Most of the council’s revenue budget is made up by grant support from central government. Council tax only accounts for 25% of the income received. 

Full details of the local government settlement are still to be confirmed. Based on provisional information, elected members heard that the council may see a funding uplift of £12.609 million, some of which is for meeting the cost of new policy commitments. Around £6.7 million is available to cover some of the increasing cost of council services. However, there may be significant additional demands against this arising from the implications of the increase in employer NI contributions and new expectations relating to education.

Uncertainties

East Lothian Council covers one of Scotland’s fastest growing areas and continues to face significant challenges as a result of population growth and demographic change. This, together with growing demand for statutory services and several years of cumulative cost pressures, means the council continues to face an increased gap between available funding and expenditure requirements.

Uncertainties regarding factors including the increase in employer National Insurance contributions and payment of the teacher support grant to the council mean that cost pressures could still be encountered, impacting detrimentally on the setting of a balanced budget.

Given the various cost pressures, the council faces a budget gap of £15.2 million next year rising to £73.5 million by 2029/30. The paper presented at the meeting strongly recommended Cabinet consider measures to close the budget gap over the medium term, in addition to previously agreed savings.

Council tax

While budget decisions are required to be made at a full meeting of East Lothian Council on 18 February, the council’s budget model reflects a number of factors. This includes assumptions in relation to inflationary pressures, pay increases agreed at a national level, the delivery of previously agreed savings targets and – as set out in last year’s draft budget – an indicative 10% increase in council tax charges in 2025/26, with annual increases of 5% in subsequent years.

An increase in council tax would enable the council to make additional investment into demand led services such as Children’s Services and Adult Social Care.

A 10% increase in council tax represents a weekly increase to the average (band D) property of £2.75 and is estimated to result in increased council tax income of £9.456 million in 2025/26, which would support investment in council services and mitigate the need for further budget reductions. The majority of respondents to the East Lothian residents’ survey, conducted in 2024, indicated a preference for moderate council tax increases rather than cuts to services, which 61% indicating that they would support a council tax increase of not more than £3 per week.

The report to Cabinet can be found on our website (item 2).