Agenda Document Pack - Midlothian Council - 24/02/2026
Midlothian Council · 24 February 2026
Back to Midlothian Council — 24 February 2026 and its agenda
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Notice of Meeting and Agenda Midlothian Council Venue: Normandy Court/ Hybrid, Normandy Court, 20 Normandy Dr, Dalkeith, EH22 1JG Date: Tuesday, 24 February 2026 Time: 11:00 Executive Director : Place Contact: Clerk Name: Democratic Services Clerk Telephone: Clerk Email: democratic.services@midlothian.gov.uk Further Information: This is a meeting which is open to members of the public. Privacy notice: Please note that this meeting may be recorded. The recording may be publicly available following the meeting. If you would like to know how Midlothian Council collects, uses and shares your personal information, please visit our website: www.Midlothian.gov.uk Page 1 of 304
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1 Welcome, Introductions and Apologies 2 Order of Business Including notice of new business submitted as urgent for consideration at the end of the meeting. 3 Declaration of Interest Members should declare any financial and non-financial interests they have in the items of business for consideration, identifying the relevant agenda item and the nature of their interest. 4 Deputations No items for discussion 5 Minutes 5.1 Minute of the Midlothian Council meeting of 16 December 2025 - submitted for approval 5 - 28 Private Minute Addendum of the Midlothian Council meeting of 16 December 2025 - submitted for approval 5.2 Minute Volume Index - submitted for consideration 29 - 30 5.3 Public Action Log 31 - 36 Private Action Log 6 Questions to the Council Leader 6.1 Local Growth Fund, submitted by Councillor Peter Smaill 37 - 38 7 Motions 7.1 Newtongrange Welfare Park Centenary Celebrations 39 - 40 7.2 Conservative Group Motion 41 - 42 8 Public Reports 8.1 Financial Monitoring 2025/26 - General Fund Revenue, report by Chief Financial Officer and Section 95 Officer 43 - 56 Page 2 of 304
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8.2 Housing Revenue Account - Rent Setting Strategy 2026/27- 2028/29, report by Executive Director Place 57 - 70 8.3 Tenant Satisfaction Survey Results 2025, report by Executive Director Place 71 - 122 8.4 Housing Revenue Account - Revenue Budget 2025/26 - 2026/27 and Capital Plan 2025/26 - 2028/29, report by Chief Financial Officer and Section 95 Officer 123 - 132 8.5 General Services Capital Plan 2025/26 Quarter 3 Monitoring and 2026/27 to 2029/30 Budgets, report by Chief Financial Officer and Section 95 Officer 133 - 152 8.6 Treasury Management and Investment Strategy and Prudential Indicators, report by Chief Financial Officer and Section 95 Officer 153 - 228 8.7 Fees and Charges 2026/27 - Discussion Paper, report by Chief Officer Corporate Solutions (to follow) 8.8 Variation of Council Tax for Unoccupied Dwellings, report by Chief Officer Corporate Solutions (to follow) 8.9 Transformation Blueprint - Theme 3 - Workplaces of the Future: Relocation of Gorebridge Library, report by Chief Officer Corporate Solutions 229 - 236 8.10 Additional Public Holiday for Scotland in Football World Cup 2026, report by Executive Director Place 237 - 242 8.11 Medium Term Financial Strategy, report by Chief Financial Officer and Section 95 Officer (to follow) 8.12 Midlothian School Admissions Policy: Update, report by Executive Director Children Young People and Partnerships (Acting) 243 - 248 8.13 Mount Esk Nursery Consultation, report by Executive Director Children Young People and Partnerships (Acting) 249 - 258 8.14 Local Review Body - Nomination of Member, report by Chief Officer Corporate Solutions 259 - 262 8.15 Local Growth Fund, report by Executive Director Place 263 - 270 8.16 Edinburgh, the Lothians and Scottish Borders MAPPA Annual Report for 2024/2025, report by Head of Adult Services and Chief Social Work Officer 271 - 280 8.17 Annual Procurement Report 2024/25, report by Chief Officer Corporate Solutions 281 - 304 Exclusion of Members of the Public (A) TO CONSIDER RESOLVING TO DEAL WITH THE UNDERNOTED BUSINESS IN PRIVATE IN TERMS OF PARAGRAPHS 9 AND 13 OF PART 1 OF SCHEDULE 7A TO THE LOCAL GOVERNMENT (SCOTLAND) ACT 1973 - Page 3 of 304
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THE RELEVANT REPORTS ARE THEREFORE NOT FOR PUBLICATION; AND (B) TO NOTE THAT NOTWITHSTANDING ANY SUCH RESOLUTION, INFORMATION MAY STILL REQUIRE TO BE RELEASED UNDER THE FREEDOM OF INFORMATION (SCOTLAND) ACT 2002 OR THE ENVIRONMENTAL INFORMATION REGULATIONS 2004. 9 Private Reports 9.1 Mavisbank House - Compulsory Purchase Order, report by Executive Director Place 10 Date of Next Meeting The next meeting will be held on Tuesday 31 March 2026. Page 4 of 304
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INTERNAL USE ONLY DRAFT BY/DATE: REVIEW BY/DATE: 1-993 Minute of Meeting Midlothian Council Tuesday 24 February 2026 Item No 5.1 Midlothian Council Date Time Venue Tuesday 16 December 2025 11.00am Council Chambers, Normandy Court and Hybrid Present: Provost McCall (Chair) Deputy Provost Bowen (Deputy Chair) Councillor Parry (Council Leader) Councillor Cassidy (Deputy Council Leader) Councillor Alexander Councillor Curran Councillor Drummond Councillor Imrie Councillor McEwan Councillor McKenzie Councillor McManus Councillor Milligan Councillor Russell Councillor Scott Councillor Smaill Councillor Pottinger (virtual) Councillor Virgo Religious Representatives Anne-Theresa Lawrie In attendance: Dr Grace Vickers, Chief Executive Kevin Anderson, Executive Director Place Morag Barrow, Director of Health and Social Care: Midlothian Health and Social Care Partnership, Chief Officer to Midlothian Integrated Joint Board Derek Oliver, Executive Director Children, Young People and Partnerships (Acting) Fiona Clandillon, Head of Development David Gladwin, Chief Financial Officer and Section 95 Officer Saty Kaur, Chief Officer Corporate Solutions Michelle Strong, Chief Education Officer Alan Turpie, Legal and Governance Manager and Monitoring Officer Marc Bedwell, Programme Manager, Learning Estate Children, Young People and Partnerships Magnus Inglis, Service Manager - Business Support – Acting Up Gordon Pollock, Project Director Zero Waste Edinburgh and Midlothian Ross Irvine, Principal Officer, Learning Estate Suzanne Ross, Principal Solicitor James McQuaker, Senior Project Manager Nicola Thorburn, Democratic Services Team Leader (Acting) Page 5 of 304
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Hannah Forbes, Democratic Services Officer Louise Middleton, Democratic Services Officer Maria Perez, Democratic Services Officer 1. Welcome and Apologies The Chair welcomed everyone to this meeting of Midlothian Council and advised that the meeting will be broadcast live and saved to the Council’s archive. Items heard in private will not be made available to the public. The Chair noted that the pupils of Kings Park Primary School normally attend the start of the December Council meeting to perform Christmas carols. Due to the smaller size of the temporary Chamber, this year the Christmas performance will be from Caillan Greig and Cora Scott from Dalkeith High School. The Chair welcomed Caillan and Cora and Mr Graeme Pyper (Music Teacher). Apologies were submitted from Councillor Winchester. 2. Order of Business Democratic Services advised that there was one change to the order of business. Item 8.10 Local Review Body – Nomination of Member is removed from the agenda. 3. Declarations of Interest Elected Members were invited to declare their financial or non-financial interest in items of the agenda. No declarations of interest were made at this stage of the proceedings. Elected Members were reminded that they could make declarations of interest at relevant items of the agenda. 4. Deputations No items for discussion. 5. Minutes Report No. Report Title Presented by: 5.1 Minute of Midlothian Council Meeting of 21 October 2025 Executive Director Place The Minute of the meeting of Midlothian Council held on the 21 October 2025 was submitted for approval. Councillor Smaill requested an amendment to the Minute. Page 13 of the meeting papers (section 8.4) referred to the “fluid nature of the housing stock”. This was updated to “limited fluidity of the housing stock”. Page 6 of 304
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Councillor Parry moved to approve the amended Minute of the Meeting of Midlothian Council of 21 October 2025, seconded by Councillor McKenzie. Councillor Parry moved to approve the Private Minute Addendum of Midlothian Council meeting of 21 October 2025 as a correct record, seconded by Councillor McKenzie. Decision The amended Minute of the Midlothian Council Meeting of 21 October 2025, and the Private Addendum of the Midlothian Council Meeting of 21 October 2025 were approved as the correct record. Action Correction to section 8.4 of the Minute of the Meeting of Midlothian Council of 21 October 2025. Update the reference to the “fluid nature of the housing stock” to “limited fluidity of the housing stock” – Democratic Services. Report No. Report Title Presented by: 5.2 Minute Volume Index Executive Director Place The Minute Volume Index was submitted for approval. The Minute Volume Index was moved by Councillor Parry and seconded by Councillor McManus. Decision Council approved the Minute Volume Index. Report No. Report Title Presented by: 5.3 Action Logs Executive Director Place Council agreed that items flagged as recommended for closure could be removed from the Action Logs. Decision Council agreed that items flagged as recommended for closure could be removed from the Action Logs. 6. Questions to the Leader of the Council No items for discussion. Page 7 of 304
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7. Motions Report No. Report Title Presented by: 7.1 World Cup 2026 Councillor Parry The notice of motion was presented by Councillor Parry, noting the historic and dramatic success of the Scotland Men’s National Football Team in qualifying for the 2026 FIFA World Cup, marking the first appearance in the tournament since 1998, and recognising the immense sense of national pride and unity this achievement generates across Midlothian and the entire country. The inspiring role models presented by the team, management, and players, demonstrates dedication, teamwork, and resilience to the young people of Midlothian. This event presents significant potential to boost local participation in sport, enhance community cohesion, and generate economic activity within the Council area. Council resolves to: Formally congratulated the Scotland Men’s National Football Team, Head Coach Steve Clarke, and all support staff on this outstanding achievement, and extend best wishes for the tournament in Canada, Mexico, and the United States. Instruct the Chief Executive and relevant Officers to take every practical opportunity to ensure residents across Midlothian can participate in the excitement of the tournament. Council is instructing Officers to use the World Cup 2026 as a positive lever for a lasting legacy, and to consider the nighttime economy and licencing rather than screens in parks given the later kick off times that have now been published. There are great opportunities for Midlothian in terms of income generation and a boost to local businesses. It is hoped that despite the later kick off times that schools can incorporate the football into their curriculum and pathways into sports in Midlothian. Councillor Virgo added that the detail in the motion covers the achievement well and hopes the success is celebrated and taken advantage of going forward. The Provost added that there is a new Scotland football song being written and the parent of the songwriter is a Midlothian Council employee. Councillor Milligan echoed the sentiments in the motion and added that it would be beneficial to engage with Police Scotland, Licensees and others that may be involved in hosting events during the World Cup 2026 to gauge their interest. The motion was moved by Councillor Parry and seconded by Councillor Virgo and Councillor Milligan. Decision Council approved the motion. Page 8 of 304
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Provost McCall requested that Depute Provost Bowen assume the role of Chair for item 7.2. Report No. Report Title Presented by: 7.2 Congratulating Penicuik Community First Responders on their 20th Anniversary Councillor McCall The notice of motion was presented by Councillor McCall which recognises the volume of work undertaken by the Penicuik Community First Responders over the last 20 years. The Provost highlighted that there are people in the area who are unaware of this valuable service. Councillor McCall recently celebrated Penicuik Community First Responders reaching this milestone along with current and previous, retired responders and encouraged anyone interested in being involved to contact the Penicuik Community First Responders for more information. Councillor McManus echoed the sentiments of the motion and congratulated the Penicuik Community First Responders on reaching this milestone, which is reflective of their dedication and lasting commitment. Councillor McEwan welcomed this motion and passed their sincere thanks to the Penicuik Community First Responders for their service. The motion was moved by Councillor McCall and seconded by Councillor McManus. Decision Council approved the motion. Provost McCall reassumed the role of Chair for the remainder of the meeting. 8. Public Reports Report No. Report Title Presented by: 8.1 Treasury Management Mid - Year Review Report 2025/26 Chief Financial Officer and Section 95 Officer The Chief Financial Officer and Section 95 Officer presented the report which informed Council of the Treasury Management activity undertaken during the first half of 2025/26 and the forecast activity for the second half of 2025/26 in accordance with the Treasury Management and Annual Investment Strategy approved in February 2025. It also provides an update to the Treasury and Prudential Indicators for 2025/26. Council should note that in accordance with the Prudential Code, a draft of the report was considered by Audit Committee on 2 December 2025, with the report approved by Audit Committee as presented. Council is recommended to: Page 9 of 304
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• Note the report and the treasury activity undertaken in the period to 20 November 2025, as outlined in Section 4 and Section 5.2. • Note the current economic position and forecast for interest rates, and the actual and forecast Treasury Management activity during the second-half of the year as outlined in Section 5.2 and 5.3; and note the continuation of a Treasury Management strategy of minimising cash (fixed term deposit) balances to allow the Council to continue to defer costs associated with locking into longer-term borrowing at rates that remain elevated, noting that this strategy is similar to the majority of other Scottish Councils. • Note the technical revisions to the Prudential Indicators in Section 6 of this report. • Note the loans fund rate performance relative to other Scottish Local Authorities, as outlined in Section 7, and the cash saving (compared to the Scottish Average) that the Treasury Management function brings to support the Council’s in-year revenue budget. The Chair thanked the Chief Financial Officer and Section 95 Officer for their report and invited questions. Councillor Parry thanked the Chief Financial Officer and Section 95 Officer, and Gary Thomson, Senior Finance Business Partner, and the rest of their team for an excellent paper and the fantastic work they do in this area. Councillor Milligan congratulated the Chief Financial Officer and Section 95 Officer and their team and highlighted that Midlothian Council has led and excelled in this area for a number of years. Decision Council noted the report and its recommendations. Report No. Report Title Presented by: 8.2 Financial Monitoring 2025 /26 – General Fund Revenue Chief Financial Officer and Section 95 Officer The Chief Financial Officer and Section 95 Officer presented the report which provides Council with information on projections of performance against service revenue budgets in 2025/26 and to provide commentary on areas of material variance against budget. The budget performance figures as shown in appendix 1 result in a projected net overspend of £2.616 million which represents 0.8% of the revised budget. Some areas of projected overspend relate to recurring areas of financial pressure or slower than planned delivery of savings measures. The Corporate Management Team have discussed these in depth and, where possible, put in place recovery actions. Page 10 of 304
