Fife Council have almost £183m of unspent cash to ‘cushion’ the blow of soaring costs
FIFE COUNCIL carried forward a balance of almost £183 million into this financial year which “could be used to cushion the impact of rising costs”.
Finance chiefs said the amount of cash left over at the end of 2021-22 was “unprecedented” but warned against blowing it all amid an uncertain future.
At the cabinet committee meeting on Thursday, councillors were told there were still huge challenges due to the pandemic, rising inflation, pay pressure and supply chain problems, while they’ll have to wait on Scottish and UK government budget settlements to find out how much they’ll get to fund services.
Eileen Rowand, executive director of finance and corporate services, also warned the council was “likely to see enormous cost increases in energy, fuel, other commodities and in construction” with an estimated £6m shortfall in energy costs alone.
While they have a whopping general fund services balance of £182.8m, she warned: “Whilst the outturn position is favourable, over the year the economic conditions have changed dramatically and the council is facing an extremely uncertain financial future.
“Cost increases as a result of rapidly-increasing inflation are a real risk in the coming year and potentially beyond.”
The cost of COVID to the council was put at a net cost of £35m for 2021-22 but Ms Rowand said this “masked” the true picture of what’s in the council’s coffers.
An underspend in core general fund services of almost £7.4m, together with additional COVID-19 funding of £11.3m and contingencies of £38.6m added up to £58.9m left unspent.
Added to £121.7m left over from 2020-21, with £2m of other statutory reserves, that takes the balance carried forward to £182.8m.
She told councillors “we are in quite unique times” and her report said: “The level of balances is unprecedented and comes as a result two years of significant financial uncertainty, coupled with a raft of additional funding being provided towards the very end of last financial year.”
The finance chief added: “Whilst the organisation is facing a financially-uncertain future, the provisional outturn for 2021-22 is favourable, providing one-off resource which could be used to cushion the impact of rising costs in the very short term.”
She said that, of the £182.8m carried forward, there were plans for all but £31m of it.
The report shows that £98m of ring-fenced cash from the Scottish Government and money awarded for specific items, such as the energy management fund, Council Tax second homes and COVID-19, will now be spent in 2022-23.
That includes ongoing costs associated with recovery such as additional teaching staff, cleaning costs, Personal Protective Equipment (PPE) and some loss of income due to demand not yet returning to pre-pandemic levels.
Some of that money will also be used for the increased costs the council will face in respect of inflation on commodities, utilities and construction.
Almost £9m is committed in 2022-23 for pay and pensions, Fife Job Contract, workforce change and election costs, as well as £250,000 for a baby ashes memorial to be sited in Dunfermline, while there’s a further £25m of planned spending in 2023-24 and £18m in ‘future years’, leaving a balance of just over £31m.