A change to home-to-school transport eligibility produced a £999,000 underspend this year, but wider pressures have left Midlothian Council with a significant net overspend and exhausted welfare funding.
Despite that saving, the council reported a net overspend of about £4.8 million across services in the first quarter.
The annual Scottish Welfare Fund grant allocation for Midlothian has already been exhausted, prompting proposals to reallocate Covid recovery and service concession funds.
Councillors agreed short-term use of earmarked funds but flagged the need for measured spending decisions and income-generation options.
A policy revision to home-to-school transport meant hundreds of pupils no longer met the eligibility criteria. The transport underspend is reported at £999,000 for the year to date. Other positive variances in the report included lower-than-budgeted electricity costs and sport and leisure income running about £796,000 above budget.
Residual pressures and funding moves
Even with those savings and additional income, the council recorded a net service overspend of about £4.8 million. The Scottish Welfare Fund allocation for the year has been fully spent within a few months, creating immediate pressure for welfare payments. Council leadership recommended releasing earmarked Covid recovery funding to part-fund Scottish Welfare Fund payments and using £2.581 million in service concession funds to shore up reserves.
Council leader Kelly Parry acknowledged the mixed picture: there are some savings and income increases, but significant pressures remain. She outlined steps already taken, including stronger financial scrutiny, tighter controls on spending, and focussed reviews of pressured areas. Parry has written to the Scottish Government requesting sufficient funding for this year's welfare payments and a review of the welfare fund's allocations, noting Midlothian's allocation has not increased in several years.
Labour group leader Derek Milligan warned against treating fund transfers as a long-term fix, calling instead for "measured and palatable" options that balance cuts and service changes. He framed the choices as reallocating money between services, not straightforward spending cuts. Councillor David Virgo urged acceleration of income-generating projects already underway, citing an alpine coaster as an example of new income streams beginning to deliver.
Councillors agreed to use the proposed earmarked funds to support ongoing service pressures. The actions are short-term financial moves rather than structural budget changes.
Expect further reports and proposals detailing where permanent savings or service changes will be made, proposals to replenish or replace the Scottish Welfare Fund allocation for the remainder of the year, and updates on income-generation projects the council intends to prioritise.
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