A new report highlights the escalating financial challenges facing East Lothian Council.

Elected members were updated at today’s full council meeting regarding the in-year financial position and longer-term outlook.

Despite previous efficiencies, budget measures and increases in council tax, we are facing an overspend this year of £14.6 million.

It is projected that the council will be required to deliver financial savings over the next five years which are equivalent to just under a quarter of our annual running costs. There is an estimated recurring gap in excess of £71 million from the period 2024/25 to 2028/29.

Much of the increased costs affecting the council are driven by a combination of external factors most of which are aligned the increased cost of living challenges, including inflation and interest rates resulting in significantly rising costs.  The council is also facing significant increased demand for services related to supporting a growing population, all of which is resulting in a significant funding shortfall which needs to be addressed.

A number of actions are being taken to address the immediate pressures, and it remains the council’s key priority to be on a sustainable financial footing going forward.  Actions include:

  • A cross party group of elected members is meeting regularly to discuss the situation and look at budget proposals for the future. A meeting of full Council in early 2024 the local authority’s budget for 2024/25 and beyond will be set.
  • Progressing the council’s transformation programme which has a significant role to play in terms of bringing forward new and different ways of working which are both innovative and enable high-quality services to be delivered as efficiently as possible – for example through maximising digital technology and income generation.
  • As most of the council’s revenue budget comes from central government, representations are being made to stakeholders at a national level, including the Deputy First Minister, to highlight the need for additional resources.
  • A budget consultation, planned for early Autumn, will give people an opportunity to provide their views on the range of options to close the financial gap.

Elected members approved temporary mitigation measures such as controlling of recruitment, reviewing of operational assets to minimise costs and pausing some capital projects.

Council Leader Norman Hampshire said:

“The report highlights that the financial situation is now the greatest challenge that East Lothian Council has ever faced.

“Officers are forecasting that this council will need to identify further savings of £71 million over the next five years.

“Currently in East Lothian, our grant from central government is the third lowest in Scotland per head of population. There is no recognition within the grant received of East Lothian’s increasing population and the recurring rising costs that arise, for example the staffing and running of new schools.

“Income overall is not keeping pace with the cost of delivering services and this is putting huge pressure on our budget.

 “We continue to advance the case for East Lothian to receive additional resources, for example meeting last week with the Deputy First Minister, in order to address the very acute financial difficulties facing local government, particularly the very significant, immediate and ongoing financial pressures in East Lothian associated with supporting population growth.

“The reality is that, without further support, we will be unable to sustain the level of services currently being provided and very tough decisions are going to be required which would undoubtedly have a negative impact on service provision in East Lothian.”

The report is available to read on our website - agenda item 3.

Published: Wednesday, 30th August 2023