An update from the council's Head of Finance has confirmed that the continuing financial crisis facing councils is of a magnitude never experienced before, and that urgent action is needed to address the issues. The update was presented to Council Executive today.
The overspend explained
The vast majority of the overspend has been caused due to increasing and unprecedented demand for key services - mainly within Social Policy and Housing 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.
However, there is also significant cost pressures related to caring for children who are looked after and placed in external residential settings.
This latest update confirms that West Lothian Council has a substantial overspend this year (2024/25) of over £8.1 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 main examples of overspend in detail:
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, 187 clients per night were accommodated in B&B for the period from April to September 2024. An overspend of £1.5 million is forecast
The forecast position for the council's Adults & Older People Service is an overspend of over £6 million. Particularly 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 £5.119 million.
Internal care homes for older people continue to be a recurring pressure with a forecast overspend of £790,000, where additional agency and locum costs are required to cover for staff absence and vacancies
Recurring pressure in external residential schools has resulted in a recurring overspend of £1.7million within the council's Children & Justice Services. This is due to a high number and complexity of residential placements. 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.
There are smaller and significant overspends in other areas - such as subsidies for Public Bus Transport, mainstream bus transport and inflationary pressures in the cost of school meals.
Kenneth Ribbons, the council's Interim Chief Financial Officer said:
"The current position is not sustainable and councils across the country face very similar challenges.
"We have never experienced a forecast budget position of this magnitude. Urgent measures are needed to address the situation so that we're able to balance our budget - something we are legally required to do."
"It is also important to identify other sources of income as a longer term option which would potentially generate additional funding to help protect local services."
What urgent steps has the council agreed?
- Enhanced recruitment controls are already in place but a recruitment freeze has been approved within many areas
- All non-essential spend will stop
- A substantial number and wide range of further budget savings are being considered for this year and for future years
Why does the council face a significant budget gap?
The funding available to the council is not enough to cover the increasing demand for council services and the rising costs. This results in a budget gap which the council has a legal duty to bridge. By 2028 West Lothian Council will have had to make budget savings by almost £0.2 billion mainly due to insufficient levels of funding to local government from the Scottish Government and increasing costs.
Despite Audit Scotland's recent report, that found that West Lothian Council has a sound approach to medium and longer-term financial planning and appropriate and effective financial management, a fundamental challenge for West Lothian Council is that our costs are increasing faster than our funding.
Considering the budget savings that have already been agreed up to 2024/25, the council now faces an overspend of over £8.1million this year. In addition, the council has identified recurring cost pressures of over £13 million and a total budget gap between 2025/26 and 2027/28 of £23.4 million.
These figures will rise significantly unless spending on local services can be reduced urgently or the council receives additional funding from the Scottish Government.
How are local services funded?
- 19% of council funding is generated through Council Tax
- 1% is generated via fees and charges
- 80% of council funding comes from the Scottish Government
