£172m funding gap is worse case scenerio

South Ayrshire Council faces a‘ worst case scenario’ of a £172 million funding gap over the next decade.

At a recent Audit and Governance Panel, two separate reports outlined the long-term financial outlook.

Both the council’s unaudited annual accounts and a best value report pointed to a worst case scenario of a £172m gap over the next ten years - a figure first revealed in October.

However, the best case scenario is a £36m gap, although the best value report by external auditors Deloitte indicates a gap of between £108m and £172m, the £108m referring to a middling scenario.

The Accounts Commission also reported a potential gap over an eight year period between 2022/23 and 2029/30 of £56m and £69m.

These figures are cumulative, with the council having to make savings every year to ensure a balanced budget.

In March it was projected that the council would face a gap of between £6.18m to £20.3m in 2023/24.

The figures were all published prior to the Scottish Government’s Resource Spending Review in May, when it was announced that councils face a five year funding freeze.

The unaudited annual accounts state: “Every council in Scotland operates in a challenging economic climate and is faced with significant financial challenges due to the decreasing budgets and increasing demand for services.

“The Council’s current Long Term Financial Outlook (LTFO), published in October 2021, covers the period 2022-2032 and, using a scenario-based planning approach, indicated a potential budget gap of between £36.2 million and £171.5 million over the ten-year period of the plan.”

In its best value report, Deloitte wrote: “It continues to be faced with significant financial challenges over the medium and longerterm, projecting a funding gap of between £6m and £20m by 2023/24, and a gap of between £108m and £172m over a ten year period.

“It is positive to see the work progressing with the Strategic Change Programme with governance arrangements in place and the planned approach agreed.

“However, there is still insufficient detail against each project to be able to demonstrate that the plans are sufficient to meet the significant challenges that the Council is facing over the medium-to-longer term.”

The Accounts Commission report from October said:“The current estimated funding gap for the eight-year period 2022/23 to 2029/30 is between £56 million and £69 million.”