A nationally negotiated pay increase for Highland Council staff could force a Council Tax hike to balance the books as the the local authority eyes spending 50 per cent more on potholes
PAY could increase for local authority workers at the same time as council tax rates also rise for householders.
The scenario is outlined in a financial planning report due to be considered by councillors this week.
Setting out a range of aspirations and possibilities for council spending over the next five years, the report models pay awards of either one, two or three per cent for staff.
Though any rise would be set nationally, through discussions between unions and the Convention of Scottish Local Authorities (Cosla), individual councils would have to provide for it.
Councillors are told: “Pay costs reflect the biggest single expense that the council incurs, with salary costs in excess of £300 million incurred annually.
“Annual pay awards of one, two and three per cent have been included in different scenarios – these are intended to reflect the potential balance that may need to be struck between demand and affordability.”
No pay increase has yet been agreed for this year after unions previously rejected an offer of two per cent from council bosses.
At the same time, as part of the same report, council tax increases of between three and six per cent are also modelled.
The council says it “anticipates” receiving more than £500 million revenue funding for 2021/22 from the Scottish Government, representing 80 per cent of the total external funding it receives.
“Any changes to this funding will therefore have a significant impact on the council’s financial situation,” the report states.
With Highland council tax expected to raise £131 million this year the report continues: “Council tax rates are determined locally but any future increases may be constrained by government policy.
“A range of annual increases from three to six per cent have been modelled in the expectation that in scenarios with greater reductions in core government funding a higher rate of council tax increase may be allowable.”
A proposed council tax increase for this year was only headed off after the Scottish Government stepped in with a deal that allowed it not to be imposed.
The council’s five-year financial plan also aims to pour millions more into improving local roads, ramping up spending by more than 50 per cent.
The report details how the cost of the overall backlog on work to Highland roads now stands at £194 million, with just over £25 million a year needed to keep local routes in a “steady state” – no better or worse than they are at present.
In 2020, an additional £20 million was provided for roads to be spread over two years – that brought the total investment on roads to £17.2 million.
Now an additional £5.5 million is sought for this year which brings the total to £22.7 million but that some £2.39 million short of the steady state figure.
Next year a further £3.5 million will be spent bringing funding up to £20.7 million, which is £4.39 million short of the no better or worse than at present standard.
The cash will go on new machinery and increasing the number of “first time permanent” repairs on potholes.
The report details the range of “uncertainties” that could impact on longer term council budget planning, including ongoing impacts of Covid-19 and Brexit and any climate and demographic challenges.
And it adds: “In terms of funding the council has only received a settlement for 2021/22, with no visibility on settlements beyond that.
“With regard to pay, no agreement has been reached on a pay award for 2021/22 and a long term settlement looks unlikely.”
Given the range of variables the council says it could be looking at a budget gap – the difference between income and expenditure – of anywhere between £13.9 million and £120.4 million.
However, it is currently working on the expectation of a need to make annual savings of £15 million as the most likely scenario.
Related story – Highland councillors clash over urgent road spend
