Glasgow councillors struggle to find solution as city budget looms towards £120m shortfall

Glasgow City Council could face a budget shortfall of nearly £120 million for the 2023/2024 financial year.

Scotland’s largest local authority’s financial forecast, published on Wednesday, revealed that it is predicting a deficit of £119.4 million.

The local authority said that as a result of various measures undertaken to save money previously, the ability to identify opportunities for savings has become “increasingly difficult”.

It warned that the scale of savings required will be “considerably higher than have been faced in previous years”.

Inflation is expected to have the biggest impact on the council’s finances, making up £87.2 million of the predicted loss, with pay inflation set to form the largest part of this figure at an estimated £80.1 million.

The report, prepared by executive director of finance Martin Booth, says there is a “degree of uncertainty over a number of the key elements”, particularly in the “current climate of inflationary pressures and public sector funding challenges”.

It continues: “For many years the council has had to identify savings in order to balance its budget.

“As a result, the ability to identify opportunities for efficiency savings and service reform was becoming increasingly difficult. However, the current levels of inflation are significant and are forecast to have a profound effect on the finances of the council family over the next three years.

Council chiefs in Glasgow City Chambers are struggling to balance the books. (Pic: John Devlin)

“This will severely affect the type and range of savings the council family are able to identify for the period of this financial forecast.”

Pressures such as increasing utility costs and revenue consequences of capital investment are expected to cause a shortfall of £26.7 million.

Included in this figure is the rental cost of operational properties that have been included in recent sale and leaseback agreements conducted by Glasgow City Council in order to settle equal pay claims.

The council announced in September that two art galleries and Glasgow City Chambers will be among buildings to be sold and then leased back to fund the claims after it agreed to pay out at least £500 million in 2019.

The forecast said there are no assumed increases in council tax – as it will be a decision taken at the council’s budget meeting – or in spending.