Financial challenges facing local services in West Lothian

In brief:

• Government funding less than is needed for Scottish councils
• West Lothian Council's budget gap to increase significantly following the Scottish Local Government Settlement
• The funding settlement from the Scottish Government accounts for around 80% of the council's budget that funds local services and has a major impact on the level of resources available to the council and, as a result, on performance
• West Lothian now faces a budget gap of £15.4 million (an increase from £9.7million)
• Legally councils must balance their budget which means the council needs to agree measures by the end of February to address this gap over the next two years
•  Although the Scottish Government's Core Grant Funding to West Lothian will increase by £12.2 million next year (compared to this year),  this only amounts to an increase of 0.3% after taking account of inflation. It does not take into account the significant increase in demand for services (particularly older people services) and other increasing costs of delivering services. Furthermore, the council's capital funding allocation - which pays for one off projects such as building new facilities or upgrading existing facilities and assets such as roads - has been cut by £2.5 million (a 20% cut in real terms)

Following the Scottish Government's Scottish Draft Budget announcement earlier this month, the implications on local council services will be presented to Council Executive next week.

The finance report being discussed next week makes it clear that the Scottish Government funding is not sufficient to meet increasing costs and demand for services.

The council had previously forecast to have a net revenue budget gap of approximately £9.7 million for 2026/27 and 2027/28.  This meant that the council had to find additional savings or generate additional income by £9.7milllion in order to deliver a balanced budget

Now that the Scottish Government's Local Government Settlement has been set out, and taking account of updated planning assumptions, the council's estimated budget gap for 2026/27 and 2027/28 has increased significantly to £15.4 million. Legally councils must balance their budget which means the council needs to agree measures by the end of February to address this gap over the next two years.

On behalf of local authorities across Scotland as a whole, COSLA's budget ask was for £16 billion in revenue funding including an additional £750 million for social care to cover the cost of providing the services. The Scottish Government budget provides £15 billion in revenue.

An assessment of the local government finance settlement for 2026/27 is ongoing with officers considering the implications for the council's budgets.

Potential additional saving options, including feedback received from the Phase 3 public consultation, will be presented to PDSPs for scrutiny in line with the previously agreed approach in relation to new saving measures before potential inclusion in the revenue budget report.