Scottish Borders Local Association

'We'll freeze Council Tax ... but our budget has an £8.3million shortfall'

Published Date: 30 October 2008

By Mark Inchley

COUNCIL Leader David Parker warned of tough times ahead at a briefing meeting with council finance chiefs on Monday.

Despite the expectation that Council Tax will be frozen again next year (2009/2010), he warned that schools, roads, support for the elderly and a range of other services will all be hit as Scottish Borders Council (SBC) battles to overcome an £8.3million shortfall in the projections for next year's budget.

This time last year, the council was in exactly the same position and managed to bridge the gap by the new financial year, but, this week, council leader David Parker admitted the circumstances are very different 12 months on, and there will inevitably be tough times ahead for everyone in the region.

"This is a budget like no other and we're working against the backdrop of a world economic climate like we haven't seen before," he said, speaking at Monday's briefing.

"We're now at the stage of making significant decisions. There is no doubt there has to be an element of savings and there's simply no way around that."

Pressures on the £213million budget include an anticipated £3.4million increase in pay awards, a £2.1million increase in fuel bills and £5.1million in charges for new high schools in Earlston, Eyemouth and Duns, built under public-private partnership (PPP) agreements.

But despite the local authority being hit badly by the current financial climate, Mr Parker insisted neither dipping into reserves nor increasing Council Tax rates are the answer and said cuts will instead have to be made elsewhere.

Already, savings have been made this year though internal "efficiency measures" but, according to finance chiefs, further significant cuts will still have to be made through both the Transforming Children's Services (TCS) and the Older People reviews.

Yesterday, Mr Parker rejected claims that recent public consultations on these had been a sham.

He told TheSouthern: "There's no doubt we're looking to make savings through these, but we think we can deliver things in the same way or better and still make savings. As a result of the TCS consultation, there will be specific changes to the proposals which will be put to a full council meeting on November 20. The same is true of the Older People review."

"We're working hard on this budget and we're doing our best to understand the current economic climate and how to respond.

"The fact that we're trying to freeze Council Tax is recognition of that, but I have to be honest, it might not be possible to close the gap without making difficult decisions and changes to services.

"There may be adjustments that will impact on people across the Borders, but we just don't know yet."

The recent crash in the property market has also hit SBC, with the news a £6million one-off payment for the three new high schools, due in July 2009, will have to be funded using cash originally intended for other capital projects.

Mr Parker continued: “We’d hoped to achieve more from the sale of assets but we were unable to achieve that because of the current state of the market, so we had a review of the capital programme and managed to find £6million from within.

“You can’t take that amount of money out of the capital programme without there being some impact, so there has been some slippage and we’re looking at other delays.”

Meanwhile, the local authority remains optimistic about £10million of public money locked in two Icelandic banks that collapsed earlier this month.

The council leader said he is expecting to hear from administrators Ernst & Young in the next few weeks about £5million tied up in Heritage Bank and – while admitting there has been some difficulty in pursuing a claim for £5million invested in Landbanski (now under the control of the Icelandic government) – said there is “cause for optimism” and insists it is still a case of “when, not if”.

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