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The projection of the General Fund balance at 31st March 2026 is £12.884 million, of which £9.124 million is earmarked for specific use leaving a non-earmarked General Fund balance of £3.760 million in advance of incorporating outcomes from the review of earmarked reserves. Council approval to capitalise costs of £0.737 million relating to gym refurbishment increases the non-earmarked element of the General Fund to £4.497 million. The review of earmarked reserves carried out during quarter 2 (section 5.3) identified a further £0.770 million of earmarked reserves that can now be reclassified as non- earmarked thus increasing the non-earmarked element of the General Fund to £5.267 million and making it compliant with Reserves Strategy. Consequently, the total projected General Fund Balance increases to £14.391 million. Council is recommended to: a) Note specifically the recommendation in the General Services Capital Plan report on today’s agenda to capitalise £0.737 million of costs relating to Gym Refurbishment previously funded from earmarked revenue budgets for Public Realm repairs and the impact of this on the General Fund Balance (Section 5.3); and otherwise b) Note the remaining contents of this report. The Chair thanked the Chief Financial Officer and Section 95 Officer for their report and invited questions. Due to their personal interest, Councillor Curran recused themself from the meeting at 11:28am as it was likely that Home to School Transport would form part of the discussion. Councillor Milligan queried why the overspend on Pupil Transport has now risen by a further £937,000 and stressed that Council must understand why this has happened. Over the last three years the Council has seen overspend in this area of £1 million, and in this year’s budget there was an increase of £1 million to break even. There was an Internal Audit carried out to determine why Council were not sighted on the previous overspends and since then Elected Members have been advised that there is a new system in place, however there is an another additional overspend being reported. Councillor Milligan asked what has changed in the new contract to incur the £937,000 overspend and what measures are being put in place to address this. Councillor Milligan requested a report showing what has caused this additional money to be spent as it appears that there is no control and Council cannot afford this additionality. The Chief Financial Officer and Section 95 Officer advised that a report, including a detailed cost analysis, could be provided and added that comparable figures must be used in the exercise, e.g. the actual expenditure in 2024/25 and the projected expenditure in 2025/26. The position has not been perfect as the data was not available to construct the budget. Councillor Milligan asked for an explanation on the comparison data in the budget for Pupil Transport as the missing information related to the additional £1 million put Page 11 of 304
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into the budget to fix the original overspend last year. There is now a further £937,000 overspend which equates to £2 million. The Chief Financial Officer and Section 95 Officer advised that there is a lag in the financial years, for the 2023/24 budget an additional £500,000 was put in the budget because of what was identified in 2022/23. The same thing happened around one year ago when reviewing the position for 2024/25 and the budget was increased by £1 million for 2025/26. What was unknown at that stage was what the outturn in 2024/25 was going to be. 11:39am Councillor Curran rejoined the meeting. Councillor Milligan queried the £163,000 shortage in income rental for Commercial Lets and stated that they had been informed that there are people waiting to let premises. Councillor Milligan could only find one commercial property for let online but places such as Hardengreen Industrial Estate have several for let signs up. Councillor Milligan asked if the Council are being too restrictive in the class for usage. The Chief Financial Officer and Section 95 Officer advised that the majority of overspend does relate to Hardengreen Industrial Estate and deferred to colleagues to provide further detail. There is also a contribution due to vacant premises on Buccleuch Street, Dalkeith and some of the movement is part of the Midlothian House Refit and Dalkeith Town Centre Project. The Executive Director Place advised that there are currently 3 office premises empty and 3 small units vacant at Hardengreen. Two of these are listed on the Locate in Midlothian website. Councillor Curran suggested that all vacant premises should be advertised on Locate in Midlothian (https://locateinmidlothian.co.uk) so people can take up the leases and generate income for Midlothian Council. Councillor Milligan queried the scaffolding bill of £96,000 and the need to understand the decision process between renting and buying this equipment given how long it has been up. Councillor Milligan acknowledged the dissatisfaction expressed by the public and added that Officers must take action. Councillor Pottinger also raised the spend on scaffolding noting that a certain type had to be used for safety purposes and about contractor negotiations and if there was any scope to provide our own scaffolding. The Chief Financial Officer and Section 95 Officer advised that the reason the scaffolding cost is showing as a variance in the revenue monitoring is due to previously anticipating that this would be a capital cost wholly chargeable to the capital project. Following discussions with the Contractor for Midlothian House, this is not the case due to the type of scaffolding and that is why it is showing on the revenue account. The Executive Director Place advised the current scaffolding was erected for safety reasons and that the duration of it being there has been frustrating while investigative surveys were performed. This scaffolding will be taken down, and alternative working load bearing scaffolding will be erected. Page 12 of 304
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Decision Council noted the report and its recommendations. Action Provide a detailed cost analysis in relation to the further £937,000 overspend on Pupil Transport, including a comparison of this year versus last year - Chief Financial Officer and Section 95 Officer. Report No. Report Title Presented by: 8.3 General Services Capital Plan 2025/26 Quarter 2 Monitoring Chief Financial Officer and Section 95 Officer The Chief Financial Officer and Section 95 Officer presented the report for decision, which provided Council with: • An update of the GSCP incorporating information on a further addition to the Plan for approval (Section 3). • Information on the projected performance against budget for 2025/26 (Section 4). • Update on the Capital Fund (Section 5) It is recommended that Council: 1. Note the inclusion of the Property and Estates Asset Management Plan as outlined in Section 3.1. 2. Approve the inclusion of the projects in Section 3.2 in the General Services Capital Plan (GSCP). 3. Note the forecast outturn for expenditure (after reflecting rephased project budgets), funding and borrowing, as outlined in Section 4. The Chair thanked the Chief Financial Officer and Section 95 Officer for their report and invited questions. Councillor Parry passed on their thanks to the teams involved in the gym refurbishments as these projects are moving forward with pace, which will hopefully attract more members in the new year and generate additional income. Councillor Milligan noted some disappointing slippages in the report but also acknowledged the pace at which the gym refurbishment programme is progressing. Councillor Parry also thanked the transport teams, and in particular Anna Herriman, Strategic Transport Planning Manager, who has done a fantastic job in reaching out and securing additional Scottish Government funding that can be used towards bus improvements. Councillor Milligan echoed these comments and highlighted the Page 13 of 304
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significant amount of funding that Anna Herriman, Strategic Transport Planning Manager, and team, have secured for Midlothian Council. The report was moved by Councillor Parry and seconded by Councillor Milligan. Decision Council approved the report and its recommendations. Report No. Report Title Presented by: 8.4 Housing Revenue Account - Revenue Budget and Capital Plan 2025/26 Chief Financial Officer and Section 95 Officer The Chief Financial Officer and Section 95 Officer presented the report for information, which provided Council with a summary of expenditure and income to 24th October 2025 for the Capital Plan and a projected outturn for both the Housing Revenue Account (HRA) and Capital Plan for 2025/26. The summarised financial performance for 2025/26 is: • Projected capital investment in the year totalling £63.864 million; • A projected net overspend in the revenue account of £1.067 million; • A projected HRA general reserve at 31st March 2025 of £30.351 million. Council is recommended to note the contents of this report. The Chair thanked the Chief Financial Officer and Section 95 Officer for their report and invited questions. Councillor McKenzie welcomed this report to the Chamber and passed their thanks to the Chief Financial Officer and Section 95 Officer, and Lisa Young, Accountant, and their teams for the work done in this area. Councillor McKenzie added that the Rent Consultation closed on 5 December 2025 and that Midlothian continues to invest in high quality council housing. Councillor McKenzie noted that the net overspends mentioned in the report reflects the increased level of investment in the housing stock. Councillor McKenzie extended their thanks to Councillor McEwan and Councillor Smaill for their participation in the Building Maintenance Project which closed earlier this quarter. Decision Council noted the report and its recommendations. Page 14 of 304
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Report No. Report Title Presented by: 8.5 Medium Term Financial Strategy – 2026/27 to 2028/29 Chief Financial Officer and Section 95 Officer The Chief Financial Officer and Section 95 Officer presented the report for information, which provides Council with an update on development of the 2026 /27 revenue budget, building on the report presented to Council on 24th June 2025 and looking ahead to further member engagement early in 2026 culminating in Council setting a balanced budget on Tuesday 24th February 2026. Pressure on budgets across the public sector is severe and, as the fastest growing Local Authority in Scotland, the impact is intensified in Midlothian. Population projections show a continued high level of growth in Midlothian through to 2043. There is a significant underlying funding gap of 6.545 million (2% of expenditure) in 2026/27 rising to £10.131 million by 2028/29 (2.9% of expenditure) that will impact on what services the Council can continue to deliver and how they are delivered. Reprioritisation and redesign are crucial to balancing the Medium-Term Financial Strategy (MTFS) and immediate action is needed. Key messages from the recent UK Government budget are considered along with the impact these may have on Midlothian Council. An updated budget position will be presented to the Business Transformation Steering Group (BTSG) after the Scottish Government budget in January, subsequent publication of the Local Government Finance Settlement, and base budget work is complete. Council is recommended to: a) Note that the BTSG will continue to consider measures necessary to support delivery of a balanced MTFS before any policy measures are presented to Council. b) Note the recommendation from the best value audit report on transformation that the Council recognises that it is operating in a fiscally challenging environment and now needs to find a way to accelerate progress on the remaining projects within the Transformation Blueprint with the resources it has available. c) Note that the budget gap for 2026/27, incorporating the planned use of service concession retrospection and an indicative 9% annual Council Tax increase is projected to be £2.452 million, rising to a projected £10.131 million by 2028/29 (section 3.4). d) Note the MTFS planning assumptions set out in the report (section 3.5). e) Note the position relating to the UK Government Budget (section 3.6 to 3.10) and the Scottish Government Budget (sections 3.11 to 3.14). Page 15 of 304
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f) Note that a final budget gap, reflecting base budget work and Scottish Government funding will be presented to BTSG on Wednesday 21st January 2026. and g) Otherwise note the remainder of the report. The Chair thanked the Chief Financial Officer and Section 95 Officer for their report and invited questions. Councillor Parry thanked the Chief Financial Officer and Section 95 Officer for outlining the Council’s challenges well and added that there is a unique challenge facing local authorities this year in terms of budget setting. Councillor Parry could only recall one other occasion in the last 10 years being elected that the budget information has been this late. There is currently no indication as to what the Council’s financial settlement is, and this is a repercussion of the UK Government being late and subsequently the Scottish Government being late and therefore out with Midlothian Council’s control. Those people funded by Midlothian Council are becoming incredibly anxious about the situation. Councillor Parry advised Council that they have written to the Scottish Government, detailing the challenges that are specific to Midlothian, the pressures in the Midlothian Integrated Joint Board, the minimal reserve balance this financial year and those years ahead, and has asked that the Cabinet Secretary for Finance is incredibly mindful of this when setting the floor mechanism for the next financial year. Councillor Parry also highlighted the pressures on the school estate building programme as well as challenges to accommodate growth and infrastructure. Democratic Services circulated a copy of the letter to Elected Members during the meeting, which will be appended to this minute for public record. Councillor Smaill mentioned the Scottish Government’s ‘floor mechanism’ for determining funding highlighted a long running issue when reviewing planning assumptions. Councillor Smaill asked the Chief Financial Officer and Section 95 Officer to confirm if Midlothian and the Scottish Government are up to date with the actual population of people to support in Midlothian given that grant funding has population-based indicators. The Chief Financial Officer and Section 95 Officer advised that there is a lag in all the statistics as they can only be gathered up to a certain point in advance of the budget setting for any financial year. The population issue goes back to the 2012 Census through to the 2023 Census. When the figures were updated the change in population figures were based on National Records of Scotland (NRS) projections however those projections were out of step with the actual figures in Midlothian which were much higher. The 2025/26 figures appear to be aligned with the actual population but the information for 2026/27 is not available yet, however the Chief Financial Officer and Section 95 Officer is monitoring this closely. Decision Council noted the report and its recommendations. Page 16 of 304
