East Ayrshire Council has revealed that it will have to find £2.8million to cover staff pay increases.
Council staff downed tools after they were initially offered a pay increase of two per cent earlier this year, pointing out that rising inflation made this a real terms cut in pay.
Strike action was called off when Cosla made an offer of five per cent, with the Scottish Government putting up £140m while calling on councils to match this.
On Thursday, the council’s governance and scrutiny committee were warned that the increase was a factor in the council potentially being unable to meet costs out of the money it receives from the Scottish Government.
The government’s spending review indicated that there would be a freeze on council cash over the next five years.
As well as the pay increase a number of factors are highlighted :
- Covid
- Brexit
- Inflation, energy costs and the cost of living crisis
The report states: “We consider the overall risk rating to be high given the significant challenges that have arisen from the Coronavirus pandemic which has had an unprecedented impact on UK Government borrowing levels and which will potentially lead to reduced funding allocations going forward.”
February’s council budget saw £6m in cuts to balance the books.
The report continued: “We recognise that the volatility around inflation, energy costs and the cost of living will continue in the short term.
“The Resource Spending Review and the Medium Term Financial Plan published by the Scottish Government in May 2022 shows that funding to Local Government will be held at 2022/23 levels until 2025/26 which will in turn present additional financial pressures given demand levels and the current projected rate of inflation.
“Pay negotiations remain live for all staff groups with the offer to the SJC of five percent being more than had been modelled in the budget for this year.
“Negotiations continue at a national level and the Scottish Government has intimated that they would provide £140m on a recurring basis to help with the costs of the revised offer.
“Modelling shows that even after this contribution the council could have an in year recurring unfunded liability of £2.8m which will increase the stress on the existing budget.”
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