Taxpayers bail out city with £3m to help balance the books

Published on Saturday 26 January 2008 09:52

COUNCIL tax payers are set to bail out the city's finances this year after paying around £3 million more than expected.

The local authority's books are finally set to be balanced thanks to the unanticipated cash boost.

The money has been raised after residents moved in to around 1500 new homes in the city, bringing in an extra 1.8m in council tax.

On top of that, around 1.2m has been clawed back following a review of people who claim single person household discount.

Last September, the council launched a crackdown on council tax fraud, amid fears that thousands of households were fraudulently claiming the discount.

The review accounts for around 4000 cases, although this also includes residents whose circumstances have changed.

A new report reveals the council's overall financial position has now improved dramatically, following warnings of a 25m overspend at one point.

Just before Christmas, chief executive Tom Aitchison said he was still "extremely concerned" about the situation, with a projected overspend of 5m come April. That has now fallen to a slight "surplus" of 125,000.

City finance leader Councillor Gordon Mackenzie said: "We are making every effort to maximise council tax collection to help us to claw back the budget deficit.

"The current prediction is that we will succeed in balancing this year's revenue budget.

"However in many areas this has been achieved through 'one-off' savings."

Council officials regularly carry out budget predictions for the whole year, based on spending levels to date.

This year, a range of drastic measures have been introduced, including a ban on overtime and a recruitment freeze, as well as delays to major projects and funding cuts to voluntary groups.

A dividend from the council-owned firm EDI and a 435,000 contribution from NHS Lothian have also helped.

But the council's director of finance, Donald McGougan, said there were still financial risks.

"Despite the improvement in the projected position, a number of departments are still over-spending, compromising the financial stability of the council," he said.

"Significant risks remain in relation to the projected financial outturn, indicating that further measures should have been approved at an earlier point in the year."

Labour group leader Ewan Aitken, the former council leader, said his administration regularly tackled projected overspends.

He said: "This year, there were some underlying issues, but the new (Lib Dem/SNP] administration panicked.

"One-off cuts have affected the elderly, vulnerable, the voluntary sector and children. That's how they have balanced the books."