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Report No. Report Title Presented by: 8.6 Midlothian School Admission Policy Executive Director Children, Young People and Partnerships (Acting) The Executive Director Children, Young People and Partnerships (Acting) presented the report for decision, noting that at the full meeting of Midlothian Council on 9 September 2025, Elected Members agreed to remit to Midlothian Council’s Education and Children’s Services Cross Party Group to develop the detail of further statutory consultation on the Admissions Policy and bring back to the next Council for approval. The Council’s Religious Representative was also to be co-opted onto the Cross- Party Group on this matter. This report sets out the agreement reached by the Education and Children’s Services Cross Party Group, in conjunction with the Council’s Religious Representative and the Headteacher of St David’s Roman Catholic High School and as directed is being brought back to Council for approval. Council is recommended to approve the following: • Agree to the revised admission to primary and secondary school priority groups for denominational schools as set out in paragraph 3.3 of this report; • Agree to carry out a statutory consultation on Midlothian Council’s Admission Policy for Primary and Secondary Schools based on the above priority groups to commence early 2026; and • Agree that all of the above recommendations are subject to the outcome of engagement with East Lothian Council with regard to the additional and quantifiable education costs associated with Loretto RC Primary School pupils accessing St David’s RC High School for secondary denominational education. The Chair thanked the Executive Director Children, Young People and Partnerships (Acting) for their report and invited questions. Councillor Scott moved the recommendations in the paper and stated that they hope the consultation will help provide a fairer and clearer way to manage admissions to St David’s RC High School while work is ongoing with East Lothian Council to formalise arrangements re associated costs. This should provide reassurance to families going forward that a policy will be in place in the future. Councillor Scott acknowledged that pupils from other local authorities can be considered for placement, but by including the intake of a whole school outside Midlothian is a unique situation and therefore they do not believe the people of Midlothian are being unreasonable to ask for a payment towards this. Councillor Scott hopes Elected Members agree that the Council is not putting up any barriers to admittance but rather ensuring security for Loretto RC Primary School students going forward. Councillor Scott added that charges to East Lothian would not be on a real-cost basis but rather the additional and ancillary costs to Midlothian as a result of this arrangement by admitting the Loretto RC Primary School pupils. Councillor Scott hopes that East Lothian Council agree that this is a sensible and Page 17 of 304
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equitable way forward and once the consultation has ended, we can come to an amicable agreement which provides reassurance for the future. Councillor Drummond seconded the paper and noted they were pleased that all three parties were able to come to an agreement in relation to Loretto RC Primary School and shares Councillor Scott’s hope that East Lothian Council support the proposal as the pupils are a valued part of the St David’s RC High School community. The report was moved by Councillor Scott and seconded by Councillor Drummond. Decision Council approved the report and its recommendations. Report No. Report Title Presented by: 8.7 Attainment Update for Midlothian in Primary and Secondary Schools Chief Education Officer The Chief Education Officer presented the report for information, which provides the annual update on attainment for Midlothian’s children and young people on two key datasets: Achievement of Curriculum for Excellence Levels (ACEL) and Senior Phase Insight update. These two dataset updates provide important indications of the attainment of our children and young people at various stages from P1 to S6. This report highlights the successes and challenges at various points, along with plans to address these and ultimately improve the outcomes for all our children and young people. The stretch aims for Midlothian Council for the period to 2026/27 are also presented here as part of the Scottish Governments programme for raising attainment. Council is recommended to: • Note the significant progress, strengths and improvements in our children and young people's attainment in both primary and secondary schools as outlined in this report. • Note and acknowledge the strategies adopted to address areas for continuous improvement outlined in this report. • Congratulate all pupils, parents/carers and staff on the improvements in attainment during session 2024/5. The Chair thanked the Chief Education Officer for their report and invited questions. Councillor Scott noted the recommendations and congratulated the whole of the Education Team and Michelle Strong, Chief Education Officer, in particular for their hard work leading to this achievement. The outstanding results are a testament to the hard work, resilience and ambition of our children and young people who are supported by dedicated families and staff. Councillor Scott highlighted that pupils in P4, P7 and S3 achieved their highest ever literacy results and the poverty related attainment gap narrowed across every measure exceeding this year’s aim. This demonstrates the collective focus on equity, high quality learning and targeted support is making a real difference. Page 18 of 304
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Councillor Scott congratulated Rosewell Primary School who has received the prestigious National Digital Schools Award. Councillor Drummond congratulated and passed their thanks to everyone involved in achieving these very impressive results. Decision Council noted the report and its recommendation. Report No. Report Title Presented by: 8.8 Pre-Election Publicity Guidance Chief Executive The Chief Executive presented the report for information, updating Members of the terms of the Council’s Pre-Election Publicity Guidance which has previously been approved to ensure that Council facilities are not used to support any particular political party in any election, by-election or referendum. The report also asks Members to note the transitional arrangements for Meetings of the Council and Committees during the pre-election period. Council is asked to note the terms of the Council’s Pre-Election Publicity Guidance in advance of the forthcoming Scottish Parliament Election. The Chair thanked the Chief Executive for their report and invited questions. No questions were submitted. Decision Council noted the report and its recommendations. Report No. Report Title Presented by: 8.9 Standing Orders Working Group – Deputations Process Chief Officer Corporate Solutions The Chief Officer Corporate Solutions presented the report for decision, requesting that Council to consider changes to the Deputations Process; as recommended by the Standing Orders Working Group, and a change of start time of Committee meetings. Council is recommended to: • Approve the revised Deputations Process (Appendix B). • Consider a change to Council Committee start times from 11am to 10am with the exception of Council which remains at 11am. Page 19 of 304
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The Chair thanked the Chief Officer Corporate Solutions for their report and invited questions. Councillor Parry moved to amend the second recommendation in the paper to delegate any changes to Council Committee meeting start times, with the exception of Council, to each individual Committee Chair. Councillor Curran agreed and seconded the paper as amended. The amended report was moved by Councillor Parry and seconded by Councillor Curran. Decision Council approved the amended report and its recommendations. Any changes to the Council Committee start times has been delegated to the individual Committee Chairs to consider if required. Report No. Report Title Presented by: 8.10 Local Review Body – Nomination of Member Chief Officer Corporate Solutions As per the Order of Business, this item was removed from the agenda. Decision Not applicable. Report No. Report Title Presented by: 8.11 Midlothian Armed Forces Covenant Plan 2025 to 2030 Executive Director Children, Young People and Partnerships (Acting) The Executive Director Children, Young People and Partnerships (Acting) presented the report for decision, outlining the Council’s statutory responsibilities under the Armed Forces Covenant legislation and associated guidance. It also presents the updated Midlothian Armed Forces Covenant Plan 2025–2030, which sets out a shared vision which is: “To improve outcomes for serving personnel, veterans, reservists and their families by understanding their needs through data, lived experience and strong collaborative partnerships.” Council is recommended to endorse and approve the Midlothian Armed Forces Covenant Plan 2025–2030 and to note the future requirement to respond to the extension of the Armed Forces Duty, once enacted. The Chair thanked the Executive Director Children, Young People and Partnerships (Acting) for their report and invited questions. Page 20 of 304
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Councillor Parry endorsed the paper in Councillor Winchester’s absence, and as the only Elected Member that has serving experience in the Armed Forces and noted how proud it made them to attend external events with veterans and be told about the fantastic reputation Midlothian has for supporting both active service personnel and veterans. Councillor Parry thanked staff for all their hard work in this area. The Provost attended the 110th Anniversary of Veterans Housing Scotland, which is a very special event, and Midlothian always receives recognition for their support. Councillor Smaill noted the significance of the Armed Forces, particularly at Milton Bridge who are a major employer in our environment. It is a very complex area and involves a lot of administrative work, and Councillor Smaill commended the efforts of Annette Lang, Group Service Manager, Community Planning, Communities, Lifelong Learning and Employability, and added that Midlothian continue to receive a gold award each year from the Armed Forces for our connections. Councillor Scott added that, as a volunteer for the charity Gorebridge Cares, they were fortunate to be awarded an Armed Forces Covenant Grant and said that this is a great project which has opened their eyes to the needs of Armed Forces community and veterans. Councillor Scott highlighted that army wives with young children are often far away from families and their partners are in active service which can be very isolating, so it is important they have as much support as possible to enable them to come together as a community. Councillor McEwan welcomed the report and agreed the importance of supporting the Armed Forces community. Councillor McEwan mentioned that one of their constituents was refused access to dental care under the covenant as the list is closed and queried whether the Council have any authority to enforce this. The Executive Director Children, Young People and Partnerships (Acting) advised that, as this is a regulated service, this would be in the remit of the General Dental Council (GDC) and that the constituent should contact the GDC directly. The report was moved by Councillor Parry and seconded by Councillor Smaill. Decision Council approved the report and its recommendations. At 12:15pm the Provost requested a short comfort break. At this point the Religious Representative, the Service Manager - Business Support – Acting Up and the Principal Solicitor left the meeting. Prior to the meeting restarting, the Head of Development, the Programme Manager, Learning Estate Children, Young People and Partnerships, the Project Director Zero Waste Edinburgh and Midlothian, the Principal Officer, Learning Estate and the Senior Project Manager joined the meeting. The meeting resumed at 12:18pm. Page 21 of 304
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Report No. Report Title Presented by: 8.12 Penicuik High School Refurbishment and Expansion – Update Report Executive Director Children, Young People and Partnerships (Acting) The Executive Director Children, Young People and Partnerships (Acting) presented the report for decision, which updated Council on the progress of the Penicuik High School refurbishment and expansion project. It outlines key developments since the initial approval in June 2023, including changes to the design strategy, financial implications, contractor appointment and site surveys. The paper seeks Council approval for an additional £10.668 million in capital funding to support the delivery of the revised scheme, bringing the total approved budget to £55.378 million. Since the Council approved the initial proposal in June 2023, the Penicuik High School project has undergone a strategic review to ensure the budget is closely monitored while meeting educational requirements. The original decant strategy, which involved modular accommodation at Montgomery Park, proved financially unviable. As a result, the existing 1960s building was adapted to accommodate pupils during construction, providing a practical and cost-effective alternative. Council is recommended to: 1. Approve the provision of a revised capital expenditure budget in the General Services Capital Plan (GSCP) of £55.378m, an increase of £10.668m from the existing £44.710m (the previous estimated capital cost of the refurbishment and extension of Penicuik High School) and notes the net notional capital cost of £33.395m once Scottish Government LEIP funding is taken into account. 2. Note the progress made with the Refurbishment and Expansion of Penicuik High School and that the current design proposal differs from the original proposal. The Chair thanked the Executive Director Children, Young People and Partnerships (Acting) for their report and invited questions. Councillor Scott moved to approve the revised capital expenditure budget and noted the progress made with the refurbishment and expansion of Penicuik High School. While it is disappointing to hear of the delay and extra costs due to rising construction costs, extended design discussions and the need for further surveys and safety checks, the health and safety of pupils and staff is of the highest priority during any building works. The end product will be a landmark, energy efficient building that will be enjoyed by pupils, staff and the wider community for decades to come. Councillor McManus added that there was a lot of concern in Penicuik in relation to this and thanked the Executive Director Children, Young People and Partnerships (Acting), their predecessor and the Education Team for taking their concerns seriously and speaking with parents. Page 22 of 304
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Councillor Milligan commented on the £10,668 million additionality, noting that this project was originally approved in June 2023 and Council warned that that they did not have all the required information to proceed, then 2.5 years later Elected Members are being asked for more. The effect on the revenue budget will be around £750,000 per year to pay the borrowing and Council Milligan feels there is no control over the capital spend and action needs taken urgently by Council Officers. Council has already seen the rise in cost for Midlothian House and there is still no report on Beeslack High School but now there is another £10,668 million to find, taking the cost of the Penicuik High School Refurbishment and Expansion to £55 million. Councillor Milligan highlighted that for £38 million a brand new Lasswade High School was built with many new facilities, and this is costing £55 million for a refurbishment. The extra spend could have gone into much needed work on Primary Schools. Councillor Milligan stressed that they do not accept this, the Labour Group does not accept this, and the public do not accept this. Councillor Parry shared Councillor Milligan’s frustrations. Councillor Parry added that Lasswade High School was opened in 2013 and circumstances are different now. Councillor Parry stated that most Scottish local authorities are grappling with challenges in terms of construction and capital build projects. They referenced the treasury management paper which referenced US tariffs now impacting our economy and having an impact on UK Government budgets. The additional funding requirement is disappointing, and this should be used a lesson. Councillor Parry finished by adding that they do not expect to see this coming back to the Chamber now the additional funding has been agreed. Councillor Smaill added that Council has learned that there is no such thing as a fixed price building contract however queried the actions taken to reach this position and asked whether condition surveys were carried out and asked whether there was a problem with the initial surveyor report and was it too basic. The Executive Director Children, Young People and Partnerships (Acting) advised that when the contract was first negotiated there were several exclusions that were set out and this has resulted in this situation that requires additionality. Additional support is being sought through Scottish Futures Trust (SFT) in terms of Scottish Government Learning Estate Investment Programme (LEIP) funding regarding the discovery of the abnormalities, and this will go some way to offset the additional cost. Councillor Smaill asked about the LEIP funding, querying if there is less support from the Scottish Government for Penicuik compared to the funding for Lasswade High School previously. Councillor Smaill asked what the outcomes were that require to be achieved to satisfy LEIP funding requirements and whether we are at risk of the Scottish Government reducing their commitment to support this build. The Executive Director Children, Young People and Partnerships (Acting) advised that we have the agreed amount that the Scottish Government has committed to provide and there is potential for additional funding. The Programme Manager, Learning Estate Children, Young People & Partnerships advised that in terms of outcomes this is getting the full picture of the asbestos and ground conditions, and Officers are very close to providing that figure. The Page 23 of 304
