Budget proposals for the next financial year were announced by the council’s political leader Gary Robinson at the full council meeting on Wednesday.
Next year, 2014/15, will see a £14.8 million draw on reserves, but this, he said, is down from £30 million in 2011/12 and “shows the distance we have come”. Further savings should be made up to 2017 but, if the 2014/15 budget is delivered: “Our difficulties should be behind us.”
Next year there will be cuts of eight per cent on corporate services, 13 per cent on development and 12 per cent on infrastructure. Children’s services and community care will be “protected”, with only two per cent reductions.
The only two new capital projects will be the new Anderson High School and broadband infrastructure.
The council’s financial position is steadily improving, executive director of finance James Gray told the meeting.
The news came after a report by Audit Scotland gave a positive picture of the situation. The financial statements were unqualified and were deemed by auditors to give a “true and fair view” of transactions in the financial year 2012/13.
Although the council had made good progress in saving money it could not be complacent, however, and would have to make “difficult decisions” regarding provision of services. This would specifically mean not eroding its reserves. The council’s medium term financial plan should ensure a minimum reserve balance of £150 million by 2017/18. The plan requires savings of £23 million over the next four years.
Mr Gray said that the council’s reserve fund, in the 20 years from 1993 to the present, has stood at roughly £200 million. These investments are managed by fund managers and they have earned an average annual income of 5.75 per cent, or £11.5 million. Taking inflation into account, at a rough figure of 2.5 per cent, or approximately £3.25 million, a sum of £6.5 million income is left. This could be spent by the council every year without plundering the reserve fund.
During the last year, after taking into account statutory adjustments, the overall draw on reserves was £21.4 million, almost £5 million less than budgeted.
Audit Scotland auditors called the financial report “all satisfactory” and “very positive”, but the “key challenge” was to keep the draw on reserves down.
Another positive piece of news came about the council’s pension fund, which is in good shape, according to external auditor Carol Hislop who addressed the meeting.
Ms Hislop said the pension fund statement gave a “true and fair view” of the situation, with the fund having £306 million net assets. This is similar to the pension funds of other authorities, she said.