Future funding of council services

Reductions in council services isn't a new concept, but a very detailed report was presented to Council Executive this week - highlighting the impact of Government decision have on funding for local services in West Lothian.

In brief:

• The Scottish Government provide West Lothian Council with over 80% of our budget, with much of that funding ring fenced for policies set by the Scottish Government
• Spending decisions made by the UK Government impact on the Scottish Government's budget through the Barnett formula. This in turn has implications for available resources for the council through the local government finance settlement from the Scottish Government.
• Government funding inevitably has implications for the council's budget, ability to provide services and performance 
• A report being presented to Council Executive provides an update in relation to the announcements contained in the Chancellor of the Exchequer's 2025 Spending Review and a summary of the Scottish Government's medium-term financial strategy

• Due to insufficient funding the council has a budget gap of £34.9 million over the next three years
• Nearly £12 million of savings are required this year alone - as the council must legally agree balanced budget. Legally, the amount of funding the council spends needs to be equal to the funding we receive. What we spend needs to match our income. This is what is meant by balancing our budget

By 2028 the council will have had to make budget savings of over £207 million (between April 2007 - March 2028)

Council officers have been instructed to investigate additional saving options to fully balance future year budgets

In detail:

• The Chancellor of the Exchequer delivered her 2025 Spending Review to the House of Commons in June.  The spending review outlines how much day-to-day funding government departments will get over the next three years until 2029. It also covers capital investment budgets over the next four years, until the end of 2030. Subsequently, on 25 June 2025, the Scottish Government announced an updated medium-term financial strategy (MTFS). The MTFS document outlines the Scottish Government's financial plans and priorities over the next five years
• The strategy aims to provide a framework for fiscal decisions, resource allocation, and economic management in Scotland. It considers various factors such as economic forecasts, revenue projections, spending priorities, and the government's policy objectives
• The overall outlook for resource funding is that spending will grow more quickly than funding from 2024/25 to 2027/28 - resulting in a budget gap
• The UK economy's performance has deteriorated compared to the October 2024 forecast, with GDP forecast to reach 1% this year, half the expected rate in the October forecast. The economic and fiscal outlook has become more challenging since the October 2024 forecast with European energy prices rising again, upward pressure on defence spending and a tightening of global trade restrictions
• The continued uncertain economic outlook, and its effect on public sector expenditure, emphasises the importance of the council having a robust approach to financial planning. The strategic approach to corporate and financial planning helps the council to ensure that outcomes are achieved and balanced budgets are delivered within the context of uncertain, constrained public sector funding.

Officers will keep all relevant UK and Scottish government budget and funding announcements under review and will report to future meetings of Council Executive. Including what the impact of Government budgets will have on West Lothian Council's budget and local services.