EARLY estimates suggest East Renfrewshire Council could be facing a budget gap of £7.3million next year.

Work for 2022/23 is underway ahead of the Scottish Government’s budget announcement, which is scheduled for December 9.

Councils are expecting to find out their grant settlement before Christmas, but a report to East Renfrewshire’s cabinet states the forecasted required savings is £7.3m.

The figure is based on the assumption of a “flat cash grant settlement, together with a three per cent council tax increase and typical non-pay spending pressures”. 

It does not include pressures related to Covid-19 as it is expected these will be covered by specific grants or fiscal flexibilities.

If there was to be a one per cent cash reduction in the grant settlement, then the savings figure would rise to £9.5m.

The report adds: “These shortfall figures will change significantly as more detailed information on the 2022/23 settlement and spending pressures becomes available and is factored in.

“This will continue to be closely monitored in the next few months. Should the grant settlement position worsen and/or the level of pay award increase, the budget shortfall would further increase.”

Given the “level of uncertainty”, a “flexible approach” to covering the shortfall will be needed, the report states.

Options include using reserves, although that is not an “ongoing solution”, and raising council tax above three per cent if permitted. The report states a one per cent increase raises roughly £600,000.

Directors of council services have also been asked to identify possible cuts to cover the shortfall, and the council is awaiting final guidance on how fiscal flexibilities may be used to address “future budget challenges”.

“The outlook continues to be challenging,” the report adds. “The council has already been made aware of the significant rise in loan charge repayments in the coming years due to our ambitious Capital Plan. 

“This position may be exacerbated in future with current price rises and shortages affecting capital projects and the potential impact of the current national review of capital accounting arrangements.”

Councillors will be updated on capital plans and the loan charge position in February next year.

The report reveals it is expected that Covid grants, unused by March 31 next year, will be able to be carried forward to meet “ongoing pandemic pressures”. However, it adds there has been “no indication” whether there will be further funding or fiscal flexibilities available.

The Convention of Scottish Local Authorities (COSLA) is monitoring the position and lobbying for continued financial support next year, the report claims.

East Renfrewshire Council’s reserves had been forecasted to be £5.6m by the end of March, however, due to “control of expenditure”, they are now expected to be £7.85m.

The report on the council’s financial position will be presented to a meeting of the cabinet this week.