Financial headache for West Lothian Council

Each council area has a legal duty to balance its budget each year. In order to do this, the council will have to make significant savings.

The head of finance has warned that this is the most severe financial position ever faced by the council and that urgent action is now required to help ensure it remains financially sustainable.

Since October, 2021, the council has reported regularly to councillors on the projected budget gap and five year revenue strategy for 2023-28. In October this year, the council estimated that the gap between projected spending requirements compared to funding available would be £47.1 million.

It recently consulted residents on officer budget proposals that would help the council reduce services over the next three years and allow the local authority to balance its budget.

However, following the autumn statement, the council now estimates that the budget gap is £57.7 million.

The Scottish Budget will be announced on December 15 which will provide clarity on the level of grant funding each council area will receive for 2023/24.

A report to the council executive this week set out the scale of the challenges faced and called for urgent action.

Donald Forrest, the council’s finance chief, said: “Decisions made by the UK and Scottish Governments have a direct impact on our financial position as do the significant cost pressures such as staffing costs and energy prices.

“Our customers know through our recent public consultation of the huge challenges that were already facing us. Unfortunately, the most recent forecast now means that even more severe and difficult decisions are necessary.

“Urgent action is required to assist with the financial crisis facing the council.

“The magnitude of the pressures faced, with constrained funding in a time of extremely high inflation, should not be underestimated. We are now forced into a position that we must act to reduce costs and increase income in order to protect local services.”

To assist with the financial crisis facing the council, the council executive agreed that the following will now be considered:

A council tax increase. The council’s current planning assumption for Council Tax is an annual increase of 3.5%. Consideration is now being given to increasing it further. An increase of 4.5%, for example, would generate revenue of £5.7 million over the next five years.

Officers will review savings proposals to assess if they can be accelerated.

Developing new savings measures not included as part of the council’s current public consultation. New measures would be subject to a future public consultation in 2023.

Council leader Lawrence Fitzpatrick said: “This is an alarming budget gap and the situation is perilous. All 32 finance directors from all Scottish councils have recently written to the Depute First Minister to set out their concerns and to ask for changes to the way we’re funded. Action is needed now.”