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Aberdeen budget: Why council tax is going up and harsh cuts could become a reality

Our guide reveals why Covid, the invasion of Ukraine and surging energy prices have all led to a cash crisis.

Aberdeen's budget explained
Aberdeen City Council is facing a financial storm. Image: Roddie Reid/DC Thomson

Councillors will have to weigh up a perfect storm of financial challenges as they find ways to cut £46.6 million in year-on-year spending.

To achieve this, city accountants have pressed for a 10% increase in council tax from April.

But the body’s largest political group, the SNP, ruled out the step after The Press And Journal exclusively revealed the eye-watering hike was under consideration.

But this could be a double-edged sword…

In protecting residents from the steep jump in council tax bills, councillors could be left slashing spending on some important services.

The upcoming talks will shape the next year in Aberdeen. Image: Chris Sumner/DC Thomson

Aberdeen budget explained: Council tax level will impact on cuts

Encouraging the rise in a report to be considered next week, chief finance officer Jonathan Belford blamed a lack of central funding.

He added: “Local authorities must turn to the fiscal levers they have to maximise and influence the level of income they have, to pay for services

“Fundamentally this means looking carefully at the power to raise funds locally from council tax, and to review/apply fees and charges for services.”

The 10% council tax rise would have raised an extra £12m every year but looks destined to fail.

A 4% rise – matching Aberdeenshire Council – would bring in £7.8m less.

This could mean councillors have less flexibility when it comes to saving the wide range of services now on the chopping block.

Aberdeen City Council's chief finance officer Jonathan Belford has warned the cost of borrowing to fund capital projects - including big money regeneration work - will be more expensive after the last three months in politics. Image: Scott Baxter/DC Thomson.
Aberdeen City Council’s chief finance officer Jonathan Belford. Image: Scott Baxter/DC Thomson.

Managing to avert cuts last year could mean difficult decisions ahead

Other reasons this year’s budget could be especially bleak for Aberdeen residents include decisions made when councillors balanced the books last year.

Perhaps wary of inflicting savage cuts months ahead of an election, “one-off” measures were used to save many services from harm.

The “unsustainable approach” included deferring debt repayments for a year and plundering reserves.

Mr Belford explains: “Each annual budget must unwind the one-off funding solutions, increasing the financial challenge in the following year to approve a balanced budget.”

Spectre of Covid continues to haunt council

The finance boss says the pandemic made it “crystal clear” that “a single event really does have the ability to impact the council so significantly that it needs to have resources immediately available”.

Aberdeen city centre during lockdown. Picture by Scott Baxter

The subsequent invasion of Ukraine along with rising inflation, supply chain turmoil and soaring fuel costs caused more chaos, “reinforcing” the need for the council to be “financially resilient”.

The council’s gas bill has shot up by 129% and electricity by 67%, and these costs “have to be passed on”.

‘Never before’ has it been so important to make savings

It also comes against a background of “challenging” pay negotiations with unions, increasing the authority’s wage bill.

“In the case of the current offers made by to unions (and in some cases accepted), the
council has had to find an additional £4.5m, a recurring cost that has only added
to the budget gap for 2023/24.

“At time of writing the uncertainty remains, as two pay bargaining groups have yet to be agreed leaving the final cost to local government uncertain.

“Never before has it been so important to have financial resilience.”


Are you worried about the impact the budget might have on your family? Let us know in our comments section below


Big ticket items could make a dent in Aberdeen City Council’s £46.6m budget blackhole

It’s with all this in mind that Mr Belford also wants to increase all council fees and charges by 10%.

His estimates show that would bring in another £763,000 a year.

The council is looking to save more than £100m over the next five years – and much of this year’s savings will likely come from the early parts of that reorganisation.

Combining organisational redesign with a voluntary severance and early retirement drive is hoped to free up £11.7m next year.

Making use of new Scottish Government flexibility on accounting charges for the Aberdeen’s for ‘3R’ public private partnership (PPP) schools and Lochside Academy would save another £4.5m.

The new system for empty property relief on business rates could take the total for these big ticket items to around £17.6m.

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