Our Financial Situation

Why are we faced with budget reductions?

The UK Budget Deficit

In an attempt to begin immediately tackling the UK budget deficit, the new UK Government has announced, and will be announcing major cuts to the UK budget for the coming years. The proposed cuts to public sector spending will be part of this, generating widespread public debate.

Scotland's Budget

The UK Government has already announced it will cut £6.2 billion from the 2010/11 UK budget; the Scottish Government will also be affected by public spending cuts.

As a result of this, £332 million will be cut from the total Scottish Government Grant fund, which provides funding to all of Scotland's 32 councils.

This in turn will mean cuts to the individual Revenue Support Grants received by each council from the Scottish Government.

Aberdeenshire Council's Budget

Like all councils across the country, we are facing significant reductions in budget and are considering the best ways to maintain delivery of essential services.

Around 80% of Aberdeenshire Council's budget comes from the funding we receive as Scottish Government Grant. This means that cuts to this funding will have a significant impact on the authority’s budget.

As an efficient, well-run council with good financial management, we know it is essential we are prepared for the future decisions of Government and that we are able to respond to those decisions quickly, whatever they might be.

At the meeting of Aberdeenshire Council in September 2010, councillors heard that the local authority should prepare a budget on the basis of three scenarios to save either £42million, £58million or £73million over the next two years. Councillors discussed the scenarios and asked officers to prepare a draft revenue budget for 2011-12, which was presented on November 25.

Interim Budget - November 25

An interim budget was set in November – the first time the authority has taken such a decision – as a result of the unprecedented pressure on public sector budgets. 

Councillors agreed savings of £51million over two years alongside a council tax freeze for 2011/12 on November 25, 2010.

The interim budget included looking at charges for council services, reviews to make the council more efficient as well as service cuts.

Work began to implement these savings as soon as councillors agreed the interim budget. In addition, further work has taken place to secure the last of the required savings – around £5million.

The council tax freeze was agreed as part of a package of measures negotiated between the Scottish Government and the COSLA Leadership following the 2010 Spending Review.

In December the Scottish Government also announced its grant settlement for Scottish councils and due to an error in calculation Aberdeenshire will receive less than originally forecasted at £426.477million for the 2011/12 financial year.

On February 10, 2011, Aberdeenshire Council agreed a budget of over £540 million for 2011/12 for vital services in Aberdeenshire.

Budget Setting - February 2011

The budget recommndations included balancing the budget by bringing forward savings of £1.7 million from 2012/13.

What happens next?