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Scottish Government have shown they are willing commitment to providing support which is at around £950,000 with the potential for more. Councillor McEwan echoed Councillor Milligan’s comments, and to an extent those of Councillor Smaill. Councillor McEwan expressed their disappointment on the overspend but appreciated that costs can be difficult to pin down. Councillor McEwan took comfort today that there would be no further financial asks as Council are unable to finance such increases. The Programme Manager, Learning Estate Children, Young People & Partnerships confirmed that they are looking to work back from the overspend, drive it down and find further efficiencies in the project. Councillor Imrie added that if Council funds the £10,668 million overspend then another area would suffer. There was a recent debate regarding Mauricewood Primary School and the decision was that there was not enough money, but a little bit would have gone a long way to improve the Primary School. There was a similar issue with Rosewell Primary School getting modular units rather than an extension. Councillor Imrie was concerned that there appears to be no control on the capital projects in general and stressed that Council Officers must get this under control. If Council did not accept this report today, then an alternative option would have to be found. Councillor Milligan and Councillor Imrie confirmed there was no motion from the Labour Group but noted their dissatisfaction and concern. The report was moved by Councillor Scott and seconded by Councillor Parry. Decision Council approved the report and its recommendations. Before moving into the private section of the meeting, Councillor Parry thanked their fellow Elected Members, Officers, staff and volunteers for their hard work every day and to those that will also be working over the Christmas holiday period to ensure Midlothian’s residents are looked after and cared for. Councillor Parry also thanked Midlothian Council’s partners in the emergency services who are under incredible pressure over this period but continue to work hard for Midlothian. 9. Private Reports Exclusion of Members of the Public (A) TO CONSIDER RESOLVING TO DEAL WITH THE UNDERNOTED BUSINESS IN PRIVATE IN TERMS OF PARAGRAPH 1, 8 and 9 OF PART 1 OF SCHEDULE 7A TO THE LOCAL GOVERNMENT (SCOTLAND) ACT 1973 - THE RELEVANT REPORTS ARE THEREFORE NOT FOR PUBLICATION; AND (B) TO NOTE THAT NOTWITHSTANDING ANY SUCH RESOLUTION, INFORMATION MAY STILL REQUIRE TO BE RELEASED UNDER THE FREEDOM OF INFORMATION (SCOTLAND) ACT 2002 OR THE ENVIRONMENTAL INFORMATION REGULATIONS 2004. 10. Date of next meeting The next Council meeting is scheduled for Tuesday 24 February 2026. The public section of the meeting concluded at 12:38pm. Page 24 of 304
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Midlothian Council Midlothian House Buccleuch Street Dalkeith Council Leader EH22 1DJ Councillor Kelly Parry Midlothian Tuesday 16 December 2025 Shona Robison MSP Cabinet Secretary for Finance and Local Government The Scottish Government St Andrew’s House Regent Road Edinburgh EH1 3DG By email: dfmcsf@gov.scot Dear Cabinet Secretary, RE: Local Government Settlement FY 2026/27 – The Case for Midlothian I am writing to you ahead of the upcoming Scottish Budget to make Midlothian’s case for a fair and increased settlement for Midlothian, and for all of Local Government across Scotland. I fully recognise the severe fiscal constraints facing the Scottish Government; however, the pressure on essential local services has reached a critical tipping point. While I stand with my COSLA colleagues in seeking sustainable funding for Local Government, I would like to draw your attention to the unique and acute pressures facing Midlothian Council. Our specific demographic reality means that a "flat cash" or standard settlement will effectively result in severe real terms cut that places our statutory duties at risk. Midlothian is proud to be the fastest-growing local authority area in Scotland. This growth is a success story for the region and for Scotland, contributing significantly to the national housing targets and economic development, and growth. Despite our resource constraints, we have continued to deliver rapid housing growth, facilitating major development to house Scotland’s growing population together with a significant investment in our school estate. We have also invested in Cost of Living Support by setting up a Cost of Living Taskforce and have targeted resources to support our most vulnerable residents, specifically addressing stubborn pockets of deprivation within Midlothian to ensure no one is left behind. We are also actively fostering an environment for business growth and job creation. Page 25 of 304
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Tel 0131 271 3002 Our Ref: www.midlothian.gov.uk However, this success comes at a price. Our population increase is not merely a statistic; it represents immediate, real-time demand on services that our current funding formula fails to capture adequately. We are now facing a convergence of financial pressures that threatens our financial sustainability. The financial position of our Health and Social Care Partnership is critical. The Council has invested heavily in Health and Social Care but despite this, our Integration Joint Board (IJB) has no general reserve and is currently carrying a projected overspend for financial year 25/26. Last year, the Council covered the IJB overspend and this year, the quarter 2 outturn shows a projected overspend of £3.258 million. To put this in stark perspective, this figure is 60% of our non- earmarked general fund reserve which currently sits right on the 2% minimum per our Reserves Strategy and in line with Audit Scotland good practice. We simply do not have the safety net to absorb this structural deficit without devastating impacts on other services. As our population grows, so too does our school roll. Specifically, we are seeing a disproportionate and acute rise in children with Additional Support Needs (ASN). Providing the necessary, statutory support for these young people is a moral and legal imperative, but the current funding allocation has not kept pace with the complexity and volume of need in a rapidly expanding authority. Growth requires infrastructure, and the capital costs required to build new schools, community facilities, and social housing to support our new residents have skyrocketed due to inflation and construction market volatility. This feels like a penalty on growth and leaves us with revenue pressures as we continue to borrow to build infrastructure that the current settlement does not adequately reflect. To address these disparities and ensure Midlothian can continue to grow sustainably, we propose the following measures for the 26/27 settlement: • Maximising the Funding Floor: We urge the Scottish Government to utilise the funding floor mechanism to its maximum extent. This provides essential stability and protection for councils that may otherwise lose out under standard distribution formulas, as well as recent changes to funding for Social Care. • Specific "Growth Council" Mechanism: The current funding formula lags behind real-time population explosions. We need a specific funding stream or adjustment that recognises "Rapid Growth Councils" to front-load funding for services required now, rather than years in the future. • Targeted IJB Funding: Given the scale of the IJB deficits across Scotland, but specifically the insolvency risk in Midlothian, specific intervention is required for social care to prevent the collapse of these critical services. Page 26 of 304
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Tel 0131 271 3002 Our Ref: www.midlothian.gov.uk Midlothian wants to continue being a partner in Scotland’s success. However, we cannot sustain Scotland’s fastest growth on a shrinking real-terms budget. I would welcome a meeting with you at your earliest convenience to discuss these figures in detail and explore how the 26/27 settlement can recognise the unique reality of Midlothian. Midlothian Council Officers would also be happy to meet with any of your officials. I look forward to your response. Yours sincerely, Councillor Kelly Parry Leader of Midlothian Council Kelly.Parry@midlothian.gov.uk Page 27 of 304
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Midlothian Council Minute Volume Presented to the Meeting of Midlothian Council on Tuesday, 24 February 2026 Midlothian Council Tuesday 24 February 2026 Item No 5.2 Page 29 of 304
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1 Minutes of Meetings submitted for Approval No items for discussion 2 Minutes of Meetings submitted for Consideration Minute of the Meeting of the Standing Orders Working Group on 23 January 2025 Minute of the Meeting of the Police and Fire and Rescue Board on 22 September 2025 Minute of the Meeting of the Performance Review and Scrutiny Committee on 28 October 2025 Minute of the Meeting of the Performance Review and Scrutiny Committee on 9 December 2025 Minute of the meeting of the Planning Committee on 18 November 2025 Private Addendum to the Minute of the Meeting of Planning Committee on 18 November 2025 Minute of the Meeting of Cabinet on 25 November 2025 Private Addendum to the Minute of the Meeting of Cabinet on 25 November 2025 Minute of the Meeting of the Local Review Body on 1 December 2025 Minutes of Meetings submitted for Information 3 Minute of the Meeting of the MIJB Audit and Risk Committee on 4 September 2025 Minute of the Meeting of the Midlothian Integrated Joint Board on 9 October 2025 Page 30 of 304
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Midlothian Council Tuesday 24 February 2026 Item No 5.3 Midlothian Council - Action Log No Date of meeting Item No and Title Action Action Owner Expected completion date Comments 1 25/06/2024 8.14 Whitecraig Traveller Site A full cost report to come back to Council for final approval to include early termination cost and reinstatement cost unless the cost for this is nil. Executive Director Place When termination costs are known Recommend for closure Work ongoing with ELC joint site operators and suggest action is closed and if additional costs are likely this will be presented to Council for consideration. Align any action jointly with ELC. Vacant site assessment taking place when termination costs are known. 2 27/08/2024 8.1 Financial Monitoring 2024/25 General Fund Revenue Report on the better utilisation of expensive machinery, such as the use of large plant for potholes. Chief Officer Place May 2026 Review report drafted with the additional MTFS road repairs allocation. Page 31 of 304
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No Date of meeting Item No and Title Action Action Owner Expected completion date Comments 3 17/12/2024 8.13 Animal Boarding Establishment Licence Conditions Conduct a review on commercial dog walkers, including a review of any existing policy. Chief Officer Place November 2025 Recommend for closure Fees and charges paper scheduled for February Council contains policy and fees for commercial dog walkers. 4 25/02/2025 Proposed Disposal of Property Asset The Chief Officer Place to provide the exact number of single units in a block of four. Chief Officer Place October 2025 Property disposal completed. Under occupation of properties analysis in progress. 5 25/02/2025 Capital Plan Prioritisation Provide the respective timescales for the extension and refurbishment of Mauricewood Primary School. Executive Director Children, Young People and Partnerships (Acting) Design & costs option being finalised. Extension & Refurbishment assessment scoped into Capital Investment Strategy (Estate & Asset Management Plan) exercise. Design and cost options report expected at March Capital Plan Board. 6 21/10/2025 8.2 Housing Revenue Account – Rent Setting Strategy 2026/27- 2028/29 Schedule an Elected Members Briefing in relation to the Rent Setting ahead of February 2026 meeting of Midlothian Council. Executive Director Place / Democratic Services TBC Recommend for closure. Briefing took place on 11th February 2026. 7 21/10/2025 8.2 Housing Revenue Account – Rent Setting Strategy 2026/27- 2028/29 Prepare a cross-party approach to lobby government to make life better for the people of Midlothian following the recent government funding where Midlothian Council did not benefit. Council Leader TBC Recommend for closure Council Leader has written to both Scottish and UK Governments before and after recent budget announcements and has requested an urgent meeting with the MP for Midlothian to seek improvements to Page 32 of 304
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No Date of meeting Item No and Title Action Action Owner Expected completion date Comments funding for Midlothian, particularly in relation to the Growth Fund. 8 21/10/2025 8.2 Housing Revenue Account – Rent Setting Strategy 2026/27- 2028/29 Provide an update on the progress being made to reduce the number of Voids. Executive Director Place TBC Recommend for closure. Re-let times to permanent accommodation properties has reduced to 42 days to re-let in quarter 2 compared to 54 at the end of quarter 1. Relet figures have been higher over the last few quarters due to a change in policy with the Scottish Housing Regulator where flip tenancies are now excluded. In Q2 there were 113 void properties turned around as ready for let by our Building Maintenance Service. Our void turnaround times show that 44% (50) of properties required minor work and were turned around quickly, within 20 days, averaging 11.24 days to bring to a letting standard. 42% (47) of properties required major works involving house clearances, full decoration and excessive repairs and therefore take longer to bring to standard, those properties averaged 64.51 days. 14% (16) of properties required moderate work including a moderate clearance and repairs and took an average of 23.5 days to bring to a letting standard. Page 33 of 304
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No Date of meeting Item No and Title Action Action Owner Expected completion date Comments 9 21/10/2025 8.4 Midlothian Strategic Housing Investment Plan 2026/27 - 2030/31 Provide Elected Members with a list of housing developments and the percentage of affordable housing that can be expected in each. Head of Development TBC In progress. MLDP2 will have to address demands for affordable, specialist and wheelchair accessible housing through site allocations and policy in MLDP2. Midlothian Council may consider a number of approaches in MLDP2 to meet the affordable demand, including consideration of a higher affordable housing requirement (currently 25% in the MLDP). 10 21/10/2025 8.5 Rapid Rehousing Transition Plan 2025/26 Provide Elected Members with more detail on the increase in the homeless application statistics in relation to the termination of tenancies due to mortgage arears and default on payment. Executive Director Place Complete Recommend for closure. Tenancy Terminations due to rent or mortgage arrears in 2024/25 were 38. Further analysis indicates 15 owners. 11 16/12/2025 5.1 Minute of Midlothian Council Meeting of 21 October 2025 Correction to section 8.4 of the Minute. Update the reference to the “fluid nature of the housing stock” to “limited fluidity of the housing stock”. Democratic Services Complete Recommended for closure. Minute updated. Page 34 of 304
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No Date of meeting Item No and Title Action Action Owner Expected completion date Comments 12 16/12/2025 8.2 Financial Monitoring 2025/26 – General Fund Revenue Provide a detailed cost analysis in relation to the further £937,000 overspend on Pupil Transport, including a comparison of this year versus last year. Chief Financial Officer and Section 95 Officer TBC Page 35 of 304
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Midlothian Council
Tuesday 24 February 2026
Item No 6.1
Council will be aware of the £140m Local Growth Fund ("LGF") announced by Labour minister
Douglas Alexander on 9 January 2026, from which £37 .Sm is allocated to the East of Scotland. This
follows on from the Pride in Place programme and Growth Mission Fund. Can the Leader confirm
whether Midlothian will or will not specifically benefit from any of these funds; and state to what
extent we have been consulted; and whether there is for Midlothian any relevant body to which
representations can be made."
