East Ayrshire Council: Cabinet discuss £20m overspend

This will include a pause on all ‘non-essential’ spend and a review of current tenders.

During a discussion on a review of the council’s waste management service on Thursday, Chief Finance Officer Joe McLachlan told councillors that services could not continue to operate the way they are now.

And the state of those finances is laid out in a performance report to cabinet this week.
The issue is almost entirely driven by education and social care spending that has seen the council over spent by more than £6m in the three months up until June.

Chief Finance Officer Joe McLachlan. (Image: East Ayrshire Council)

The council had already carried forward £5m of an £11m overspend in 2023/24. The remainder lay with the East Ayrshire Health and Social Care Partnership, which used its reserves to make up the shortfall.

In a report to cabinet on Wednesday, Chief Finance Officer Joe McLachlan points out that he would normally only cover the projected end of year budget.

He states: “Given the unprecedented carry forward from 2023/24 into this financial year and the increasing demand for services together with increases in our costs, it is important to also highlight to members the quarter one analysis on the financial position to July 31.”

In the three months to the end of July, overspend on supplies, services and third party payments had reached around £6m.

Mr McLachlans report states: “If demand and cost pressures and spending plans were to continue there is the potential for the overspend position across the Council to be circa £20m.”

Almost all of the projected overspend relates to health and social care (£9.997m) and education (£8.45m).

Mr McLachlan continued: “To address the potential financial position at March 2025, interventions have been put in place across the council to enhance financial governance.

“These interventions will be challenging for services and require an increased level of financial control and monitoring to ensure that their implementation has the desired impact.”

“It is proposed that going forward and until further notice the following measure are established.

A freeze is placed on the filling of all non-essential vacancies;

• All non staff expenditure is only incurred on an essential, business critical basis
• All contracts currently being tendered or appraised should be reviewed having regard to their continued need and the availability of resources.

The report highlights the ongoing issues around ASN school transport, which is expected to be £2.3m overspent, teaching absence costs (£1.5m), roads (£1.6m) and Housing & Communities (£1.2m).

Ayrshire Roads Alliance faces pressures around the cost of primary and secondary school transport, roads maintenance, street lighting and parking.

The overspend by East Ayrshire Health and Social Care Partnership sits at just under £10m.
Mr McLachlan explained this ‘predominantly relates to pressures within Community Care.

Services continue to experience legacy issues from the pandemic as well as the long–term pressure from an ageing population with increased numbers of people living with multiple and complex conditions’.

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East Ayrshire Integration Joint Board operates community care via the Health and Social Care Partnership, but is constrained by the money it receives from the council.

Last week the IJB also met to discuss its financial recovery plan.

Mr McLachlan said that the HSCP management team was reviewing existing balances and reserves to establish available financial support in the short term, as well as considering options going forward to mitigate increased demand and costs and provide service delivery within financial resource levels.

Councillors agreed to a £40m fund to tackle child poverty and support early intervention and prevention work.

The report highlights that this work will be vital in years to come as it used to reduce demand on council services, reducing costs and increasing collaborative working with partners.