Highland Council cuts expected as £40 million black hole revealed
Highland Council will need to save almost £40 million over the next three years to balance its books - well over what had been an expected gap of £5 million.
A medium-term financial plan update due to be discussed at the full council meeting on Thursday (October 29) states that a "significant package of other savings will need to be agreed” in order to plug a £39.2 million black hole.
The new figure is around £35 million more than was previously expected when the council agreed its 2026/27 three-year budget in March, and it's only halfway through the first financial year of that plan.
The report explains that since that was drawn up “significant events” including the Iran war and conflict in the wider Middle East have resulted in higher interest rates.
The report itself does not detail any specific cuts or changes that could be made to balance the budget but it is understood that, in August, an "urgent action” paper was rolled out by the council chief executive and head of corporate finance to all council managers and budget holders.
It ordered them to “take immediate action regarding cost control and avoid non-essential spend”.
The actions were required across all services due to the then £10 million forecasted overspend for quarter one of the 2026/27 financial year.
On top of the urgent paper, a “three pillar” savings approach will be presented for agreement by councillors at Thursday’s meeting.
It includes utilising different council funding streams and savings to close the gap.
Those detailed in the report are referred to as "financial flexibilities" including council tax, levies and treasury and debt management - estimated to generate £12.8 million over the three years.
There are also council-wide "strategic savings” - which include staffing, fees and charges - and “service savings”. Combined they are expected to save around £20 million.
Leader of the opposition, Councillor Alasdair Christie (Inverness Ness-side, Lib Dem) hit out at the SNP-led administration on the expected cuts.
He said: “Any cut of £40 million will have a devastating impact on services in Highland - they will need to take extreme care not to cause long-term damage, especially in the lives of vulnerable people.
“The SNP administration will make lives worse because of this.”
Conservative group leader Ruraidh Stewart (Eilean a' Cheò) said: “The SNP administration has lost control of Highland Council’s finances. And, as always, it is the hardworking men and women of the Highlands who are expected to pay the price.
“The trouble with this administration is that it knows how to spend taxpayers’ money, but not how to live within its means. Faced with out-of-control spending and its own failure to deliver agreed savings, its solution is to demand still more from the taxpayer.
“They plan to pick the pockets of hardworking Highlanders with council tax rises amounting to 22.5 per cent over the next three years. More money from the taxpayer, less value for the taxpayer.
“The people of the Highlands never gave the council a blank cheque to squander their hard-earned cash. The SNP may believe taxpayers’ pockets are bottomless, but their patience is not.”
At the meeting on Thursday, councillors will be asked to agree to the new budget forecast and “three pillar” approach as well as launching a public consultation on where these savings can be made.
If agreed, the consultation will start next month via the council's new online platform Engage Highland with off-line material also available.
A spokesperson for Highland Council has said it has taken a “proactive and multi-year approach” to its financial situation.
They added: “Audit Scotland has also commented as part of their audit activity that the Council has effective and appropriate financial management arrangements in place.
“However, ongoing global economic uncertainty, including the conflict in the Middle East, inflation and higher interest rates, continue to increase costs and place pressure on budgets. Early indications also suggest the Council’s funding settlement from the Scottish Government could be lower than previously anticipated and below a flat-cash position.
“It is important members of the public and communities are involved in shaping budget decisions. At Thursday's meeting of The Highland Council, members will be asked to agree a programme of public engagement starting in November, with further details to follow."
