South Ayrshire Council’s massive cash shortfall

Jul 2 2010 by Edwin Lawrence, Ayrshire Post (main ed)

A MASSIVE cash shortfall of £56 million is faced by South Ayrshire Council.

And like every other council in the land, it will have to find even more savings.

The stark deficit is revealed in the latest Audit Scotland checks on the council.

Auditors reckon South Ayrshire will come up short by a staggering £34 million in revenue (day-to-day running costs) over the next three years.

And it will be £22 million adrift in funding for capital (one-off) spending projects over the same period.

Then there’s the uncertainty about the return of a £5 million investment with an Icelandic bank.

Also the UK government’s spending review, concluding in the autumn.

Most would say it’s a pretty bleak financial position.

But South Ayrshire was in such dire straits two years ago, that Audit Scotland says the council’s position has actually IMPROVED.

And it says the council has succeeded in establishing a medium-term financial strategy.

Auditors report: “Financial pressures remain, due to the economic climate, demographic change resulting in an increase in service demand, and future funding gaps.

“The council is actively managing these risks, but it would benefit from introducing more detailed financial plans.”

Just two years ago, the council was slated for having the lowest cash reserve fund of any council in Scotland.

But it should reach £6.8 million this year, with the council aiming for £8 million by March 2013, to meet unexpected events.

All these figures have to be taken into the context of the council’s annual spend of £270 million.

Auditors also reckon the council is improving its customer care, although it still has a way to go.

South Ayrshire opened a customer contact centre in Ayr in February, dealing with council tax, waste uplift and general enquiries.

But the council is not meeting its target of having all calls answered within 60 seconds, as the average queuing time is two to three minutes, and 25 per cent of calls are abandoned.

Scrutiny by councillors – regarded as ineffective a couple of years back – is also said to be improving.

But auditors say officials must improve the quality of information going to councillors.

This follow-up report was ordered by the Accounts Commission, and chairman John Baillie said: “South Ayrshire Council has made good progress in addressing the improvements needed.”

But he admitted: “However, there is still much to be done. As the council recognises, many of the improvement activities are still at an early stage.”