Scottish council in budget warning as it forecasts a £70m gap

A Scottish council has revealed a £70m black hole in its finances for next year.

Local authorities are legally required to set a balanced budget.

But Highland Council says it faces a projected budget gap of £60-70m in 2024-25 and the impact could be "disastrous" for the area.

The warning comes after First Minister Humza Yousaf announced he will freeze council tax across Scotland.

That move was made without the agreement of councils body Cosla, in breach of the Verity House Agreement. It is not yet known how much it will cost.

Highland Council has said there will be "considerable uncertainty" around this until the Scottish Government announces its budget in December.

Raymond Bremner, leader of Highland Council, said: "While we understand the cost of living crisis for our communities, local authorities are also facing incredible cost pressures in the shape of inflation, high rates of interest and the need to fund pay settlements.

 "We anticipate we will have an unprecedented budget gap next year of around £60-70m and a shortfall of around £100m over the next three years has been forecast.

"Without adequate funding, we will have a choice of making service reductions or increasing income or a mixture of both. 

"Service reductions would also mean job losses and that is something we are doing everything possible to avoid, as this would be disastrous for communities and our economy in the Highlands."

Convener Bill Lobban added: "This council has managed through prudent financial management to build up a level of reserves which were used to balance our budget this year. 

"However, that cannot continue, and we must find a sustainable way forward to ensure we can provide the badly needed services that Highland people deserve, including having control over our spending and the income we generate."

 Councillor Derek Louden, chair of the authority's resources committee, commented: "Last year we set one of the lowest council tax rates in Scotland in recognition of the cost of living crisis in our communities.

"Council tax freezes have a long term negative impact on local authority budgets and effectively widen the budget gap in the coming years.

 "We will continue to work with our Cosla colleagues, to get clarification of the Scottish Government's plans and how the cost of any freeze would be funded, both for next year and mitigation of the impact on future years’ budgets."