Submitted by:
Peter Smaill
Leader, Conservative Group
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Midlothian Council Tuesday 24 February 2026 Item No 7.2 Motion to Council Council note that David Virgo was elected to Midlothian Council’s Bonnyrigg Ward in 2022 having fought the seat as a member of the Conservative and Unionist Party and subsequently having become Leader of the Council’s Conservative Group. On the 30th of November 2025, Councillors and Council officials received an email from Councillor David Virgo, indicating that he was resigning from the Conservative and Unionist Party and the Council Conservative Group, through whom (as Group Leader) he had secured nominations regarding cross-party bodies and a Chairmanship position under cross party working arrangements. He undertook to determine shortly thereafter what his political future would be. He suggested that his politics were still undetermined; albeit he was party to a Conservative leaflet campaign around the point of his resignation which was critical of the Scottish Nationalist Government regarding Council Tax policy. Nevertheless, the facts are that over the past year at least, Councillor Virgo has in effect been working with the SNP administration and has supported their positions on a number of issues over this period. Within a couple of days of the email being sent, his name appeared on the SNP group office door. Councillor Virgo should be upfront with Council colleagues and, more importantly, the electorate of the Bonnyrigg Ward who cast their votes for a Conservative and Unionist candidate in the 2022 Council elections. These constituents will feel seriously let down by what can only be described as political departure by Councillor Virgo. Council therefore agrees the following. i. Council calls on Councillor Virgo to respect the wishes of the people of the Bonnyrigg ward, who voted to elect a Conservative and Unionist Party councillor, and step down as Councillor for the ward; thereby allowing the electorate to choose a replacement ii. agree that in the spirit of cross party working, each political group should hold the Chair of at least one of the Council’s Committees. Moved Seconded Cllr Peter Smaill Cllr Pauline Winchester Page 41 of 304
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Midlothian Council Tuesday 24 February 2026 Item No 8.1 Financial Monitoring 2025/26 – General Fund Revenue Report by David Gladwin, Chief Financial Officer and Section 95 Officer Report for Information 1 Recommendations Council is recommended to: a) Note the contents of this report. 2 Purpose of Report / Executive Summary 2.1 The purpose of this report is to provide Council with information on projections of performance against service revenue budgets in 2025/26 and to provide commentary on areas of material variance against budget. The budget performance figures as shown in appendix 1 result in a projected net overspend of £1.826 million which represents 0.5% of the revised budget. 2.2 Some areas of projected overspend relate to recurring areas of financial pressure or slower than planned delivery of savings measures. The Corporate Management Team have discussed these in depth and, where possible, put in place recovery actions. 2.3 The projection of the General Fund balance at 31st March 2026 is £14.969 million, of which £8.912 million is earmarked for specific use leaving a non-earmarked General Fund balance of £6.057 million. Date: 23 January 2026 Report Contact: David Gladwin, Chief Financial Officer and Section 95 Officer David.Gladwin@midlothian.gov.uk 0131 271 3113 Page 43 of 304
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3 Background 3.1 This report encompasses all performance against revenue budget for General Fund services. 3.2 During 2024/25, in response to fiscal pressures, the Chief Executive instructed a moratorium on any spend that was not business critical and in addition, the Chief Executive has extended this directive into 2025/26 including robust and formal scrutiny arrangements to oversee Directors progress in monitoring the urgent recovery actions required. Performance against budget 3.3 The material areas of projected adverse variance against budget at quarter 3 are outlined in table 1 below which also describes mitigating measures and next steps. Projections part-way through a financial year are difficult in some areas and come with a degree of uncertainty. Narrative relating to Midlothian Integration Joint Board (MIJB) is provided in section 4 below. Table 1: Material cost variances against budget Budget Overspend Reason Action Plan / Mitigating Measures Next Steps External Residential Placements for Children £1,617,000 A significant increase in placements during recent months. All placements are continually reviewed to ensure the most appropriate arrangements are in place and where possible within Midlothian. Consideration of options to build capacity in Midlothian. Recognition of ongoing financial pressure is made in the draft 2026/27 budget. Pupil Transport £937,000 Volume and value of school pupil transport invoices higher than budgeted. Council approval to proceed with the client transport review was granted on 25th June 2024. This includes a root and branch review of practices, processes, policies and costs. A procurement exercise for contracts is now complete and these are now in operation. Basline costs have been identified and financial projections in 2025/26 are based on these. Where possible, early implementation of identified efficiencies. Work to finalise a baseline cost of service provision is complete and this will form the basis of more rigorous financial management. The newly established Member / Officer Working Group on passenger transport will be briefed on progress. Recognition of ongoing financial pressure is made Page 44 of 304
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in the draft 2026/27 budget. Staff Costs £579,000 Maternity cover in schools (£415,000) and higher costs from temporary resources to cover service areas with permanent recruitment challenges (£634,000). Partially offset by vacancies across the Council. Strategic Workforce Plan is in place Continuation of enhanced level of vacancy control. Continual review of service costs. The draft 26/27 budget provides for recurring areas of staffing pressure including Maternity cover in schools. Insurance £521,000 Several new claims with potential for higher value settlements have been received in 2025/26. The volume of insurance claims settled remains higher than budgeted. Insurance Premiums have increased by £106,000 based on the insurance market, the Council’s claims experience and implementation of advised risk control measures. Internal processes to consider each claim are being reviewed with potential to increase repudiation rates and consequently reduce projected costs in 2025/26. Officer review meeting linking in with professional insurer advice. Waste Disposal £651,000 Continuing trend of reduced third party income from Millerhill Residual Waste Plant from sale of energy. Mitigated partly by reduced bulky waste tonnage. Engagement with the waste plant operator and the contract monitoring team to explore options to generate additional income and to also reduce disposal costs. Sport and Leisure £119,000 Staffing overspend of £513,000 due to use of casual and specialist instructors to cover vacant posts. Membership income continues to exceed budget and is now £430,000 in excess. Review of implementation of staffing review. Next phase of Sport and Leisure staffing review. Commercial Properties £161,000 Shortfall in rental income at Hardengreen Business Park and for Buccleuch Street. Reduce void properties and strive to ensure all available properties are let. Fleet £205,000 Ageing vehicles and higher volumes of external contracting than planned. External vehicle hire to support service continuity. Areas of service have been re- provisioned. Cost containment measures in place. Fleet Maintenance Fleet replacement for ageing and costly maintenance has been accelerated as approved by Council on Tuesday 21st Page 45 of 304
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Review underway. Multi-year Fleet Asset Management Plan being developed. November 2024. As new items of fleet become operational repairs costs should reduce. Midlothian House Scaffolding £96,000 Scaffolding in place at Midlothian House in advance of commencement of the project to refurbish Midlothian House. Safety scaffolding due to be removed early in Q4. There also remains £1.791 million of Medium Term Financial Strategy (MTFS) cost reductions either to be finalised or to be fully implemented. A number of these are taking longer than planned to implement with an adverse impact on the 25/26 financial position. These are detailed at appendix 2 and reported to the Business Transformation Steering Group (BTSG) on a half-yearly basis. Work continues to implement these as quickly as possible. Underspends • Loan Charges are projected to underspend by £3.325 million in 2025/26. There are four main factors: o Deferral of borrowing to later in 2025/26 than budgeted for and also to later years to match timing of capital expenditure; o A reduction of £24.9 million in the borrowing requirement for 2025/26; o Higher than forecast surplus cash related directly to timing of capital expenditure thus providing opportunity to generate some deposit income; o The immediate impact of the Public Works Loans rescheduling undertaken during 2025/26. • Costs across the spectrum of learning settings for children and young people are lower than provided for in the budget mainly due to lower than budgeted pupil numbers thus giving rise to a positive variance of £1.492 million. • In recognition of potential inflationary pressures across the Council Budget due to fluctuating prices a provision of £1m was set aside. At this stage it is anticipated that £0.315 million of this provision will be utilised. • Income projections from the Alpine Coaster exceed those budgeted which were based on the approved business case. These are partly offset by additional staffing and security costs. Overall there is a positive variance of £0.845 million. • Electricity prices are lower than budgeted slightly offset by higher gas prices thus giving rise to a combined positive variance of £0.386 million. Consumption appears in line with budget. Page 46 of 304
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• Income from Burials exceeds budget by £0.110 million mainly attributable to an increased level of income from lairs. • Council Tax Income exceeds budget by £0.101 million due to slightly faster growth in Band D properties than budgeted for. 3.4 The Corporate Management Team met on Wednesday 18th January 2026 and considered the financial position reiterating, alongside the continued financial discipline measures referenced in section 3.2, the requirement for services to live within available budget and the continuation of some areas of enhanced monitoring. Pay and funding 3.5 Employees whose pay negotiations are covered by the Scottish Joint Council (SJC) trade unions have accepted a pay offer for 2025/26 at 4% and for 2026/27 at 3.5%. Staff covered by the Scottish Negotiation Committee for Teachers (SNCT), whose current agreement ended on 31st July 2025, have accepted an increase of 4% from 1st August 2025, a further 0.25% on 1st April 2026 and 3.25% on 1st August 2026. 3.6 The 2025/26 budget and the MTFS assumptions contain a pay uplift of 3%. Funding for the 2025/26 and 2026/27 offer involves an assumption of 3% in council budgets with the remainder funded by the Scottish Government through a mix of re-directed revenue funding and additional capital funding flexibilities. At this stage there remains a risk that unbudgeted costs exceed funding in 2025/26 as not all expected funding has been distributed yet. 4 Delegation of resources to Midlothian Integration Joint Board 4.1 The approved budget provided for the allocation of £71.087 million to the MIJB for the provision of delegated services. 4.2 In accordance with the Integration Scheme the MIJB is required to deliver delegated services within budget allocations from the Council and NHS Lothian and, where any overspend is projected, to put in place a recovery plan to address that. As a last resort the integration scheme allows for the MIJB to seek additional financial support from its partners, either by way of an additional budget allocation or by “brokerage” (provision of additional resources in a year which are repaid in the following year). 4.3 Financial Monitoring reports covering all of the MIJB activities are formally presented to the Integration Joint Board and are available on the committee management section of the Council website:- Midlothian Integration Joint Board (cmis.uk.com) 4.4 MIJB meet on Thursday 19th February and will discuss projections for 2025/26 which show a significant overspend of £3.9 million albeit with mitigating actions underway. £2.284 million of this relates to Adult Social Care services. The most significant Adult Social care pressure is spend driven by the Community Care Resource Panels alongside some smaller projected overspends in Newbyres Village Care Home Page 47 of 304
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and Highbank Intermediate Care Facility. Delivery of agreed financial recovery actions has mitigated budget pressure to some extent, but not fully. 4.5 At this stage there is a very high risk of MIJB requiring additional resource from Midlothian Council to be able to fund costs in 2025/26 and this is reflected in appendix 1 and section 5 below. Financial Recovery work continues as MIJB strive to reach a break-even position. 5 General Fund Reserve 5.1 The projected balance on the General Fund as at 31 March 2026 is as follows: £ million £ million General Fund Reserve at 1 April 2025 32.029 Planned movements in reserves Application of Budgets carried forward from 2024/25 for use in 2025/26 (9.688) Utilisation of reserve to balance 2025/26 budget (0.163) Utilisation of retrospective service concessions to fund costs in 2025/26 (4.093) Transformation funding applied to date during 2025/26 (0.421) Transformation funding projected for use during 2025/26 (1.840) Supplementary Estimate for Gorebridge High School Land Identification (0.050) Enhancement to Business Transformation Fund 1.000 Other 0.021 (15.234) Overspend per appendix 1 (1.826) General Fund Balance at 31 March 2026 14.969 An element of the General Fund is earmarked for specific purposes and this is shown below: £ million General Fund Balance at 31 March 2026 14.969 Earmarked for specific purposes To support Council Transformation Blueprint (0.085) Planned use of Service Concession Retrospection (6.674) Planned use of Loans Fund Review Savings (2.153) General Reserve at 31 March 2026 6.057 5.2 The Reserves Strategy approved by Council on 12th February 2019 requires Council to maintain an adequate level of General Reserve to provide a contingency for unforeseen or unplanned costs. In the financial context at that time Council approved the adoption of 2% of the approved budgeted net expenditure (excluding resources delegated to the IJB) to be considered a minimum. This now equates to £5.235 million. Council also agreed that where projections indicate that Page 48 of 304
