Inverclyde Council may have to make 'unpopular' savings

The council's chief financial officer, Alan Puckrin, warned councillors against using the authority's cash reserves to plug recurring holes in its budget in future.

Councillor Stephen McCabe said the financial position facing the council is the result of "unforeseen pressures" on its budget this year.

The remarks were made during a discussion at the council's policy and resources committee on the authority's budget projections for 2025-26.

A final decision on the council's spending plans for the next financial year won't be made until February, but Councillor McCabe told the meeting he expected some potentially unpopular savings options to be laid out before Christmas.

A document laid before the committee's meeting on Tuesday stated that officers had identified a £1.2m deficit the council’s 2024/25 revenue budget, meaning the council has an £800,000 shortfall against its minimum level of 'unallocated reserve cash' for this financial year.

While the council has £40 million in reserves, around 90 per cent of that has already been allocated for specific purposes.

Mr Puckrin said: “The council has a lot of reserves. Elected members have taken decisions to allocate and earmark significant volumes of reserves.

“At the moment from, what I can recall, we have about £40m worth of reserves.

"The projection in the report presented earlier indicated that free reserves, the unallocated bit, was going to fall below £4m, which is the minimum amount I would recommend.”

The financial chief then went on to advise councillors that they consider taking savings measures if further budget pressures materialise.

He added: “My professional advice to elected members is that at moment, in this year’s budget, we’re using over £2.6m worth of reserves and, have provisionally budgeted to use £2.9m of reserves in 2025/26.

"I personally think that’s a reasonable upper limit of the use of reserves to balance the day-to-day recurring budget.

“So, if there are new pressures that emerge, I would make recurring savings to square them off, rather than increasing the use of reserves from £2.9m to £3.6m, because we are ultimately going to have to address that.

“Whilst the use of reserves that this council has approved is higher than I would ideally like, it’s significantly less proportionately than a number of councils are using.

"But I’m focused on Inverclyde Council’s financial position, not other councils' financial position.

"My advice would be: don’t use any more reserves to square the recurring budget; come up with savings.

Councillor McCabe highlighted a range of factors which could affect the council’s current two-year budget, which was signed off last April.

He said: “This report stems from the fact that there are unforeseen pressures happened in the current financial year that we need to address. Officers are going to bring forward savings proposals to help us address them.

“I don’t know what they’re going to be at this point in time, but we’ll have to consider them.

“We’ve set a two-year budget, but we’ll obviously have to review the second-year budget in the context of any settlement we get from the Scottish Government, inflation, any other factors, the ongoing impact of pay awards, et cetera.

“Essentially, to use a golfing analogy, we only have three clubs in our bag: we make cuts, we put council tax up, we can put charges up.

“We’ve made certain assumptions around all of those in setting a two-year budget, all of those will need reviewed and can be reviewed in the context of the challenges we face.

“As we see in the report it’s not just councils facing these pressures. The UK Government is facing these pressures and making uncomfortable decisions. The Scottish Government is facing these pressures and making uncomfortable decisions.

“And I’m quite confident that when officers bring forward savings proposals in December some of them will be unpopular decisions that we may have to take.”