West Lothian’s head of finance lays out ‘unprecedented’ financial crisis for councils

West Lothian's head of finance lays out 'unprecedented' financial crisis for councils

The continuing financial crisis facing councils is of a magnitude never experienced before and urgent action is needed to address the issues, councillors in West Lothian were told yesterday.

An update from the council’s head of finance presented to the council executive outlined details of the local authority’s overspend, the vast majority of which has been caused by 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 number 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 a 25.4% increase in those aged over 75 during the same time period.

However, there are 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.

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 £1.5m is forecast

The forecast position for the council’s Adults & Older People Service is an overspend of over £6m. 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 a forecasted overspend of £5.119m.

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 £1.7m 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 has 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.”

In response, enhanced recruitment controls are already in place across the council but a recruitment freeze has now been approved within many areas. All spending seen as non-essential will now stop, while a substantial number and wide range of further budget savings are being considered for this year and for future years.

By 2028, West Lothian Council estimates it 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.

Considering the budget savings that have already been agreed up to 2024/25, the council said it now faces an overspend of over £8.1m this year. In addition, the council has identified recurring cost pressures of over £13m and a total budget gap between 2025/26 and 2027/28 of £23.4m.

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