Precarious position in Moray’s finances revealed in Council report

Moray must act now as current financial plans are ‘unsustainable’

A FULL COUNCIL meeting on Wednesday could have far-reaching consequences for service delivery by the local authority with Councillors being told that current levels of capital expenditure are “simply unsustainable”.

A detailed paper being put by Mark Palmer, head of corporate services, shows the realities being faced by the local authority and seeks that formal recognition is given that alternative plans must be found and put in place soon.

The report seeks to provide Moray Council with a revised capital strategy that complies with the Chartered Institute of Public Finance and Accountancy (CIPFA) prudential code for capital finance.

A key proposal being put in Mr Palmer’s paper notes: “It is proposed that the council should formally recognise that current levels of service provision are not sustainable and action needs to be taken to enable the council to demonstrate compliance with the Prudential Code.

“The overall financial strategy that has emerged over the past few months is that the council will use reserve funds to maintain services at current levels during 2016/17 and, has recognised the need to embark on an ongoing programme of engagement with the local community and, other stakeholders, to influence the changes and reductions that need to be made.

“It is envisaged that some progress, towards a sustainable level of service delivery, will be made in setting the 2017/18 budget, but there is likely to be a further substantial use of reserves. Using reserves is highly unlikely to be an option when setting the budget for 2018/19.”

The report adds that failure to formally recognise the position requires at least an acceptance to limit capital expenditure, saying: “If the council does agree to formally recognise the fact that current levels of service provision are not financially sustainable, then it should agree to limit capital expenditure until a sustainable position has been reached.

“Whilst this does not demonstrate immediate compliance with the [CIPFA] Prudential Code, it would demonstrate that the council is working towards compliance.”

Among a raft of detailed issues the report proposes a new draft Capital Strategy and proposals to limit items that have already been agreed. These include a limit being place on the replacement for Lossiemouth High School so as to restrict it to a new school incorporating a public library only – delaying the building of a new swimming pool and community centre for the project.

Mr Palmer concludes: “As reported on a number of occasions, current service provision is not financially sustainable and the council needs to focus its efforts on addressing this fundamental problem during the next two years.

“Whilst a simplified interpretation of the problem could result in the council freezing all non-committed expenditure, this would result in higher costs over the longer term. Substantial change and reductions will be necessary and the council is urged to take an extremely cautious approach in relation to its financial plan, incorporating the capital plan.”

The report and its detailed appendices appear as Item 8 on the Agenda for Wednesday’s meeting and can be found online.