High interest rates mean finances remain tight for Falkirk Council

At the full council meeting on Wednesday, councillors will see an update on the council’s overall financial position in a treasury management report that highlights how unlikely it is that the council will get any extra government cash this year.

Demand for council services is continuing to grow as the cost-of-living crisis continues to hit people hard but chief finance officer Amanda Templeman told councillors that it is looking likely that public spending will be curbed further as the economy remains sluggish.

“The UK economy remains fragile, there was little growth for 2023 and indeed the Office of National Statistics has estimated there will be no growth for the third quarter in 2023. In addition, growth is expected to remain low in 2024,” she told members of Falkirk Council’s executive last week.

“The UK economy remains in a very difficult position and there is a view that the UK must reduce public sector spending and clearly that will impact on our funding.”

And with interest rates remaining stubbornly high, the Public Works Loan Board – which funds most council borrowing – is forecast to remain above five per cent until 2025.

Much of that borrowing is for the council’s housebuilding programme, so any reduction would have a major impact at a time when homelessness is also increasing.

However, the Scottish Government announced in May it is also facing a budget gap, forecast to be around £1 billion, so Falkirk is not expecting much more than flat cash when Holyrood announces its budget later this month.

Last week, Scottish Government minister Shona Robinson was also quoted as saying there was “no doubt” that the public sector workforce will have to shrink.

And at last week’s executive, the SNP leader of the council, Councillor Cecil Meiklejohn, stressed that Falkirk Council “is facing the exact same pressures as every other council”.

“Workforce will be an issue going forward and I don’t think that’s something we can hide from.

“If the overall budget doesn’t increase we will have some very, very difficult decisions to make and none that anybody would wish to make.”

On Monday a report from the Convention of Scottish Local Authorities (CoSLA) warned that the unprecedented financial challenges are placing local services at risk, “such as programmes supporting children and young people, sports and leisure facilities and public transport”.

Nationally, CoSLA is lobbying the Scottish Government for more cash, making the case that local authorities can save spending in other areas such as health.

COSLA President, Councillor Shona Morrison, said: “Councils really are the key to unlocking the best for our communities – from safe, quality housing; to clean streets; to supporting the most vulnerable people to thrive; to education and social care – the importance of these services cannot be emphasised enough, but they need to be funded properly.”