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should the 2% minimum General Reserve balance be breached an immediate recovery plan be implemented to recover the position, failing which, the next available budget would need to provide for the reinstatement of reserve position. 5.3 The General Reserve of £6.057 million is £0.822 million above the minimum set in the Reserves Strategy. It must continue to be viewed both in the context of £5.475 million of underlying service pressures in 2025/26 (Appendix 1 - General Fund Services Net Expenditure) and the latest MTFS projected gap of approximately £11.7 million through to 2028/29. 5.4 Until there is significant progress towards a balanced MTFS it remains sound financial practice to maintain a substantial buffer in the General Reserve to offset any further adverse performance against budget or delays in delivering savings measures. This is a key part of 2026/27 budget setting deliberations. 6 Report Implications (Resource, Digital and Risk) 6.1 Resource The projected performance against budget set out in this report presents the initial projections for the year. Work continues across the council to reduce overspends and to progress at pace delivery of approved savings. 6.2 Digital Increased reliance and investment in digital solutions and digital first solutions will be a key element of future plans. 6.3 Risk Section 95 of the Local Government (Scotland) Act 1973 requires all Local Authorities in Scotland to have adequate systems and controls in place to ensure the proper administration of their financial affairs. The assessment of performance against budgets by services is underpinned by comprehensive financial management and budgetary control arrangements. These arrangements are central to the mitigation of financial risk. Ensuring that adequate systems and controls are in place reduces the risk of significant variances arising, and where they do arise they help to ensure that they are identified and reported on and that appropriate and robust remedial action is taken. The primary purpose of this report is to provide an assessment of performance against budget for the full year. The material variances detailed in the report highlight that the financial management and budgetary control arrangements require continual review and enhancement if financial risk is to be effectively mitigated during the year. Page 49 of 304
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There are some areas where effective forecasting of spend against budget can be hindered due to incomplete service information which in previous years has resulted in previously unreported or significantly adjusted variances at the financial year end. CMT continues to consider these areas and supports actions to address the underlying issues and mitigate the risk associated with them. The Council recognises the potential for compensation claims deriving from Scottish Government’s Limitation (Childhood Abuse) (Scotland) Act 2017 which removes the three year time limit on claims of child abuse. Some claims will be historic and relate to Lothian Regional Council, Midlothian District Council or their predecessors and some will date post reorganisation and relate to Midlothian Council, and so presents a risk that would further reduce reserves from those currently projected. Further financial obligations may also arise as the implications associate with the The United Nations Convention on the Rights of the Child (Incorporation) (Scotland) Bill, which has yet to secure Royal Assent, are more fully understood. 6.4 Ensuring Equalities As changes to existing plans are developed the assessment of the impact of these proposals in relation to their impact on equalities and human rights will be carried out. This will help to ensure wherever possible that there are no negative impacts on equality groups or potential for infringement of individuals’ human rights from the any of the proposals. 6.5 Additional Report Implications See Appendix A Page 50 of 304
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Appendices APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan The existing financial plans support the delivery of the key priorities in the Single Midlothian Plan. As the impact on the Council of the pandemic and recovery continues to unfold over the financial year any changes in the availability and allocation of resources will need to be considered in parallel to the actions proposed to continue to delivery key priorities. A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value The report does not directly impact on Delivering Best Value. A.5 Involving Communities and Other Stakeholders The development of the Medium Term Financial Strategy reflects community consultation exercises carried out in 2019 and again in 2022 to help shape the drafting of the “Midlothian Promise” and the development of the Council’s Longer Term Financial Strategy. In addition, there is continued engagement with the recognised Trade Unions on the financial position. Page 51 of 304
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A.6 Impact on Performance and Outcomes The Financial Strategy facilitates decisions on how Council allocates and uses its available resources and as such has fundamental implications for service performance and outcomes. The lasting financial consequences of the pandemic will impact on the availability and allocation of resources in pursuit of key outcomes as set out in the Single Midlothian Plan for both the immediate and longer term and therefore the ability of the Council to continue to deliver services in a financial sustainable manner. A.7 Adopting a Preventative Approach Maintaining the effectiveness of the Financial Strategy will support the prioritisation of resources to support prevention. A.8 Supporting Sustainable Development There are no direct sustainability issues arising from this report and we will work to mitigate as far as feasible any sustainability issues which arise as a consequence of any of the changes to existing plans. Appendix 1 Projected Outturn Appendix 2 Approved Savings Delivery Page 52 of 304
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MIDLOTHIAN COUNCIL Appendix 1 GENERAL FUND 2025/26 Performance against budget Revised Budget Revised Budget Revised Budget (Underspend) Function Approved Budget Expenditure Income Net Outturn / Overspend £ £ £ Management and Members 4,856,493 4,804,229 0 4,804,229 4,927,229 123,000 Place Corporate Solutions 23,746,618 45,191,029 (20,065,011) 25,126,018 26,455,018 1,329,000 Place 42,018,333 66,660,155 (21,242,408) 45,417,747 45,398,747 (19,000) Central Costs 2,368,921 684,859 0 684,859 680,859 (4,000) People and Partnerships Midlothian Integration Joint Board 71,086,709 80,550,039 (9,033,002) 71,517,037 73,801,037 2,284,000 Non-Delegated Services - Community Safety and Welfare Rights 714,131 897,609 (98,757) 798,852 799,852 1,000 Childrens Services, Partnerships and Communities 21,005,822 23,939,759 (1,008,565) 22,931,194 24,354,194 1,423,000 Education 153,756,358 163,639,834 (6,144,609) 157,495,225 157,771,225 276,000 Lothian Valuation Joint Board 581,659 581,659 0 581,659 643,659 62,000 Non Distributable Costs 898,936 898,936 0 898,936 898,936 0 GENERAL FUND SERVICES NET EXPENDITURE 321,033,980 387,848,108 (57,592,352) 330,255,756 335,730,756 5,475,000 Loan Charges 8,872,000 8,842,000 0 8,842,000 5,517,000 (3,325,000) NDR Discretionary Relief 70,300 70,300 0 70,300 70,300 0 Investment Income (110,736) 0 (110,736) (110,736) (110,736) 0 Allocations to HRA, Capital Account etc. (5,800,545) (5,800,545) 0 (5,800,545) (5,800,545) 0 324,064,999 390,959,863 (57,703,088) 333,256,775 335,406,775 2,150,000 less Funding: Scottish Government Grant (244,974,000) 0 (245,027,000) 245,027,000 245,250,000 (223,000) Council Tax (71,830,000) 0 (71,830,000) 71,830,000 71,931,000 (101,000) Service Concessions - in-year 0 3,005,000 0 3,005,000 3,005,000 0 Utilisation of Reserves 7,260,999 393,964,863 (374,560,088) 13,394,775 15,220,775 1,826,000 Page 53 of 304
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MIDLOTHIAN COUNCIL Appendix 2 GENERAL FUND 2025/26 Delivery of Approved Savings 25/26 25/26 Savings Outturn Variance Target Q3 Q3 Narrative Place Management Review 1,256 1,256 0 Digital Transformation 257 0 257 Efficiencies from rollout of Digital Tools remain in service budgets Online Customer Engagement 235 0 235 Automation of services will generate saving. Work programme under development and savings will follow Leadership Review - Corporate Solutions 45 45 0 Reduce Net cost of Benefits by 6% 238 0 238 Open Revenues Project commenced and successful completion of actions will lead to staffing efficiencies Rationalisation of the office Estate 250 250 0 Shared on-call Service 10 10 0 Review of Temporary Accommodation 200 200 0 HRA Void Clearances 15 15 0 School and ASN Transport Review 30 30 0 School Admin Support 20 20 0 Non-delegated HSC efficiencies 45 45 0 Reduction of Specialist Instructors 35 35 0 Further review of S&L 44 44 0 Reduce Shrub Bed maintenance 36 36 0 PPP school closures during holidays 40 40 0 Public Toilets closure 81 55 26 Remaining facilities offered for sale or Community Asset Transfer Trading Standards Regional collaboration 90 90 0 Cease Night Security at Stobhill Depot 150 150 0 Safety Advisory Group 25 25 0 Remove 5 FTE Grade 1 Cleaners 125 76 49 Incremental workforce reductions are being realised Location and Vehicle Advertising 25 25 0 Wrap Around Care 75 0 75 Plan to deliver this to be developed. Land Services Review 75 75 0 Education Third Party Contracts Review 500 500 0 Admin Review 34 34 0 1% DSM Budget 400 400 0 Transformation of the School Week 2,000 2,000 0 Continuous Improvement Team 28 28 0 Internal Audit 55 55 0 Reduction in offer to MIJB 1,133 1,133 0 Communities and Lifelong Learning Review 250 250 0 Parking Fines 100 24 76 Fine income offset by running costs. Link to development of parking strategy Roads Maintenance - replace maintenance costs with £2.5m capital 267 267 0 Reduction of Dry-Side and Wet-side facilities at the weekend in Leisure Centres 177 72 105 New staffing rotas being developed but not yet implemented Reduction in Cleaning Frequency in some Council Buildings 132 62 70 Incremental workforce reductions are being realised Review of Service Contracts in CYPP Directorate 500 0 500 Review of contracts underway. Majority of saving will be delivered in 26/27 CLLE Efficiency 75 75 0 Review of CYPP Central Teams 200 200 0 Lets and Charges for After School Clubs 40 40 0 Delivery of Business Critical Spend 717 557 160 Income Generation worksteams to be worked through Total 10,010 8,219 1,791 Page 55 of 304
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Midlothian Council Tuesday 24 February 2026 Item No 8.2 Housing Revenue Account – Rent Setting Strategy 2026/27-2028/29 Report by Kevin Anderson, Executive Director Place Report for Decision 1 Recommendations 1.1 It is recommended that Council; i. Notes the Rent Setting Strategy for 2026/27 – 2028/29 and ii. Approves a rent increase of 5.42% per annum for the period 2026/27 - 2028/29 2 Purpose of Report 2.1 This report presents the Rent Setting Strategy for Midlothian’s Council housing from April 2026 which will support the continuing investment in the Council’s existing housing stock as well as a significant programme of refurbishment and the Energy Efficiency Standard programme, while also determining the level of new build investment beyond the Council’s current social housing programme commitment. Date: 16 January 2026 Report Contact: Kevin Anderson, Executive Director, Place kevin.anderson@midlothian.gov.uk Page 57 of 304
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3 Background 3.1 In April 2023 the Council last set the rent levels for the period 2023/24 – 2025/26. This strategy concerns the rent levels from 1 April 2026 until 31 March 2029. 3.2 As of January 2026, the Council owned 7,478 permanent homes and 1,267 garages and lock ups. The rental income received through the Council’s Housing Revenue Account (HRA) for 2024/25 was £36,218,737. Midlothian Council has carried out a new social housing programme since 2006 and continues to invest in building new social housing. The most recently approved Strategic Housing Investment Plan (SHIP) contains details of a further 673 Midlothian Council new build homes planned between 2026/27 and 2030/31. There continues to be high demand for the Council’s social housing despite significantly increasing the new supply of affordable housing; there are currently 6,514 households on the Council’s waiting list(s) – including 7361 homeless households. In order to address housing need, the supply of affordable housing across all tenures needs to increase whilst investment is also made to existing housing stock in adherence with the Scottish Housing Quality Standard and the Energy Efficiency Standard for Social Housing. 3.3 The Energy Efficiency Standard for Social Housing (EESSH) was introduced by the Scottish Government to improve the energy efficiency of social housing and the statutory target that by 2040 no more than 5% of households in each local authority area should be in fuel poverty. Meeting EESSH is a statutory requirement for all Scottish local authorities. The EESSH cost for Midlothian Council is currently estimated at £169m. 3.4 The Scottish Housing Quality Standard (SHQS) was introduced by the Scottish Government in 2004 to ensure that homes meet a minimum standard. The budget for the SHQS in Midlothian was secured and ring- fenced for this ongoing work with £5.652 million remaining as of January 2026. 3.5 There is budget of £249.275 million for completion of 925 units under phases 3-5 of new social housing, 479 of which have been completed. The Housing Revenue Account reserve was £31.910 million on 1 April 2025, which is committed to support the future years debt charges associated with completion of these phases. Additional resource is required for three sites allocated to Midlothian Council in the most recent SHIP, which will result in 184 additional properties. 3.6 Despite the success in significantly increasing the new supply of affordable housing in Midlothian, it is evident that the level of housing need is increasing. The most recent Housing Needs and Demand Assessment for the South East Scotland area projected that in order to 1 As of January 2026 Page 58 of 304
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meet existing housing need in Midlothian, 412 new affordable homes are required every year for 20 years. 3.7 In October 2025, Midlothian Council agreed the Rent Consultation Strategy 2026/27 – 2028/29 which included an online survey (with paper copies available) and a number of drop-in information sessions. 4 Midlothian Council Rent Consultation Results 2026/27 – 2028/29 4.1 The consultation was open to all tenants and waiting list applicants and was held between Monday 3 November 2025 and Friday 12 December 2025. 727 surveys were completed, and three residents attended the four drop-in sessions that were held in libraries across Midlothian in November 2025. Eighteen surveys were completed by people who were neither tenants nor waiting list applicants; those choices were removed leaving 709 legitimate results. Table 1 lists the survey options and chart 1 details the results of the consultation. Table 1: Rent consultation survey options Rent increase (new build housing and EESSH2) No. of new builds 4.77% 0 5% 100 5.22% 200 5.42% 300 5.64% 400 5.84% 500 Chart 1: Summary of Consultation Responses Page 59 of 304
