THE finance chief at East Ayrshire Council has warned that a quarter of the authority's welfare cash for the whole year has been spent in just eight weeks.

Joe McLachlan said a 'technical underspend' of £3.7 million by the local authority for 2022-23 masked the true picture of the financial situation at the council - which he said was illustrated by the speed at which it was spending money from the Scottish Welfare Fund.

The fund provides Crisis Grants, which help people with unexpected emergencies like a fire or flood, losing money or a job.

It's also used to provide Community Care Grants to help people ‘start to live, or to carry on living, a settled life in the community’.

Mr McLachlan, the council's chief financial officer and head of finance and IT, was speaking at a meeting of the local authority's cabinet.

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He said: “Members will be aware that the Scottish Welfare Fund (SWF) has been under unprecedented strain over the last few years with applications for Crisis Grants and Community Care Grants reaching exceptional levels.”

Last year, on top of a £1m core SWF budget for East Ayrshire, there was an additional £200,000 from the Scottish Government and an extra £250,000 from the council.

This financial year, the core £1m budget and £250,000 from council funds comes amid an increasing number of requests for assistance.

He continued: “It is a sign of just how challenging it is for our residents that I have to inform cabinet that around a quarter of that core £1 million budget for this year has already been spent in the first eight weeks.

“We are required under the Scottish welfare fund guidance to take steps that ensures that this budget lasts the financial year.

“The tools to do that are fairly blunt and lead to the introduction of stricter eligibility criteria.

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“Unfortunately, while I have taken steps to maintain crisis grant eligibility at 'low', but I have had to move eligibility for community care grants to 'medium', which will essentially limit the value of any award that is made.”

He also told the cabinet's members that it was ‘likely’ he would return with a request to utilise the remaining £300,000 in funding set aside specifically to ease the cost-of-living crisis.

Mr McLachlan told councillors that the underspend of £3.72m was a result of specific factors, such as an underspend on employee pay due to industrial action.

The council also enjoyed lower-than-expected corporate insurance and pension bills, and also brought in more council tax than it had anticipated.

Changes to the authority's capital programme, with some projects moved back to a later date, also resulted in lower debt charges than had been budgeted for.  

Mr McLachlan asked councillors to transfer a significant amount of its surplus to services that had overspent.

He explained: “Our strategy means that when a service underspends, it carries that underspend into the following year’s budget.

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“However, where a service overspends at the year end, the overspend is taken forward and becomes the first hit against the next year’s budget.”

The remaining surplus of £700,000, he said, would be added to the council’s uncommitted, reserves to provide flexibility in the coming year. 

Mr McLachlan said the area's education service had overspent by £2.2m. However, this was halved when the unpaid wages of striking staff, which required to be return to the council’s general fund, were paid back to the service.

Most of the remaining overspend of £1.1m was put down to costs incurred through the 'early years' service.

The East Ayrshire health and social care partnership (HSCP) also had a £1.8m underspend in 2022/23, but Mr McLachan again said that circumstances had ‘masked’ the reality.

He said: “Social care services are facing unprecedented challenges and indeed that end of year under spend position was only achieved after the service had used £3.6 million of Covid-related funding received from government.

“The service would have otherwise ended the year overspent by £1.7 million.”

Mr McLachlan pointed out that all of the council's Covid reserves had now been utilised.

He added: “Therefore it will be a budget under severe pressure as we go through the year.”