Perth and Kinross Council has surpassed its budgeted use of reserves for the year, doubling the amount to £28.1 million from the planned £13.8 million. The council approved this budget for 2024/25 in February, aiming to utilise a certain portion of their reserves. However, the actual amount has exceeded expectations, leading to concerns about the council’s financial sustainability.
During a recent meeting of PKC’s Audit and Performance Committee, Councillor Liz Barrett raised questions about the council’s financial position, particularly in light of the significant capital investment programme amounting to £674 million over the next five years. This programme includes key projects such as the Cross Tay Link Road, the new Perth High School building, and the PH2O leisure facility in Perth.
The PH2O project had faced challenges last year due to inflationary pressures, which resulted in a revised plan for a facility at Thimblerow Car Park. These developments have contributed to the council’s increased use of reserves beyond the initial projections.
Councillor Barrett also highlighted concerns about Perth and Kinross Council’s ranking in terms of financial sustainability among Scottish local authorities, mentioning a drop from fifth place in 2018/19 to 18th place in 2022/23. The council’s Chief Finance Officer, Scott Walker, explained that comparisons with other councils regarding reserves are complex and depend on individual policies and circumstances.
Although the exact impact of exceeding reserve usage on the council’s standing remains uncertain, Walker reaffirmed that PKC is within the two to four per cent range outlined in their reserve strategy. The council continues to monitor its financial situation and address any challenges that may arise.
In summary, Perth and Kinross Council’s decision to more than double its planned use of reserves reflects the financial complexities faced by local authorities in funding essential projects and services. While this move raises concerns about long-term sustainability, the council remains committed to managing its finances responsibly and delivering key initiatives for the community.