“There is no light at the end of this tunnel,” Aberdonians have been told – as the city braces for another multi-million-pound budget cull.
City accountants predict £43.5 million will need to be cut from day-to-day spending in 2024-25.
The projected black hole in the pot for everyday council services has gaped a further £8m on what was feared in March.
And it will mean cuts of similar scale to this year, when councillors slashed £46.6m from public spending.
A latest in a bleak series of budget days, Aberdeen City Council has since been taken to court over the closure of libraries and swimming pools which followed as a result.
With those unpopular decisions now taken, this year the axe could fall on schools, grass cutting, street lighting and road maintenance.
Further cuts could be made to the library service or further council tax hikes might be considered following this year’s 5% rise.
But the soaring cost of borrowing also threatens the grand multi-million-pound regeneration plans for the city centre and Aberdeen beach.
Gross external debt topped £1.5 billion last year. And the rising cost of maintaining that debt is leading to calls to scale back or slow down the city’s building projects.
Aberdeen budget survey to ask public which cuts would hurt least
After this year’s budget backlash, the SNP and Lib Dems running the local authority have launched a consultation of citizens to try to understand what they value most.
The first phase, a more general poll, revealed schools and education to be public priority number one.
Art, culture and sport followed closely. Insight gleaned from the work so far was put to councillors this week.
A second survey, more detailed and in line with the screeds of budget options councillors are presented with to find ways to balance the books, will come in the autumn.
Even with public input, the difficult decisions will not ease in coming years.
The squeeze will continue as the city’s pips squeak.
In 2025-26, budget cuts of an estimated £29m will be required.
The following year is first which council chief finance officer Jonathan Belford believes could bring more money for local government, with an expected 1% increase across the board.
Hopes of less ring-fencing of funding coming from Holyrood offers officials some hope of flexibility in the bookkeeping.
But the city is still expected to need to slash a total of £123m from everyday services between now and April 2029, if there is no change.
Aberdeen’s continued budget woe: ‘No light at the end of this tunnel’
Meanwhile, Mr Belford told councillors: “I have set out scenarios for a number of years and there is no light at the end of this tunnel, it would seem.
“There’s always a gap become our income and expenditure.
“The funding that supports our services is not expected to increase and therefore the demand and cost pressures that we cannot fully control will have to be addressed by the council.
“The gap between our forecast income and expenditure in the coming years means that decisions will have to be taken. I believe these will not be easy or straight forward.”
And, there is inflation still to contend with. The cost of heating council buildings, like schools, has risen significantly.
There is also pay inflation. Large swathes of council staff have won significant pay increases this year.
Negotiations continue over further wage rises too, leaving future pay bills uncertain for now.
Interest rates threaten big plans for Aberdeen revamp
On top of that, the cost of borrowing has gone up amid the global economic turmoil.
It means the debt the council has built up on huge capital projects – the beachfront revamp, Aberdeen market, P&J Live and construction of new homes and schools – is now costing more.
Previously, chiefs accounted a £50,000-a-year payment on every £1m they borrowed. Now it’s £60,000.
The inflation has hit around a quarter of the city’s £1.5 billion debt, while the rest is secured on a fixed rate of interest.
The soaring cost of that 25% of the bill – some £375m – has led Jonathan Belford to urge a scaling back or slowing down of the council’s building projects.
“A balance must be struck,” he said.
More than £730m is slated to be spent on city projects – new schools, homes, roads and technological infrastructure – over the next five years.
A search for fat to be trimmed is already under way. Those projects that do get the go-ahead could take far longer to come to fruition as well.
In a “sobering” report prepared for councillors, he wrote: “Options available to the council for managing rising debt levels include reducing the scale and scope of the capital programme or extending it over a much longer period.
“The council must consider if the proportion of revenue resources allocated to capital financing is appropriate and it should make changes as necessary as part of the 2024-25 budget setting process.”
Hope Aberdeen public can ‘understand difficult budget decisions needed’
In previous years, communities, charities and organisations reliant on council cash have spent the week before the budget meeting in panic.
Hundred-page documents list doomful options listing everything from cutting school meal provision to closing libraries.
SNP finance convener Alex McLellan revealed hopes the new budget consultation would remove some of the dread.
He said: “These are simply unprecedented times and we’re doing all we can to manage our way through this storm.
“Our partnership has committed to greater community engagement through the budget protocol and setting the budget.
“We are striving to improve consultation, improving the conversation with citizens.
“In this ever-challenging financial environment, it’s important the public are aware of the challenges so they understand the difficult decisions we need to made.”
