A Scottish council has warned of ‘harder times ahead’ as it projects a £5m plus overspend for the year.

The Highland Council’s corporate revenue monitoring statement for the first quarter of the financial year predicts a £5.1m overspend for the coming year.

Budget leader Cllr Alister Mackinnon said that ‘urgent action’ was required to bring expenditure back under control by next March.

The council’s reserves, which are at about £8m, are below the minimum level recommended by Audit Scotland, Cllr Mackinnon warned.

‘It is vital that they are not depleted further by a year end overspend,’ he said.

‘This is an early warning and we are determined to take the necessary corrective actions, in a business-like manner, recognising the seriousness of the situation.’

This was particularly urgent, Cllr Mackinnon argued, because the area may experience another hard winter which would deplete the authority’s reserves further.

The Highland Council last March projected a £2m overspend in its winter maintenance budget after severe winter weather at weekends and bank holidays pushed up its labour costs.

The council yesterday said it intended on bringing forward a three year plan to provide certainty for staff and communities.

‘It is clear that there are harder times ahead,’ said Cllr Mackinnon.

‘It is more important than ever to find every possible means of income generation to avoid job losses and protect essential services.’

Council staff have been asked to take action now to avoid non-essential expenditure and to consider deferral of non-priority activity.