East Lothian Council has been told its use of reserve cash to plug budget gaps is ‘unsustainable’ and it needs to be clearer with residents about cuts to services.
The Accounts Commission has told the local authority it needs to make ‘significant progress’ in changing how it delivers public services to a rapidly expanding younger and older population.
And it has criticised a lack of transparency around how it is going to carry on supporting people while dealing with a £46million funding gap which is coming over the next four years.
Addressing the use of reserves – cash set aside by each local authority for emergencies – the commission said the council’s current fund is just over 17% of its overall annual budget compared to a national average of more than 23%.
And it said changes would need to be made if it is to continue providing services to residents.
The commission report said: “We recognise many of the council’s services have improved, or at least maintained levels of performance, in the face of financial pressures.
“But this has come at an unsustainable cost. The council can no longer rely on using money saved in reserves to support the delivery of services. It needs to be clearer about how it will balance its budget in a sustainable way.”
The commission also acknowledged work done by the council to engage with communities describing it as ‘encouraging’ but added: “the council must be clear about the services de-prioritised and the impacts, as it looks to bridge a £46 million budget gap in the four years from 2026/27.”
Council leader Norman Hampshire welcomed the findings of the report which recognised the council was continuing to improve.
He said: “The report highlights that we have a clear vision and priorities, with appropriate budget setting and monitoring arrangements in place.
“But we are not complacent and that’s why I’m pleased to see that our push for continuous improvement is recognised.
“Despite the extremely challenging financial environment in which we operate and the fact further difficult decisions need to be made, we are determined to ensure the council continues to be financially sustainable while innovating and collaborating with partners to grow the local economy, tackle climate change and reduce inequalities. This report together with its recommendations helps us with that push.
The council’s total usable reserves carried forward last March was £55.5million, representing 17.1% of its budget. The national average is 23.9%.
It placed the council 26th out of 32 local authorities when reserves are compared
Jo Armstrong, chairperson of the Accounts Commission, said: “Unlike most councils in Scotland, East Lothian has numbers of both rapidly expanding younger and older populations. This presents real opportunities as well as significant challenges and strains on staff, money and resource.
“The council must continue to hold ongoing conversations with staff and communities to shape and agree the changes it needs to make to services.
‘It’s reassuring the council’s latest financial plans limit the use of reserves. Now we need to see progress on the council’s programme to change how it delivers services and improves efficiency. This must happen, to ensure the council’s future financial security.”
By Marie Sharp Local Democracy Reporter
