Fair funding for Midlothian

Why do we need it?

The Scottish Government allocates funding to councils to meet over 70% of their costs. However, the funding model used does not keep pace with population changes. This puts Midlothian at a considerable financial disadvantage compared to other local authorities in Scotland.

The challenge for Midlothian

With the fastest growing population of any local authority in Scotland, Midlothian Council is having to deal with major financial challenges in preparing to meet future demand for local services.

• By 2028, the population of Midlothian is projected to increase from 91,340 to 103,945. This is an increase of 13.8%, compared to a projected increase of 1.8% for Scotland as a whole.

Growing child population

Against the trend for most Scottish council areas, Midlothian will also see an increase in its child population over the next 25 years. Poverty and child poverty levels are also projected to increase over this period, increasing the demand for a range of vital council services.

• Projections for 2043 show that only four council areas will have an increase in their child populations by that date. Midlothian’s is the highest, at 20% and Stirling’s the lowest of the four at 1%.

The rising number of school pupils will place a significant pressure on the council’s budget planning, with the need for more schools, extended school buildings and more teachers.

• The risk that these cost pressures will exceed budget estimates is one of the key risks identified by the council and has been raised as an issue of concern by our external auditors in the council’s Annual Audit Report for 2019-20 (published October 2020).

Early learning and childcare

The local government spending watchdog, Audit Scotland, drew attention to a specific funding challenge for Midlothian in their national report, Early Learning and Childcare Follow up, published in March 2020.  The report dealt with the rollout of additional funded childcare hours in Scotland and noted that:

• As the result of a decision to base funding allocations for this service on population figures for 2014, the funding that Midlothian Council will receive is 24% less than what is needed to meet the rapid growth in our early years population.

Older people

The number of older people in Scotland is also projected to increase in the coming years, with the proportion over 75 increasing by 71 per cent by 2043.

• In Midlothian, by 2028, the over 75 age group is projected to see the largest percentage increase of any age group at +40.9%. This will place even greater pressure on health and social care services, particularly as many of these older people will have complex care needs.

Other cost pressures

Under the current funding formula, Midlothian is also required to redirect part of its grant allocation to other Scottish councils to help support their financial stability. This includes councils which, unlike Midlothian, are currently experiencing a fall in their population numbers.

• In 2020/21, this amounted to a £1.8 million loss in funding for Midlothian.

The need for change

Midlothian Council believes that the Scottish Government needs to urgently consider changes to how local government funding is allocated.  The council wants this to take full and proper account of population change and the significant impact that this is having on Midlothian Council’s ability to plan for future service demand.

Support for a growing economy

In parallel, the council would like the Scottish Government to consider a specific funding mechanism to support the financial challenges associated with delivering sustainable services to meet the needs of a local population which is growing significantly.  This growth is critical to the economic wellbeing and planned growth of the Scottish economy as a whole.

How we’re making our case

Midlothian Council aims to persuade key decision-makers in the Scottish Government and Parliament of the case for fair funding for Midlothian.  The council also wants to work with the government, other councils and partners, to devise a fairer funding formula for local public services which takes account of population growth.

Meeting with the Scottish Government

The case for a fairer funding allocation for Midlothian was put to Scottish Cabinet Secretary for Finance, Kate Forbes, at a meeting held in January 2021. Midlothian Council Leader Derek Milligan reported that the Cabinet Secretary was “receptive to the council’s suggestion for a Growth Fund and was very interested to hear about the financial challenges that rapid and repetitive population growth is creating for councils such as Midlothian.” Following the meeting, it was agreed that Scottish Government officials and council officers would look further into the issues raised.

• Read more about the council's meeting with the Scottish Government Cabinet Secretary for Finance

Have your say

• We will continue to provide a range of financial information on this website to help explain the specific challenges facing Midlothian and setting out the case for fair funding for local councils and other public services
• For more information or to give your views, email: HaveYourSay@midlothian.gov.uk