Council Inflation-Impact Report Set for FPT Committee
Members of Dumfries and Galloway Council's Finance, Procurement and Transformation (FPT) Committee will meet on Tuesday 13 September and receive a report on the impact of inflation on Council budgets this financial year.
Councillors will be asked to note the "escalation of inflationary pressures" and agree to allocate funding to address a current-year budget shortfall caused by increased energy costs.
The report - "The Impact of Inflationary Cost Increases on Council Budgets 2022/2023" - details how much more the Council estimates it will spend on energy and fuel this financial year.
According to the report, non-pay inflationary pressures will increase the cost of delivering Council services by £4.87 million in 2022/23, with rising energy costs the main contributor.
The Council estimates its gas costs alone will jump by £1.669 million (a 162% increase on the previous financial year) with electricity up £1.077 million, a 23.2% increase on 2021/2022.
Recognition of inflationary cost pressures has been a key part of the Council's financial planning strategy so funds have already been set aside to allow for inflation and "unidentified budget pressures".
However, the report states "the increases in inflation levels in recent months have consistently exceeded economic forecasts" so the Council is now faced with a budget shortfall this financial year of £1.54 million.
Finance, Procurement and Transformation Committee Chair Carolyne Wilson said: "This report focusses on the direct financial impact of increased inflationary pressures on the Council itself. However, we know that the increased inflationary rates and rising prices for essential goods are impacting significantly on families, individuals and businesses across Dumfries and Galloway.
"This is being felt disproportionately by the most vulnerable in our communities and this financial year we are directing a combined £3.2 million of additional resource to tackle poverty and support School Holiday Payments and Direct Cash Payments to the most vulnerable residents in our region."
At the Finance, Procurement and Transformation Committee on 13 September, elected members will be asked to agree funding the shortfall from Council reserves in an effort to protect Council services.
Projections of inflationary cost increases beyond the current financial year are being assessed as part of the Council's Medium Term Financial Strategy, which will be reported to Full Council on Thursday 29 September.
In addition, a report outlining measures the Council could take to reduce the amount of energy and fuel it uses and accelerate the shift to renewable energy sources will be brought to the next meeting of the Council's Economy and Resources Committee on Tuesday 15 November.
Finance, Procurement and Transformation Committee Vice Chair Dougie Campbell said: "The inflation levels of recent months have been eye-watering and the projected increase in the energy price cap in October, January and April gives grave cause for concern.
"Our Council has made sensible provision and this year we are able to meet the budget shortfall caused by these price rises. I look forward to seeing the report to Full Council at the end of this month when we will have a clearer picture of the medium- to long term effects on the level of service provision that our Council can afford."
To see "The Impact of Inflationary Cost Increases on Council Budgets 2022/2023" report in full, go to: Agenda for Finance, Procurement and Transformation Committee on Tuesday, 13 September, 2022, 10.30 am - Dumfries and Galloway Council (moderngov.co.uk) (item 5)