Under the draft settlement announced by the Scottish Government, the main funding Orkney Islands Council receives to run services would be £ 74.592 million for 2019-2020.
This is a cash decrease of £28,000 compared to last year, but when Retail Prices Index inflation of 3.3% is taken into account, it means a real terms reduction of £2.490 million.
The Council’s share of the settlement for 2019-2020 also includes new ring-fenced sums of £1.528 million for the Government priorities of early learning and childcare and social care, which would effectively mean that this funding is not available for other Council Services. This ring-fenced funding represents a further cut to the core Council budget.
The combination of the effects of inflation, ring fencing and a cut in Government support means that support for the core Council budget is £4.046 million less in real terms than for the last financial year.
To help offset this, the Government will allow Councils to raise Council Tax once more, having removed the Council Tax freeze in 2017-2018 that had been in place since 2007-2008. Councils can opt to raise Council Tax charges by up to 3%.
Council Tax income will already increase by £135,000 in Orkney next year due to the growth in the number of properties liable to pay Council Tax, while a 3% increase in Council Tax would bring in a further £265,000 in income. Any increase will be a matter for Elected Members to consider when OIC’s budget for the year ahead is set in February 2019.
The Government has also announced that in addition to OIC’s share of the local government settlement, it is continuing to provide £10.5 million for inter-island ferry services in Orkney and Shetland.
OIC Leader James Stockan said: “The fine details of OIC’s share of the settlement still need to be gone through before we have a completely clear picture of our financial position for the year ahead.
“However, there is no funding in the settlement to cover the government’s lead on relaxation of pay policy, nothing to cover inflation and with additional ring fencing this as it stands is a very worrying settlement for local government.
“If no more funding comes as a result of political party negotiations, this will be one of the most challenging budgets we have faced for the Council’s core services. Be assured that we do not regard this as the final settlement and, along with other councils in Scotland, we will be fighting our corner for a fairer outcome from the Government.”