Council adopts a measured approach to keep budget on track
East Ayrshire Council is adopting a ‘measured approach’ to fiscal management as it strives to overcome the financial challenges of not only this current year, but to prepare the ground for years to come.
Joe McLachlan, Chief Financial Officer and Head of Finance and ICT set out the challenging and ongoing pressures that are impacting upon the Council and its services as he introduced the Council’s quarterly performance report ‘East Ayrshire Performs’ at Cabinet earlier this week.
During the first quarter of this financial year (April to July) the Council has incurred a £6m overspend. Mr McLachlan warned that if demand, cost pressures and spending plans were to continue in the same way, there is the potential for this overspend across the Council to rise to around £20m by March 2025; £9.997m would relate to services provided by the Health and Social Care Partnership, with £9.836m across services directly governed by the Council, primarily Education.
Health and Social Care services continue to experience legacy issues from the pandemic as well as the long-term pressure from an ageing population with increased numbers of people living with multiple and complex conditions. The Education service faces additional pressures relating to Additional Support for Learning and the costs of covering teacher absences.
Financial recovery plans are currently being prepared for services across the Council, but a number of immediate precautionary measures have been put in place to help minimise spending by introducing additional governance measures.
- A freeze on the filling of all non-essential vacancies until further notice;
- All non-staff expenditure is incurred on an essential, business critical basis only;
Mr McLachlan explained: “These precautionary measures will be challenging for services, and they will require an increased level of financial control and monitoring to ensure that their implementation has the desired impact - which is to prevent the potential financial projection being realised.
“The Council’s Management Team fully supports these interventions which will ensure that recovery action can begin immediately, with other service-based recovery options implemented at pace. Additional technical and professional supports have also been provided to assist Heads of Service complete and monitor their recovery plans.
Councillor Douglas Reid, Leader of the Council welcomed this approach. He said:
“East Ayrshire Council has always prided itself in having sound and rigorous financial management arrangements in place. This has enabled our Finance Team to identify potential risks at an early stage in the fiscal year and to respond quicky with an alternative course of action. We’ve known for some time that there would be some significant financial challenges ahead for us, but we have previously taken steps to prepare for this and having a whole Council approach to financial recovery is the way forward.
“Innovation and new models of services will be the key to success and the creation of the £40m ten-year fund to tackle child poverty and support early intervention and prevention initiatives aimed at reducing demand on Council services, reducing costs, and increasing collaborative working with partners will support the Council - and our communities - into the future.”