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4.2 The results of the Midlothian Council Rent Consultation Survey are as follows: • 29% of respondents chose the largest rent increase (5.84%) which would result in 500 new council properties being built beyond those which are already budgeted for. • 28% of respondents chose the smallest rent increase (4.77%) which would result in no further new builds beyond those already budgeted for. • 20% chose a 5% rent increase which would result in 100 new council properties being built beyond those which are already budgeted for. • 11% chose a 5.22% rent increase which would result in 200 new council properties being built beyond those which are already budgeted for. • 10% chose a 5.42% rent increase which would result in 300 new council properties being built beyond those which are already budgeted for. • 2% chose a 5.64% rent increase which would result in 400 new council properties being built beyond those which are already budgeted for. 4.3 There are two concentrations of preferences between opposite ends of the spectrum in relation to rent increases, with some support for the intermediate increases. 5 Midlothian Council Rent Affordability 5.1 Statutory obligations for consulting tenants on rent increases are set out in Section 25 of the Housing (Scotland) Act 2001. There is however, no formal guidance on how to define rent affordability. As per Scottish Government guidance, landlords should determine the balance between affordability for the tenants and costs of delivering services and property management. The Scottish Social Housing Charter defined standards and outcomes that all social landlords should aim to achieve: • Social landlords manage all aspects of their businesses so that: tenants, owners and other customers receive services that provide continually improving value for the rent and other charges they pay • Social landlords set rents and service charges in consultation with their tenants and other customers so that: a balance is struck between the level of services provided, the cost of the services, and how far current and prospective tenants and service users can afford them • Tenants receive clear information on how rent and other money is spent, including details of any individual items of expenditure above thresholds agreed between landlords and tenants Page 60 of 304
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5.2 In order to demonstrate the affordability of current and possible future rental charges, the tables below show an average weekly 1, 2, 3 and 4+ bedroom Midlothian Council house rent and compares this to a gross household income based on a full-time employee working 36 hours per week who receives the national living wage (currently £12.21 per hour, rising to £12.71 in April 2026 ). It is suggested that when housing costs exceed 30%-35% of a household’s income, the cost is judged to be unaffordable. It shows in all cases that current rents are below 23%. 5.3 The tables also show the effect of different rent increases of between 4.77% and 5.84% between 2026/27 and 2028/29 and illustrate that rents would remain below 30% in this affordability test. The highest proposed rent increase of 5.84% would still be judged as affordable for a property with 4+ bedrooms in 2028/29 with 25% of income spent on rent. Table 2: Impact of rent increases on one-bedroom homes Current rent level 4.77% increase (0 new builds) 5% increase (100 new builds) 5.22% increase (200 new builds) 5.42% increase (300 new builds) 5.64% increase (400 new builds) 5.84% increase (500 new builds) Average weekly rent (1 bedroom) £76.36 £80.00 £80.18 £80.35 £80.50 £80.67 £80.82 Minimum wage income (gross) – 36 hours/week £439.562 £457.563 £457.56 £457.56 £457.56 £457.56 £457.56 Percentage of income spent on rent 17% 17% 18% 18% 18% 18% 18% Annual rent charge £3970.72 £4160 £4169.36 £4178.20 £4186 £4194.84 £4202.64 Weekly increase (above current rent charge) N/A £3.64 £3.82 £3.99 £4.14 £4.31 £4.46 Average weekly rent in 2028/29 (final year of strategy) N/A £87.81 £88.40 £88.96 £89.46 £90.03 £90.54 Percentage of income spent on rent in 2028/29 N/A 19% 19% 19% 20% 20% 20% 2 National Living Wage 2025/26 3 National Living Wage 2026/27 Page 61 of 304
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Table 3: Impact of rent increases on two-bedroom homes Current rent level 4.77% increase (0 new builds) 5% increase (100 new builds) 5.22% increase (200 new builds) 5.42% increase (300 new builds) 5.64% increase (400 new builds) 5.84% increase (500 new builds) Average weekly rent (2 bedroom) £86.16 £90.27 £90.47 £90.66 £90.83 £91.02 £91.19 Minimum Wage Income (gross) – 36 hours/week £439.56 £457.56 £457.56 £457.56 £457.56 £457.56 £457.56 Percentage of Income Spent on Rent 20% 20% 20% 20% 20% 20% 20% Annual rent charge £4480.32 £4694.04 £4704.44 £4714.32 £4723.16 £4733.04 £4741.88 Weekly increase (above current rent charge) N/A £4.11 £4.31 £4.50 £4.67 £4.86 £5.03 Average weekly rent in 2028/29 (final year of strategy) N/A £99.09 £99.74 £100.37 £100.94 £101.58 £102.15 Percentage of income spent on rent in 2028/29 N/A 22% 22% 22% 22% 22% 22% Table 4: Impact of rent increases on three-bedroom homes Current rent level 4.77% increase (0 new builds) 5% increase (100 new builds) 5.22% increase (200 new builds) 5.42% increase (300 new builds) 5.64% increase (400 new builds) 5.84% increase (500 new builds) Average weekly rent (3 bedroom) £92.05 £96.44 £96.65 £96.86 £97.04 £97.24 £97.43 Minimum Wage Income (gross) – 36 hours/week £439.56 £457.56 £457.56 £457.56 £457.56 £457.56 £457.56 Percentage of Income Spent on Rent 21% 21% 21% 21% 21% 21% 21% Annual rent charge £4786.6 £5014.88 £5025.80 £5036.72 £5046.08 £5056.48 £5066.36 Weekly increase (above current rent charge) N/A £4.39 £4.60 £4.81 £4.99 £5.19 £5.38 Average weekly rent in 2028/29 (final year of strategy) N/A £105.86 £106.56 £107.24 £107.84 £108.52 £109.14 Percentage of income spent on rent in 2028/29 N/A 23% 23% 23% 24% 24% 24% Table 5: Impact of rent increases on four + bedroom homes Current rent level 4.77% increase (0 new builds) 5% increase (100 new builds) 5.22% increase (200 new builds) 5.42% increase (300 new builds) 5.64% increase (400 new builds) 5.84% increase (500 new builds) Average weekly rent (4+ bedroom) £96.79 £101.41 £101.63 £101.84 £102.04 £102.25 £102.44 Minimum Wage Income (gross) – 36 hours/week £439.56 £457.56 £457.56 £457.56 £457.56 £457.56 £457.56 Percentage of Income Spent on Rent 22% 22% 22% 22% 22% 22% 22% Annual rent charge £5033.08 £5273.32 £5284.76 £5295.68 £5306.08 £5317 £5326.88 Weekly increase (above current rent charge) N/A £4.62 £4.84 £5.05 £5.25 £5.46 £5.65 Average weekly rent in 2028/29 (final year of strategy) N/A £111.32 £112.05 £112.75 £113.40 £114.11 £114.75 Percentage of income spent on rent in 2028/29 N/A 24% 24% 25% 25% 25% 25% Page 62 of 304
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Impact on Rents for New Build Homes 5.4 The tables below show the same affordability test for Midlothian Council new build properties as those rents are 25% higher than older builds. It shows in all cases that current rents are below 29%. 5.5 The tables also show the effect of different rent increases of between 4.77% and 5.84% between 2026/27 and 2028/29 and illustrate that rents would remain below 32% in this affordability test. A new build property with 4+ bedrooms and a 5.84% annual rent increase would require 32% of a household’s income by the third year of the strategy which is within the affordable range of the calculation. Table 6: Impact of rent increases on one-bedroom homes (new builds) Current rent level 4.77% increase (0 new builds) 5% increase (100 new builds) 5.22% increase (200 new builds) 5.42% increase (300 new builds) 5.64% increase (400 new builds) 5.84% increase (500 new builds) Average weekly rent (1 bedroom) £93.40 £97.86 £98.07 £98.28 £98.46 £98.67 £98.85 Minimum Wage Income (gross) – 36 hours/week £439.56 £457.56 £457.56 £457.56 £457.56 £457.56 £457.56 Percentage of Income Spent on Rent 21% 21% 21% 21% 22% 22% 22% Annual rent charge £4856.8 £5088.72 £5099.64 £5110.56 £5119.92 £5130.84 £5140.20 Weekly increase (above current rent charge) N/A £4.46 £4.67 £4.88 £5.06 £5.27 £5.45 Average weekly rent in 2028/29 (final year of strategy) N/A £107.42 £108.12 £108.81 £109.42 £110.11 £110.73 Percentage of income spent on rent in 2028/29 N/A 23% 24% 24% 24% 24% 24% Table 7: Impact of rent increases on two-bedroom homes (new builds) Current rent level 4.77% increase (0 new builds) 5% increase (100 new builds) 5.22% increase (200 new builds) 5.42% increase (300 new builds) 5.64% increase (400 new builds) 5.84% increase (500 new builds) Average weekly rent (2 bedroom) £107.70 £112.84 £113.09 £113.32 £113.54 £113.77 £113.99 Minimum Wage Income (gross) – 36 hours/week £439.56 £457.56 £457.56 £457.56 £457.56 £457.56 £457.56 Percentage of Income Spent on Rent 25% 25% 25% 25% 25% 25% 25% Annual rent charge £5600.4 £5867.68 £5880.68 £5892.64 £5904.08 £5916.04 £5927.48 Weekly increase (above current rent charge) N/A £5.14 £5.39 £5.62 £5.84 £6.07 £6.29 Average weekly rent in 2028/29 (final year of strategy) N/A £123.86 £124.68 £125.46 £126.18 £126.97 £127.69 Percentage of income spent on rent in 2028/29 N/A 27% 27% 27% 28% 28% 28% Page 63 of 304
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Table 8: Impact of rent increases on three-bedroom homes (new builds) Current rent level 4.77% increase (0 new builds) 5% increase (100 new builds) 5.22% increase (200 new builds) 5.42% increase (300 new builds) 5.64% increase (400 new builds) 5.84% increase (500 new builds) Average weekly rent (3 bedroom) £115.78 £121.30 £121.57 £121.82 £122.06 £122.31 £122.54 Minimum Wage Income (gross) – 36 hours/week £439.56 £457.56 £457.56 £457.56 £457.56 £457.56 £457.56 Percentage of Income Spent on Rent 26% 27% 27% 27% 27% 27% 27% Annual rent charge £6020.56 £6307.60 £6321.64 £6334.64 £6347.12 £6360.12 £6372.08 Weekly increase (above current rent charge) N/A £5.52 £5.79 £6.04 £6.28 £6.53 £6.76 Average weekly rent in 2028/29 (final year of strategy) N/A £133.15 £134.03 £134.87 £135.65 £136.50 £137.27 Percentage of income spent on rent in 2028/29 N/A 29% 29% 29% 30% 30% 30% Table 9: Impact of rent increases on four or more-bedroom homes (new builds) Current rent level 4.77% increase (0 new builds) 5% increase (100 new builds) 5.22% increase (200 new builds) 5.42% increase (300 new builds) 5.64% increase (400 new builds) 5.84% increase (500 new builds) Average weekly rent (4+ bedroom) £121.31 £127.10 £127.38 £127.64 £127.89 £128.15 £128.39 Minimum Wage Income (gross) – 36 hours/week £439.56 £457.56 £457.56 £457.56 £457.56 £457.56 £457.56 Percentage of Income Spent on Rent 28% 28% 28% 28% 28% 28% 28% Annual rent charge £6308.12 £6609.2 £6623.76 £6637.28 £6650.28 £6663.8 £6676.28 Weekly increase (above current rent charge) N/A £5.79 £6.07 £6.33 £6.58 £6.84 £7.08 Average weekly rent in 2028/29 (final year of strategy) N/A £139.51 £140.44 £141.31 £142.13 £143.01 £143.82 Percentage of income spent on rent in 2028/29 N/A 30% 31% 31% 31% 31% 31% 5.6 As of January 2026, there were 7,478 Midlothian Council tenants, 1,079 of which were in receipt of Housing Benefit assistance towards their housing costs and 3,657 tenancies were registered for Universal Credit claims. 5.7 The chart below illustrates how the income received from rent charges is disbursed. 49% of rental income is spent repaying loan charges (for new social housing, open market purchases, EESSH and SHQS), 27% is allocated to housing repair costs, 18% is towards staff costs and 6% is spent on ‘other’ which includes void property rental loss and insurance payments. Page 64 of 304
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Chart 2: Projected Rental Income Spent 2026/27 5.8 This report contains robust and credible data and forms a sound base to inform the recommendation for future rent setting. 6 Recommendation for future rent setting 2026/27 – 2028/29 6.1 As shown in the consultation results, 29% of respondents chose a 5.84% annual rent increase and 28% voted for a 4.77% annual rent increase. Midlothian Council has a growing waiting list of households in need of an affordable home. While Midlothian Council could seek to rely on its affordable housing partners such as registered social landlords to deliver all affordable homes in Midlothian, this is likely to result in a significant fall in the number of homes being delivered in Midlothian, as it is unlikely alternative developers would have the capacity to take on the volume of sites the Council would be forsaking. In addition, RSL rents are higher than those of Midlothian Council. The outcome of not funding any future affordable homes programme is therefore a decline in the development of new affordable homes in Midlothian, longer waiting lists and higher rents for those in housing need. 6.2 Additional resource is required for three sites allocated to Midlothian Council in the most recent SHIP, which will result in 184 additional properties. 6.3 A 5.42% rent increase sits between the two concentrations of preferences at the upper and lower end of the spectrum. This would allow an intermediate approach which would fund EESSH2 and an additional 300 social housing units being built. 6.4 The Strategic Housing Investment Plan 2026/27 – 2030/31 contains details of six sites which will arise as a result of the affordable housing requirement of the Town and Country Planning (Scotland) Act 1997. This act legislates that 25% of private housing developments should be affordable and are often referred to as Section 75 sites. These six sites do not have a confirmed developer due to an RSL development strategy change and will result in a further 134 homes, all of which are scheduled for completion during the period covered by this rent strategy. Allowing Page 65 of 304
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for project slippage beyond 2028/29, Midlothian Council will have the capacity to develop some of these homes as a result of a 5.42% rent increase. 7 Additional Question Elected members requested that an additional question be added to the rent consultation survey to ascertain tenant and waiting list applicant opinion on restricting council home allocations to people who live or reside in Midlothian. 709 legitimate responses were received with the results shown in chart 3 below. 521 respondents (73%) voted yes, 108 (15%) were unsure and 80 (11%) voted no. Chart 3: If a rent increase is implemented to fund new Council housing developments, should all subsequent Council house allocations (new builds and existing) be restricted only to applicants who reside in or have strong links with Midlothian? 8 Report Implications (Resource, Digital and Risk) 8.1 Resource The current approved Housing Revenue Account Capital Plan provides for investment of £142.027 million over the period 2026/27-2028/29, of which £61.810 million is earmarked for completion of Phase 3-Phase 5 of the New Social Housing Programme and £41.054 million for Energy Efficiency Standard for Social Housing (EESSH) works. The proposed 5.42% rent increase per annum for 2026/27-2028/29 and the longer-term assumption of 4.77% to 2031/32 will continue to support Page 66 of 304
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investment in new social housing and in existing stock, including Energy Efficiency Standard for Social Housing (EESSH) works. This additional investment would fund approximately 300 new homes including approximately 21 open market purchases. The resultant Housing Revenue Account Revenue Budget and Capital Plan 2026/27-2028/29 of the proposed rent increase is presented to February Council for approval in a separate report. 8.2 Digital Midlothian Council officers will use existing digital resources. There are no digital implications. 8.3 Risk The principal risks relate to balancing the need to invest in additional housing and providing adequate resources to maintain the existing housing stock whilst taking account of the affordability of rental charges in accordance with the views of tenants and prospective tenants. 8.4 Ensuring Equalities (if required a separate IIA must be completed) Equality is central to all housing and housing services delivery. An Integrated Impact Assessment (IIA) has been undertaken on the Local Housing Strategy 2021-26 to ensure that the needs of local communities have been fully considered. The SHIP reflects identified needs and draws on findings from the IIA when considering the implications flowing from the translation of strategic aims into housing policies. 8.5 Additional Report Implications (See Appendix A) See Appendix A Appendices Appendix A – Additional Report Implications Page 67 of 304
