West Lothian Council faces £40m black hole

Whichever party takes charge at West Lothian Council after next May’s elections is set to face a £40 million black hole for their five year term.

By Stuart Sommerville, LDR
Thursday, 30th December 2021, 11:48 am
Stock photo of John Devlin.
Stock photo of John Devlin.

The council’s head of finance, Donald Forrest, warned the £40m gap in the budget could hobble the new council until 2027/28.

Key threats include the council being saddled with new and costly responsibilities including social care.

Presenting estimates to the Partnership and Resources Policy Development and Scrutiny Panel (PDSP), he said a horizon scan predicted a best case scenario of a £22m gap – and a worst case of £56m. The figures can change because of pay awards, council tax income, Scottish Government funding, fees and charges.

Mr Forrest told the meeting: “There are a number of risks and uncertainties in the long-term financial assumptions underlying the budget model, which have intensified with the pandemic.

“These include the risk that the increase in costs associated with demand led services, such as social care, is greater than assumed and the increased incidence of ring-fenced funding and the new policy or legislative changes by the UK or Scottish governments which restrict the council’s flexibility to decide how to deliver services locally.

“The nature of forecasting means it is challenging to identify with any certainty expenditure pressures and income. In addition, there are more general risks and uncertainties which will continue to be monitored.”

The newly elected council will face five potential problem areas.

Some of the more general risks and uncertainties are: Economic growth being less than forecast, with high uncertainty around future economic growth due to Covid-19.

A second fear is of funding not being provided to fully cover the costs of introducing new legislation.

There is the potential for policy changes by the UK or Scottish governments which restrict the council’s flexibility to decide how to deliver services locally.

Finally, ring fencing of grant funding, constraining how local authorities allocate resources and changes to local government remits with uncertainty for service provision and funding could all affect how much the gap will be.

It will be the end of January before the full ramifications of the Scottish Government budget and its award to West Lothian can be fully determined with the final local budget to be set by the current Council at the end of February.

In the short term, said Mr Forrest: “there continues to be a high degree of uncertainty around Covid-19. At this point it is difficult to assess what impact the various permutations could have for the council specifically and for public funding more widely.”