Council to consider range of measures for budget shortfall

The City of Edinburgh Council is set to consider a number of key proposals to address a £126m budget shortfall over the next four years.

A number of reports, to be discussed at next week’s Finance and Resources Committee (Thursday, 24 September) will propose cost-saving actions across the Council.

These will include: 

  • Proposals for a 4-year budget framework, which will address an overall shortfall of £126m. This reflects the Council’s £107m savings target, together with additional savings to be made as a result of overspends in Health and Social Care (£10m) and in Property (£9.5m)
  • Proposals outlining options for a new Property and Asset Management Strategy to maximise the value of the Council’s extensive property estate, potentially saving £80m over 10 years
  • An update on the Council’s Managing Workforce Change Policy, highlighting measures to support employees through the transition, encourage voluntary redundancy as far as possible, highlighting the potential requirement for Councillors to consider compulsory redundancy as a further option in the future, to achieve the required savings. The workforce makes up 60% of the Council budget so it is unrealistic to make the required savings without reducing the numbers currently employed. 
  • An update on the success of the Council’s Commercial and Procurement Strategy, which has saved the Council £39m over two years
Councillor Alasdair Rankin, Finance Convener, said:

“We are very clear about the scale of the financial challenge that the Council is facing.  The Council is experiencing greater demand for services than ever before, with a growing population in Edinburgh and increasing numbers of older people and younger people, while our overall budget remains the same.  We need to take action in order to achieve the necessary savings to meet this demand, and we are making every effort to do this in a way that will safeguard frontline services for the people of Edinburgh. 

“We want to invest in the services that are important to the public but must also look to rationalise our spending where appropriate. We recognise that some of these proposals may involve tough decisions, including a reduction in Council jobs, particularly in middle management. But while this won’t to be easy, savings will allow us to prioritise the things that matter most to people.

“Our aim, as ever, is to improve and enhance the city for residents, and this package of measures is the next step to achieving this. Councillors will consider these proposals next week and we are looking forward to the discussions. ”

Summary of key reports for consideration by Councillors

4-year Budget Framework
To address its financial challenge,  the Council must look to different ways of delivering services efficiently to an increasing population, including greater numbers of older people and younger people living in Edinburgh, while its annual budget remains around the same.

The Budget Framework report outlines proposals for a 4-year budget framework which will address an overall shortfall of £126m. This reflects the Council’s £107m savings target, together with additional savings to be made as a result of overspends in Health and Social Care and in Property. An additional buffer of £15m has been built into the proposals to ensure that the £126m savings will be met, even if some of the proposals do not go forward. This takes the overall target to £141m.

In light of this, the Budget Framework sets out how resources made available for frontline services are to be maximised. The proposals outlined in the report will form the basis of the Council’s annual public engagement exercise which will commence in early October. Further details of the budget engagement will be announced in due course. 

Property and Asset Management Strategy
Proposals have been put forward outlining options for a new Property and Asset Management Strategy,  which could deliver more than £9m in savings annually, with an estimated net saving of £18m in the first four years, increasing to approximately £80m over a 10 year period.

The proposals also recommend outsourcing facilities management to a third party provider, which would deliver cost benefits to the Council, while achieving service delivery requirements. An alternative proposal, involving an in-house solution, with support from an external specialist, has also been outlined. 

By reviewing and reducing the extensive number of properties owned by the Council, and implementing a clear investment strategy, resulting in a smaller, better performing portfolio, it aims to deliver a lower cost and cost-effective estate.

Workforce Change Policy
This report provides an update on the Council’s Managing Workforce Change Policy, highlighting measures to support employees through the transition, including a new career transition service, and reinforces the Council’s commitment to encourage voluntary redundancy as far as possible, highlighting the potential requirement for Councillors to consider compulsory redundancy as a further option in the future

New procurement approach delivers savings
The Council’s Commercial and Procurement Strategy is expected to deliver further savings of £19m in 2015/16 and £20m in 2016/17 through improved commercial activity and by increasing the quality and control of purchasing. The Council, which is now ranked amongst the top three local authorities in Scotland for procurement capability, is currently piloting a procurement delivery “tactical” team to assist members of staff with less complex contract opportunities.

These include the recent award of a new ICT and digital services contract to CGI, resulting in savings of £45m over the seven year contract term.  

All of the proposals will be considered by Councillors at the Finance and Resources Committee of the Council on 24 September.

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