It includes an update on budget pressures, progress being made with the delivery of approved budget savings and projected expenditure over the next three years. The funding provided to the council is insufficient to meet the costs of an increasing demand for services and rising costs. This results in a budget gap which the council has a legal duty to bridge. By 2028 the council will have had to make budget savings by almost £0.2 billion (between April 2007 - March 2028) due to insufficient levels of funding from the Scottish Government and increasing costs.
The financial situation explained
The council agreed a two-year detailed revenue budget for 2024/25 to 2025/26 in February 2024. This included agreed budget savings totalling £17.1 million. A further £4.4 million of budget reduction measures for Social Policy - Adults & Older People were approved by another body (the IJB) increasing the total approved budget savings to £21.5 million over two-years.
Latest update and overspend explained
This latest update confirms that the council has a substantial overspend this year (2024/25) of over £5.5 million which means that more savings are now required to allow the council to balance its budget - something the council is legally required to do.
The overspend is mainly as a result of increasing demand for key services, resulting in recurring cost increases that are unavoidable in certain service areas - mainly within Social Policy, Housing and Operational Services. West Lothian's older population is growing and continues to grow at a faster rate than the Scottish average. The numbers of people in West Lothian aged 65 to 74 is expected to increase by 19% by 2028 with those aged over 75 increasing by 39%. This is compared to the Scottish average growth of 14.4% in the 65 to 74 population and 25.4% increase in those aged over 75 during the same time period.
These changes and the associated complexity of need across other key service areas have and will continue to result in more demand for health and social care services.
The main examples of overspend are set out below:
- There are growing pressures in Homelessness, largely as a result of the ongoing demand for temporary accommodation. All councils have a legal duty to provide temporary accommodation to anyone presenting as homeless and, on average, 184 clients per night were accommodated in B&B for the period from April to July 2024. An overspend of £1.4 million is forecast
- An increasing elderly population means that demand is increasing for services such as internal care homes and additional agency/locum costs, and Housing with Care services. The forecast position for the council's Adults & Older People Service is an overspend of almost £3million. In commissioned adult social care, there is significant growth in demand for packages of care, both due to client numbers and overall individual complexity, with forecast overspend of £1.974 million.
- Within Public Transport and Mainstream School Transport there is an overspend of over £300,000 as a result of inflation, additional routes being provided and routes not being removed when one-off funding has ceased. An overspend of £347,000 is also forecast for Facilities Management largely due to the rising cost of food for school meals (inflation)
- Recurring pressure in external residential schools has resulted in an overspend of £727,000 within the council's Children & Justice Services. This is due to a high number of placements over the last couple of years. There continues to be a lack of alternative options, and the cost of these placements have seen significant increases in Scotland due to high demand for placements.
Why are certain services reduced?
Councils must - legally - deliver statutory services (Statutory services are services that are required by law) so only non-statutory services can be reduced or stopped. This means there is a limited number of services where that can be reduced.
All services areas will be affected and, although the council has a no compulsory redundancy position, the scale of the budget pressures facing the council will impact on staff numbers. Overall the number of council staff will reduce over the next two years.
Chief Executive Graham Hope explains: "The continuing financial crisis facing councils is of a magnitude never experienced before and the uncertainty around the financial implications of various risks will continue to be a significant issue for local government, especially if the revenue and grant funding allocations for councils in 2024/25 sets the tone for funding in future.
"We have increasing demand for services combined with rising costs and insufficient levels of funding. In order that we can meet our legal obligations to set a balanced budget, the only option we have is to reduce some services and transform the way in which some services are provided.
"Despite the level of savings already approved, growing spending pressures coupled with insufficient funding means substantial additional savings will require to be agreed to balance the revenue budget. Officers will consider any additional savings measures that could be approved in advance of the annual budget setting exercise in February 2025 to help balance the significant overspend forecast.
Head of Finance and Property Services, Patrick Welsh added: Some of the most significant risks and uncertainties include the impact of inflation, annual constrained grant funding from the Scottish Government, pay award costs, policy changes by the government without adequate funding, and growing demographic demands.
"We have said many times before that council services have, and will continue to, change significantly because we simply do not have enough funding to continue to meet the growing costs of providing all services as they are currently provided, when grant funding provided each year does not came close to covering our additional costs. All councils are facing the same crisis and all councils must - legally balance their budgets. We cannot spend money we do not have so across the council must look at how we can reduce the costs of current service delivery models."
"It is vital officers undertake further work to identify options, over and above savings and mitigating actions already agreed, as a matter of urgency to allow the council to balance its budget and continue to be able to meet the costs of essential services that the West Lothian public depend on including social care and education."
These options will include:
- enhanced corporate recruitment control measures;
- cessation and/or reductions in discretionary (services that councils have no legal obligation to provide) spend;
- identification of planned expenditure which is not legally committed, and where expenditure could be avoided on a temporary basis either on a part year or full year basis for 2024/25;
- review of approved savings to identify the scope to accelerate approved future year savings to 2024/25, or as part of the 2025/26 budget report;
- scope for additional saving measures or income generation where savings or additional income could be achieved in 2024/25.
