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Alloa & Hillfoots Advertiser

£9 million hole in the council budget

Kevin McRoberts • Published 11 Nov 2009 10:05 Mobiles Print Comments 15 Comments

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A MAJOR cost-cutting programme is being implemented as Clackmannanshire Council needs to find £9 MILLION in savings to balance the books.

While some of the shortfall has been put down to additional budget pressures, half this figure is due to mistakes in allocating funding.

Around £4.5 million has been 'double-counted', leaving a massive black hole in the budget.

This seems to have been a simple accounting error - but the consequences are bound to be far-reaching, with the prospect of a number of jobs having to go and non-essential services being cut.

Clackmannanshire Council chief executive Angela Leitch confirmed an investigation - as revealed in last week's Advertiser - was now being carried out by another authority.

The chief executive told the Advertiser, "We are looking into what went wrong and once we know what caused this, we will take the appropriate action."

The council's workforce and unions were made aware of the budget crisis at the beginning of this week, and - inevitably - there are concerns over jobs and services.

The council says it has already identified £6.7 million which could be in place for 2010/11, leaving a shortfall of £2.3 million.

Angela Leitch said, "We are looking at every area of the council to see if we can improve the way we work.

"In common with many local authorities and public bodies, we are already scrutinising every vacancy, and we've taken out a number of posts in the last year.

"Around 70 per cent of our budget goes on staff costs, so we will have to look at that, but a big proportion of our services require face-to-face contact so we will need to look long and hard to ensure we maintain essential services.

"We will do our utmost to protect frontline services."

The accounting errors relate to the council's failure to properly allocate £2 million for the Schools PPP project, £2.2 million for the Fairer Scotland Fund and £200,000 for the Zero Waste Fund.

The council previously received funding for these 'ring-fenced' projects separately from the Scottish Government, but this year they were included in the general grant.

The council was then supposed to allocate the necessary funds to the projects, but appears to have failed to do so, with the money instead being allocated to other services.

Angela Leitch continued, "It's a serious situation but the council has been looking at ways to work more efficiently and deliver services differently for some months now, in a series of Delivery Teams targeting key areas.

"The budget situation means that we will be accelerating the pace of some of the changes proposed by these groups."

This has involved services sharing administration teams, and bringing together other functions across the organisation.

"We will be looking closely at assets such as property and how we can use them most effectively, as well as expanding the range of services we offer online.

"All of these are changes which the council was aiming to make, to streamline services and make best use of new technologies.

"But we will now be acting even more swiftly to realise savings as early as possible."

Clackmannanshire's SNP group has expressed shock at the latest revelation on the state of council finances - and has suggested the Accounts Commission for Scotland should be brought in to investigate.

Councillor Gary Womersley said, "Coming hard on the heels of the revelation that this Labour administration had written off over £7 million worth of bad debt, these latest statistics will come as a severe shock to Clackmannanshire residents and employees of the council.

"Council staff will quite rightly be concerned about job security but I think it is right and proper that the full facts are determined and put before all the members of the council.

"The SNP will be demanding an emergency meeting of the council so that the full facts can be given to councillors and proposed action determined.

"It is important that there is complete transparency regarding this issue and I believe that a complete root and branch audit of all council finances is warranted here.

"If we have seen the problem that a £25 million black hole caused for another authority (Aberdeen Council). I hate to think what effect a £10 million black hole will have for the smallest local authority in Scotland - it's going to be tough to see this one through."

Councillor Mark English added, "The SNP have indicated their concern for some time about the rollercoaster nature of the council finances.

"Such was our concern regarding the financial culture within the council that we had asked for external auditors to be brought in, but this Labour administration have been unwilling to react to the situation."

Councillor Janet Cadenhead, leader of the Labour adminstration, admitted the council was in a serious position - but she insisted it would be able to get out of it.

She said, "There's no denying that we face some extremely difficult times ahead and have some very tough decisions to make.

"Like every other local authority, we are facing financial difficulties, but we already have plans in place which would meet the vast majority of the savings we have to find.

"I am confident we can fix this situation if we all come together.

"Comparisons with the council in Aberdeen are not helpful - our position is completely different.

"With the support of our staff, we will be able to find a solution which will leave the council in a much better position.

"We will keep the staff and the people of Clackmannanshire informed of what is happening every step of the way.

"It is important that this matter is dealt with in the open and with full transparency, and that's what we'll do.

"With everyone's support, we will get through this."

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