East Lothian Council must overhaul public services to tackle £46m budget gap, Accounts Commission warns

East Lothian Council must urgently change how it delivers public services to cope with growing financial and demographic challenges, a new audit report has warned.

Accounts Commission recognises that while many of the council’s services have improved, or at least maintained levels of performance, this has come at “an unsustainable cost”. The council has relied heavily on using reserves, a practice auditors say must stop.

“The council needs to be clearer about how it will balance its budget in a sustainable way,” the report states.

Faced with rising demand from growing younger and older age populations, the council has narrowed its focus to a smaller number of key priorities.

It has also committed to engaging with residents and communities, an approach the Commission called “encouraging”.

But auditors stress the council must be transparent about which services are being deprioritised and what the impacts will be.

The council is projecting a £46m budget gap over the four years from 2026/27.

East Lothian Council faces 'significant challenges and strains on staff, money and resource,' audit report warns — East Lothian Council faces ‘significant challenges and strains on staff, money and resource,’ audit report warns iStock

The Commission says significant progress is still needed, including clearer targets for digital transformation, better collaboration with partners, and stronger action to address ongoing recruitment and retention challenges.

Jo Armstrong, chair 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.”

Council leader Norman Hampshire said: “We welcome this report, which recognises that the council generally continues to perform very well and compares favourably to national averages.

“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. In addressing the hugely significant financial pressures facing the council in one of Scotland’s fastest growing areas, we know that digital transformation is essential when it comes to being increasingly efficient and delivering service improvement, so we’re ensuring there is a sharp focus on this.

“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.

“Finally, I would like to take this opportunity to thank all council employees for their hard work which these findings are testament to. We know that our committed people will continue to be pivotal to the county’s success, as we strive to maintain high-quality services for the communities we serve.”

The full report will be considered by elected members at an upcoming full meeting of East Lothian Council.