An update on the development of East Lothian Council’s budget, including draft proposals for 2022/23, was presented at today’s meeting of Cabinet.

The report highlights the complicated nature of the funding settlement for councils from central government, which makes up more than 70% of the council’s general services budget. Any variation on this, the report explains, can significantly impact on the level of resources available for the council to deliver essential local services.

Council tax provides around 25% of the funding needed by the council.

While the draft settlement includes additional revenue to deliver national policy commitments, the council’s core grant has reduced by £734,000.

The national cap on increases in council tax has been removed, with local authorities expected to take full account of local needs and impacts on household budgets of the decisions they make.

Councils have also been encouraged to consider reserve balances and ensure that they are making an efficient use of public funds, review ring-fenced funding streams and been given the ability to make further use of ‘fiscal flexibilities’ in setting a balanced budget.

The draft budget proposed a council tax increase of 3% in 2022-23, with indicative rises of 5% in the following two years. The council proposes to make use of Loans Fund flexibility and use of a further £4.345 million of reserves in 2022-23, taking the total amount of reserves being used to £7.2m.

The draft budget for 2022-23 includes a corporate savings target of £1.163 million, which remains equivalent to a 0.5% efficiency target across services. The extent of any savings required will depend on the final settlement from national government.

Council Leader Norman Hampshire said:

“We are encountering another very difficult budget process, with a reduction in the council’s core funding from national government, which comprises the majority of our revenue budget.

“At a time when household finances face mounting pressures, we want to keep any council tax freeze to an absolute minimum. That’s why we’re making use of reserves and fiscal flexibilities to set a balanced budget. Our hope is that, if any increase in council tax is required given the reduction in our core funding, we will be able to limit this to 3% in the year ahead.

“While East Lothian Council has made savings in recent years and has a target for further savings in 2022-23, there remain a number of uncertainties and we do face the prospect of a significant financial gap.

“The council will continue to do everything it can to protect the valuable local services which our communities rely on.

“That’s why we’ll continue to focus on finding new, innovative and efficient ways of delivering these services, so that we can manage the financial pressures which we continue to face.”

Read the Cabinet report online.

Published: Wednesday, 26th January 2022