EAST Lothian Council is “facing extreme financial challenges of a scale that has never been seen before”, the leader of the local authority has admitted.

An update on the financial position facing the local authority was detailed at a full meeting of the council on Tuesday.

Councillors heard that the council was continuing to operate within the most extreme and challenging financial environment that it had ever faced, with significant challenges in 2023/24 and an estimated financial gap in excess of £70 million over the next five years – equivalent to a quarter of the council’s annual running costs.

Councillor Norman Hampshire, council leader, said: “Unfortunately, it’s clear that we’re facing extreme financial challenges of a scale that has never been seen before – but not of our own doing – which will lead to some difficult decisions ahead.

“The current financial situation has resulted mainly from external pressures including significant growth in the population of East Lothian over the last two decades which has not been matched by increased grant funding.

“Earlier this year, Audit Scotland recognised the difficulties facing local authorities, stating, ‘Councils across Scotland faced significant financial challenges during 2021/22 and are now entering the most difficult budget setting context seen for many years. Increasingly difficult choices about spending priorities will need to be made.’

“East Lothian Council has fully played its part in achieving national government objectives, including managing the requirement of an additional 10,000 houses across the county.

“I would like to take this opportunity to correct the common misconception that the resulting council tax received from new housing developments will provide an increased budget for the council. The bulk of council funding comes from national government, with the income from council tax amounting to approximately a quarter.

“Far from providing ‘a boost to council coffers’, each new house represents a further increase in demand on our services which is not covered by the council tax income, nor our current grant settlement.

“In addition, our grant from central government is the third lowest in Scotland per head of population.

“We have already brought in a number of actions, including reviewing staffing levels, increasing ways of generating income, reviewing delivery of services and selling surplus assets.

“However, we are rapidly reaching a stage where our options will become so limited that it may result in service reductions that could impact some of the most vulnerable people in our communities.”

At the meeting, councillors agreed to progress with plans for an extension at Aberlady Primary School and the construction of two new primary schools – Blindwells and Craighall.

However, it was recognised that to achieve these capital projects, significant increases in gross expenditure and borrowing requirements would be needed.

It was also agreed that the council would write to the Scottish Government seeking assurance that the full costs of supporting these obligations, including the recurring revenue costs, would be met through increased national funding.