Midlothian Council faces £14.5m funding gap alongside fastest population growth in Scotland

Penicuik Town Hall - Image credit: Midlothian Council

Midlothian Council must take urgent action to deal with a cumulative funding gap of £14.5m over the next three financial years, the Accounts Commission has said.

In a review of the local authority, the auditor noted that the council had “not made satisfactory progress” since its previous check in 2012 and it could not be confident that the council is well placed to deal with the “significant cumulative funding gap”.

In particular, “limited progress” on its corporate transformation programme had contributed to difficulties in reaching a sustainable financial position, the local government auditor said.

Midlothian has the fastest population growth in Scotland, with the number of residents predicted to rise by over 100,000 or 13 per cent by 2026 – adding to the council’s financial challenges.

Since 2008-09 Midlothian has ranked in the top four council areas in Scotland proportionally for new homes built, but with a projected 18 per cent rise in the number of children by 2026, this will lead to additional costs for delivering new schools and social care services.

The commission praised progress under the new chief executive that has seen a balanced budget predicted for 2018-19 following two years of overspends, but it highlighted the need for a medium-term strategy to deal with the following years from 2020-21 to 2022-23.

“From 2016 onwards, the council has used its reserves rather than making some difficult decisions,” the auditor said.

In addition, the report noted tensions in relationships between councillors and urged them to work together to show better leadership to deliver change, shape services and ensure the statutory duty of ‘best value’ is delivered.

However, Midlothian’s work in reshaping public services, including new schools, social housing, improved transport through the Borders Railway and the creation of the new town of Shawfair, was commended – although it notes that the “overall pace of improvement is mixed” and there have been some delays and underspends on capital building projects.

The council was also praised for its partnership working, which is described as a “strength”.

Accounts Commission member Tim McKay said: “Midlothian needs to address the significant challenges it faces – the cumulative funding gap and the additional pressures from a fast-expanding population.

“The council has a good record of working with its partners and local communities.

“This will help in supporting a medium-term strategy and transformation programme to get its finances and services in good shape for the future.”