East Lothian Council’s budget for 2026/27 has been agreed, with a focus on creating opportunities for young people, supporting vulnerable residents and continuing to invest in local infrastructure.
The administration/cross party budget, which was approved by a majority vote at today’s full council meeting, has been developed in the face of an increasingly difficult financial climate for local government. The council is experiencing significant cost pressures including increasing service demand, with East Lothian having one of Scotland’s fastest growing population rates.
Despite these challenges, the agreed budget enables the council to continue investing in significant priority areas such as adult social care, children’s services and education. The agreed budget proposals are available to read online.
Council tax
A 7.5 per cent council tax increase for 2026/27 was agreed. For people living in a Band D property, this represents a £2.28 weekly increase.
Rent
After consultation with council tenants, a 7 per cent rent increase was agreed – an average of £6.12 per week.
Other key points
Councillors also agreed:
- New revenue and capital investment to increase capacity for holiday clubs for children with disabilities, youth work and roads winter maintenance
- A commitment to invest over £233 million in infrastructure over the next five years including education estate
- An increase of £3.3 million to the Integrated Joint Board (IJB), which is responsible for the planning and delivery of adult health and social care services
- An additional £900,000 for council home modernisation
- An increase in roads capital budget of £1m, including enhancements to winter maintenance
- Planned savings of £13.2 million over the next five years with a commitment to identify further measures to close the budget gap over the medium term.
The council will also continue investing in local infrastructure and schools through its capital programme, whilst helping to support and protect the local environment.
Sustaining essential services
Council Leader Norman Hampshire said:
“This is a budget in which our top priority is to maintain the highest possible standard of essential public services for East Lothian communities, ensuring we give children the best possible start in life and provide care and support for everyone needing our help.
“Setting a balanced budget is increasingly difficult. The cost of providing our valued services continues to rise due to factors such as inflation, increasing service demand and population growth – because the council has been playing its part in delivering nationally set housing targets.
“Council tax only provides around 25% of the budget we need to run services, and income from new housing does not cover the complete cost of services needed for a larger population.
“Most of our funding comes from central government and while the amount has risen, around half of it is tied to existing or new policy commitments. It means we are still left with a budget gap to fill of around £13.3 million, due to the rising cost of services.
“Although it is a very difficult decision to take, increasing council tax by 7.5% helps us to balance the budget alongside other cost reduction measures, enabling us to protect services for the benefit of local residents as far as possible.
“I am pleased that, despite the significant and growing challenges we face, this is also a budget which will see the council take positive and proactive action to support communities - for example by investing in specialist youth workers to create opportunities for young people and the creation of additional holiday support for children with disabilities who are unable to access mainstream resources due to their complex needs. We also continue to recognise the importance of investing in vital areas such as social care, housing and the vital local infrastructure in which we all depend, including the local road network.”
The impact of the proposed council tax increase is as follows:
- Band A - £1.52 weekly increase
- Band B - £1.77 weekly increase
- Band C - £2.02 weekly increase
- Band D - £2.28 weekly increase
- Band E - £2.99 weekly increase
- Band F - £3.70 weekly increase
- Band G - £4.46 weekly increase
- Band H - £5.58 weekly increase
Background
East Lothian Council has an annual budget of £379.976 million to deliver essential public services to communities in East Lothian. Costs continue to rise due to factors such as population growth, increasing service demand and inflation. Most council funding comes is allocated by the Scottish Government, but this does not fully cover increased service costs.
The Scottish Government announced a £15bn funding package for local government for 2026/27. In East Lothian, there is a £7.4 million increase in funding for 2026/27, of which £3.7 million is tied to existing or new policy commitments. This leaves £3.7 million of new funding, which reduces next year’s budget gap.
About 75% of the budget is directed spend tied to national policies (for example education, children’s services, health & social care). Only about 25% is available for all other council services such as roads, waste, parks, libraries, and community facilities. External grants help fund local improvements but are strictly limited to specific project purposes.
Population growth from delivering nationally set housing targets brings increased demand for schools, roads, care services, and public facilities. Developers fund capital costs like new buildings, but ongoing revenue costs fall to the council.
Council tax provides around 25% of the budget we need to run services. But council tax income from new housing does not cover the cost of services needed for a larger population when costs generally are rising. The cost of delivering statutory services such as education, waste, roads, and social care significantly exceeds what households pay in council tax.
Growing demand means the council must explore new ways to reduce costs and increase income. That’s why, to manage financial pressures, the council is pursuing:
- asset rationalisation & energy transformation (reducing buildings, improving efficiency)
- transformation & digitalisation (redesigning services and processes)
- early intervention & prevention (reducing long‑term costs)
- targeted resources to those most in need
However, efficiencies alone are not expected to close the council’s future funding gap.