Funding blow for councils

All councils in Scotland face core funding cuts following publication of the Scottish Draft Budget last month, which includes Scottish Government departmental spending plans for next year.

80% of the council's funding comes direct from Scottish Government and councils have a legal obligation to balance their budget.

The council faces unavoidable increasing costs which include:

• Inflation (increasing costs of products and services)
• Energy
• Significant increases in our older population which increase the cost of often complex and essential care services. The number of people aged 65 and above will increase by more than one third by 2028.
• Pay award for staff (agreed externally)

There were calls for the Government to increase funding to Scottish councils. However, instead of increasing core funding to pay rising costs, the Scottish Government's 2024/25 budget has reduced core funding.

A report by the council's Head of Finance is being discussed at the Council Executive on Tuesday.

The report sets out that the funding the council does have must be prioritised to pay rising costs for essential and statutory services (services that we have a legal obligation to provide).  Many service cuts have already been agreed and implemented, but other measures will need to be put in place to further cut spending given the lack of adequate funding.

COSLA - the governing body representing Scottish councils - has stated that there is risk that Scottish councils could face bankruptcy if the funding by Scottish government does not match growing cost pressures, which it is not going to do.

In December, the council reported that it faced an estimated gap over the four years of £36.2 million. However, it is now inevitable that the budget gap will increase as a result of the Scottish Draft budget. After budget savings already approved are taken into account, the remaining deficit from April 2024 to March 2028 was forecast to be £9.6 million, but this will now increase further, meaning that and more savings measures need to be identified and implemented over the period to March 2028.

Patrick Welsh, West Lothian Council's Head of Finance and Property Services warned:

"The fact is that no additional funding has been provided in the 2024/25 budget settlement to meet any of these additional costs. In fact, core funding has been cut, which means that changes and reductions must be made to a range of services to reduce existing costs and allow the council to meet these costs while also meeting its statutory duty to approve a balanced budget.

"The council cannot maintain existing all existing service delivery models and levels of service with the funding that is provided to us. The only way to manage the council's expenditure within funding available is to make changes to how a number of existing services are delivered which will in some cases mean reducing or removing the service."

"Each year the council has very significant and unavoidable increases in expenditure in existing core services - across all areas including education, social care, homelessness, roads maintenance, transport and waste.

"The context faced by the council is that in the current year (2023/24) there is forecast to be an overspend in the council's delivery of services to the public of £1.5 million, as we do not have sufficient funding from the Scottish Government to meet the costs of delivering all our existing services to the level they are currently delivered.

"Despite inflation over the last 18 months being at a level not seen for decades and the increasing demands of a growing West Lothian population, it is very important to recognise that the council's core grant funding for 2024/25 in cash terms has actually been cut by over £1 million compared to what was provided in 2023/24.

"Taking account of the economic context, this is an unprecedented position."

Officers are undertaking work to identify potential additional recurring budget saving options to help contribute to balancing the current detailed budgets for 2024/25 and 2025/26 in advance of the budget setting meeting in early 2024.