COUNCIL finances face a £42.5 million cash shortage over the next three years in North Ayrshire.

And £22.8 million of the funding gap will occur next year.

The council has already dipped into £9.7 million of reserves in the last two years.

The “challenge” to balance books was laid out in front of councillors at last week’s full council meeting.

A ‘Financial Outlook’ report from its director of finance Laura Friel said the council needs to transform in order to cope with the big cash squeeze.

Ms Friel said officers had carried out work to look ahead for the next three years which “identifies fairly significant pressures”.

She revealed how 51 percent of council spend goes on employee costs.

She added: “The most significant (pressure) relates to work force – so that is pay settlements and pensions.”

She also said “demographic pressures, which are most prevalent within the Health and Social Care Partnership” are another challenge.

The Health and Social Care Partnership (HSCP) budget has been flagged as a worry because it is £5.8million in debt to the council.

The report said: “The council as one of the funding partners is exposed to risk unless the HSCP delivers services in a financially sustainably way.”

Ms Friel told the council meeting officials were searching for ways to save cash.

Ms Friel said: “As officers we have been looking at opportunities to deliver efficiencies through the way we operate, taken together, those could reduce the gross funding gap by £6 million.”

Her report to council said: “A change and transformation programme at scale and pace is required to address the challenge that the council faces and to minimise the impact on the communities of North Ayrshire.”