Falkirk Council: Freeing up £15m to deal with budget shortfall will save services being slashed

The ‘technical’ change in how Falkirk Council pays for the construction of the high schools will allow the local authority to set its budget this week without drastically slashing services.

The change, approved this year by the Scottish Government, effectively means that local authorities can now spread the cost of payments for any public-private finance projects over the length of the building’s expected life, rather than the length of any contract.

Known as service concession arrangements, the change will affect all Scottish councils in different ways. But Falkirk has nine secondary schools nearing the end of their 25-year contracts, which will now be paid over 40 years instead.

That means that, technically, the council has ‘overpaid’ by around £70 million.

Chief Finance Officer Amanda Templeman has stressed to councillors that this does not mean the council will get any cash back and in the end it will make no difference to the amount paid. It also will not affect plans to bring the five high schools that were built by company Class 98 Limited back into council ownership as expected next year.

But it does give the council an extra pot of reserves that can be used to help them at a time that is widely agreed to be the most challenging in the council’s history.

On Wednesday – if the SNP administration’s budget proposals are agreed – they will use £15.3 million of the ‘overpayment’ to help bridge the £60 million budget gap facing the council.

Neverthless, members have been warned that this is simply “buying time” for the council to make the changes needed to reduce spending over the next four years.

Ms Templeman said: “The use of service concessions doesn’t balance the budget for us but it allows us to buy some time to reprofile the budget – we have a bit longer to find those recurring savings but we still need to find them.”

In the longer term, chief executive Kenneth Lawrie is warning, the council still needs to reduce its spending and increase its income to address the fundamental mismatch between the two. Mr Lawrie said: “It’s going to require a lot of change in the council, it’s going to mean a lot of difficult decisions need to be taken by the elected members.”

He hopes money can be saved by transforming services to be delivered more efficiently and using technology to reduce staffing levels.

The other option is to increase income, including council tax which is one of the lowest in Scotland and has been since 2007, when a freeze on council tax was introduced. The administration believes this means the council has missed out on around £4 million each year the freeze was in place.

A seven per cent rise, they say, would bring it up to just below the Scottish average and still keep it lower than many neighbouring authorities.

But council tax income accounts for less than 20 per cent of the council’s income and even a seven per cent rise won’t be anything like enough to bridge the gap.

With two-thirds of its outgoings spent on staff, Mr Lawrie says the council has no choice but to become smaller.

He believes that “as a guideline figure” the council could need to lose around one-seventh of its workforce, to match the reduction it is seeing in its £420 million revenue budget.

He is hopeful this won’t mean compulsory redundancies, but it could well mean council staff retraining to move into other departments with shortages, such as health and social care.

It is the “most challenging budget” they have ever faced, according to the council leader, SNP councillor Cecil Meiklejohn. While funding from the Scottish Government has slightly increased, she says most of that cash is ringfenced for various uses, including pay awards for staff.

Costs have also increased alarmingly for councils in recent years, says Councillor Meiklejohn, with factors including the cost of living crisis, energy prices and covid.

But she says another reason is the “reticence” of councillors across the chamber to take difficult decisions, an issue Falkirk was strongly criticised for by Audit Scotland in 2021. And that has meant the council has now “run out of road”.

But there have been changes. One of the major differences this year is that councillors have started making some difficult decisions already, with approval for £1.9 million worth of savings, including new charges to have garden waste collected.

Some of the most controversial choices – including the closure of 133 buildings in the council’s strategic property review – are decisions for next year or even the year after.

Others, such as changes to the council’s free transport for school children are currently out to consultation.

But councillors are being warned that offering anything over the statutory obligation is becoming increasingly impossible. They are also being warned that reserves must be used for longer term ‘spend to save’ projects.

There are still many uncertainties in the budget process, not least the cost of any pay deals for staff.

As a minority administration, the SNP will have to rely on the support of other parties to get their budget through and although it’s been hugely difficult, Councillor Meiklejohn believes they have a budget that will protect the most vulnerable.

She also believes that the strategic property review – which will hand over council properties to communities – will mean better run services in the long run.

Councillor Meiklejohn said: “We are supporting the most vulnerable and honing our services to be able to support them the most. We are enabling our communities to do what they can for themselves.”

Falkirk Council will meet to set its budget on Wednesday, March 1 at 10 am and the meeting will be livestreamed.