SOARING council tax increases of up to six per cent could ultimately be needed to balance the North Ayrshire Council budget.

That was the view from Mark Boyd, head of service (finance) in a paper he produced for a meeting of the full council this week (Wednesday).

This is because of an estimated funding shortfall of £120 million over the next 10 years.

Mr Boyd said: “The medium-term financial plan includes a planning assumption of an annual three per cent increase to council tax. Council tax income is a vital source of funding and represents around 17 per cent of council funding – £64m per annum.

“With current inflation sitting at 10.1 per cent, this level of anticipated increase sits well below current inflation, however, it is recognised that any level of increase will add a further burden to citizens during the current cost-of-living crisis.

“An important point to note when considering the level of council tax to be set is the future year impact of any decision to maintain council tax at 2022-23 levels equates to around £2m less income.

“Due to the recurring impact on the base budget for 2024-25 this would require an increase in council tax in 2024-25 of more than six per cent to simply recover the base income position.

“This is before the measures to address the budget gap for the year are even put in place. When considered within the context of the scale of the budget gap facing the council over the next three years, not only would this present a significant challenge in delivering balanced budgets, but it is also more likely that members may have to consider increases beyond three per cent to deliver a balanced budget in 2023-24.

“Local authorities continue to operate in an increasingly complex, challenging, and uncertain environment with public sector funding not keeping pace with the increasing costs and demand for services, with challenges continuing through the legacy impact of the pandemic and more recently through the significant cost impact of inflation.

“In this climate it is important that councils continue to take both a medium-term and long-term view, however it is recognised the current level of volatility will require immediate focus on the short-term impacts. 

“As things currently stand, portfolios including health and social care and social justice and housing will see planned annual growth in cash terms over the years to 2026-27.

“Importantly, however, from a local government funding perspective, the Scottish Government has indicated a broadly “flat cash” position up to 2025-26, with growth expected in 2026-27.”