Government local government finance settlement funding was “hard to stomach”.
He added: “The value of half of the savings we made in the previous budget have been wiped out.”
Independent councillor Andrew Rodger said the council tax freeze is making it particularly difficult for the council to sustain vital health and social care.
SNP group leader Councillor Peter Grant said it was clear that no matter which government was in power, a long period of austerity was likely.
Despite the “grim reality” of Westminster austerity measures, he said the council had to protect frontline services to the best of its ability.
Mr Ross said the administration would again publish a draft budget at the end of October/start of November, which would invite the public to comment before the budget was agreed next February.