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APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan Provision of secure affordable housing will improve the quality of life for citizens and reduce the gap in health outcomes. A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value We manage all aspects of our business so that tenants and other customers receive services that provide continually improving value for the rent and other charges they pay. A.5 Involving Communities and Other Stakeholders A full consultation was undertaken with all Midlothian Council tenants and waiting list applicants invited to contribute. Stakeholders were informed at regular Local Housing Strategy Forum meetings. Council Officers briefed Community Councils, tenant organisations, community groups and the Health and Social Care Partnership. A.6 Impact on Performance and Outcomes The Rent Setting Strategy supports key objectives to keep rents affordable while improving and investing in our existing and new homes. Page 68 of 304
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A.7 Adopting a Preventative Approach The strategy for rent setting ensures that the Housing Revenue Account continues to provide for investment in existing stock to ensure housing is of good quality and investment of new housing to meet housing need in Midlothian. Investment levels over the next five and ten years will be driven by three elements: • Maintaining compliance with the Scottish Housing Quality Standard (SHQS) and Energy Efficiency Standard for Social Housing (EESSH); • Meeting EESSH2 and the Scottish Government’s carbon reduction targets; • New housing supply A.8 Supporting Sustainable Development Good practice in relation to energy efficiency and sustainability is contained in the SHIP and Local Housing Strategy 2021/22 – 2025/26. Page 69 of 304
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Midlothian Council Tuesday 24 February 2026 Item No 8.3 Tenant Satisfaction Survey Results 2025 Report by Kevin Anderson, Executive Director Place Report for Information 1 Recommendations Council is recommended to note the results of the Tenants Satisfaction Survey (TSS) carried out during 2025. 2 Purpose of Report The Tenants Satisfaction Survey (TSS) has concluded and the report indicates an improved position overall, with suggested feedback received for improvement in the repairs service. Overall satisfaction increased to 82.1%, compared to the last survey in 2022 at 81.5%. The Scottish Councils Social housing average is at 81.2%. The Housing Service shall report these results to the Scottish Housing Regulator and will publicise these findings of the Tenant Satisfaction Survey on the Council’s website, social media and Tenants groups, in line with the terms of the Tenant Participation & Customer Engagement Strategy. Date: 09 January 2026 Report Contact: Claire Douglas, Housing Services Manager claire.douglas@midlothian.gov.uk Page 71 of 304
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3 Background/Main Body of Report Midlothian Council has a landlord responsibility to ensure that we meet the needs of tenants, comply with legal standards and continuously improve daily service delivery. The TSS exercise by the Knowledge Partnership, was carried out using an interviewer led face to face questionnaire in order to support tenants regardless of their background and in a feedback style that meets their needs. The survey was administered between September 2025 and October 2025. A total of 760 council tenants participated in the survey, providing a robust evidence base to inform service improvement and future planning. We ensured compliance with the Scottish Housing Regulatory framework and the regulatory guidance for the conduct of service user surveys. The Scottish Housing Regulator (SHR) requires Councils to demonstrate how they gather and act upon tenant’s feedback. A professionally conducted survey ensures compliance and provides evidence of engagement with the tenants in Midlothian. The Survey data forms part of the submission requirements for the Annual Return of the Charter, specifically indicators No. 1, 2, 5, 7, 12, 13 and 25, which are reported separately each year to Council. 1-Percentage of tenants satisfied with the overall service provided by their landlord 2-Percentage of tenants who feel their landlord is good at keeping them informed about their services and decisions 5- Percentage of tenants satisfied with the opportunities given to them to participate in their landlord’s decision-making processes 7- Percentage of tenants satisfied with the quality of their home 12-Percentage of tenants who have had repairs or maintenance carried out in last 12 months satisfied with the repairs and maintenance service 13-Percentage of tenants satisfied with the landlord’s contribution to the management of the neighbourhood they live in 25- Percentage of tenants who feel that the rent for their property represents good value for money The TSS demonstrates strong overall performance as results show that tenants continue to value the quality of housing, their neighbourhood management and staff conduct. The survey highlights improvements in the range of indicators compared to the last survey in 2022, with the exception of indicators No. 5 at 0.4% reduction and No.13 at 0.2% reduction, while those are still performing positively. Tenant engagement indicator (No.5) at 77.5% is lower than the sector average at 80.58%. The graphic below provides our peer comparison from our last survey results: Page 72 of 304
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The action to strengthen decision making, consultations and feedback mechanisms will result from the introduction of the tenant’s portal in 2026 to support an improvement in communication. Indicator 13 shows we have strong performance in neighbourhood management at 85.3%, indicating effective estate management. The sector average is 79.47%. The graphic below provides our peer comparison from our last survey results: The action to increase this outcome will be part of our housing service review in the service staffing establishment. There is a high satisfaction rate with housing quality with 85.3% of tenants satisfied with their home, compared to 83.9% in 2022. The Scottish Council average is 80.5%. The satisfaction suggests that housing functions are being delivered effectively and that the tenant trust in the Council remains strong. Page 73 of 304
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Performance in taking care of properties is higher than the previous 2022 survey at 79.1%, and highlights continued success in maintaining safe, warm and well-maintained homes. This is reflective of our planned maintenance programmes. Tenants largely feel that rent levels are fair in relation to the quality of housing services received, which is positive indicator given ongoing cost of living pressures and separate report to Council on the Rent Setting Strategy. The highest scoring measure is that staff are respectful and fair at 88.6%. This reflects positively on our staff professionalism, behaviour and organisational culture. Feedback focus from tenants are: 1. Repairs service – time to start and then complete the repair and completing right first time. 2. Improving the condition of the home – insulation, windows, doors, kitchen, bathroom and reducing cold and draughts. This will be addressed through the planned maintenance works. 3. Neighbourhood – estates conditions, problem neighbours, dog fouling. The housing service staffing review 2026 will create capacity for officers to be more proactive around these matters. 4. Advertise damp and mould tenant information. While it is already published we will proactively issue this via social media, newsletters and tenant groups. The tenant survey provides valuable insight into tenant’s experiences of their accommodation and the housing and maintenance service. 4 Report Implications (Resource, Digital and Risk) 4.1 Resource There are no resource implications within this Report. 4.2 Digital There are no digital implications within this Report. 4.3 Risk It is a statutory requirement that Midlothian Council undertake Tenant Satisfaction Surveys to monitor the level of satisfaction with its landlord services. 4.4 Ensuring Equalities (if required a separate IIA must be completed) Tenant Satisfaction Survey provides useful information in relation to equality groups in order to assist in the development of future services, policies and procedures Page 74 of 304
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4.5 Additional Background Information (See Appendix A) Appendix A – Report Implications Page 75 of 304
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APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan Midlothian Council has made a commitment to treat the following areas as key priorities under the Single Midlothian Plan: • Reducing the gap in learning outcomes • Reducing the gap in health outcomes • Reducing the gap in economic circumstances • Reducing the partners carbon emissions to net zero by 2045 The themes addressed in this report impact on the delivery of the Single Midlothian Plan outcome measures in homelessness and stable and balanced communities. A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value Not applicable A.5 Involving Communities and Other Stakeholders Face to face interviews were carried out with 10% of Midlothian Council tenants and the Housing Service intends to publicise the findings of the Tenant Satisfaction Survey in a range of formats. Page 76 of 304
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A.6 Impact on Performance and Outcomes Previous surveys have had a positive impact on communities as they have demonstrated improved satisfaction levels among Midlothian Council tenants and have also helped identify areas for further improvements to the Housing Service. A.7 Adopting a Preventative Approach Not applicable A.8 Supporting Sustainable Development Not applicable Page 77 of 304
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APPENDIX B Background Papers/Resource Links – Tenants Satisfaction Survey 2025. Page 78 of 304
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0 Tenant Satisfaction Survey 2025 Final Survey Report MIDLOTHIAN COUNCIL HOUSING SERVICE December 15, 2025 Authored by: Alan Kennedy, Knowledge Partnership Page 79 of 304
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1 CONTENTS Summary of key satisfaction results Page 1 Executive summary Page 2-5 Introduction Page 6-9 Overall tenant satisfaction Page 10-12 Housing quality satisfaction Page 13-17 Maintenance service Page 18-23 Information, participation and contact Page 24-26 Rent value for money Page 27-30 Neighbourhood management satisfaction Page 31-33 Annex 1 to 3 Page 34-42 Page 80 of 304
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1 TABLE A - SUMMARY OF KEY SATISFACTION RESULTS FROM TENANT SATISFACTION SURVEY 2019 to 2025 ARC indicator number Measure % tenants very and fairly satisfied 2019 (700 cases) % tenants very and fairly satisfied 2022 (750 cases) % tenants very and fairly satisfied 2025 (760 cases) Council housing average 2025 Indicator Survey method Face to face Face to face Face to face Mixed methods Indicator 1 Satisfaction with Midlothian Council’s overall service 84.4% 81.5% 82.1% 81.2% Indicator 2 Satisfaction with being kept informed about services and decisions 85.0% 80.1% 81.8% 82.8% Indicator 5 Satisfaction with opportunities to participate in decision making 81.6% 77.9% 77.5% 80.6% Indicator 7 Satisfaction with quality of home 83.7% 83.9% 85.3% 80.5% Indicator 12 Satisfaction with repairs in last year 82.4% 72.4% 79.1% 85.7% Indicator 13 Satisfaction with contribution of Midlothian Council to management of neighbourhood 81.1% 85.5% 85.3% 79.5% Indicator 25 Rating of rent as very good or fairly good value for money 84.4% 80.8% 81.7% 80.4% Page 81 of 304
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2 Executive Summary This tenant satisfaction survey was carried out by Knowledge Partnership on behalf of Midlothian Council’s Housing Service (the Council) using an interviewer led face to face questionnaire. The survey was administered between September 22nd 2025 and November 10th 2025, and by the conclusion of the survey period, 760 tenants had completed a survey, representing 25.4% of all sampled tenants. Overall satisfaction ➢ Taking everything into account, 82.1% of Council tenants are satisfied with housing services overall in 2025 whilst 11.0% are dissatisfied. In 2022, 81.5% of tenants were satisfied overall whilst the Scottish council social housing average is currently 81.2%1. ➢ Analysis of tenant satisfaction by profile shows a broadly consistent pattern with some of the highest levels of satisfaction found amongst those tenants who are beyond working age (85.8% satisfied) and those who have lived in their home for up to 1 year ( 85.7%). Satisfaction is lower amongst tenants who have occupied their homes for between 1 and 7 years (78.1% satisfied) and tenants who are ‘other not working’ i.e. job seekers, carers, stay at home tenants and those in training or education (72.5%). ➢ There is some degree of variation in tenant satisfaction by allocation area e.g. 87.6% overall satisfaction in Bonnyrigg compared to 80.2% in Penicuik. Housing quality ➢ Most tenants (85.3%) are satisfied with their home whilst 6.6% are dissatisfied in 2025. The current year figure for satisfaction on this measure is above that that found during the 2022 survey (83.9% satisfied) and is also ahead of the Scottish Council average (80.5%). ➢ In relation to tenant profile, satisfaction with housing quality is highest amongst tenants who have lived in their home for up to one year (93.9% satisfied) and amongst single person households (87.8%). Conversely, satisfaction is lowest amongst tenants who are of working age (81.5% satisfied) and households who are unable to work (77.5%). ➢ There is some amount variation in satisfaction with housing quality by property type e.g. amenity/wheelchair (91.9% satisfied) and semi/detached (89.2%), compared to end terraced houses (80.6%). ➢ Housing quality satisfaction is highest for tenants living in smaller homes, e.g., 1 bed properties (90.4% satisfied), and lowest for those living 2 bed homes (82.7%). ➢ Approximately two in three tenants (66.6%) agree that their home is energy efficient whilst 23.7% disagree and 9.7% said ‘don’t know’. In relation to heating, approx. seven in ten tenants (72.8%) said they could afford to heat their home whilst around one than one in four (21.8%) said this was not the case (5.4% did not know). ➢ Analysis of the impact of ‘heating the home’ and ‘energy efficiency’ on tenants’ views of housing quality illustrates for example that where a tenant can afford to heat their home, 88.4% are satisfied with housing quality whereas in the case of tenants who cannot afford to heat their home, housing quality drops to 75.6%. A similar picture is evident for tenants’ views on their home’s energy efficiency. ➢ Tenants who found it difficult to afford to heat their home said that their landlord could assist them by better insulating their home (16.4% of all responses) and improving draughty windows (15.7%) and doors (13.4%). 1 Source SHR data published 2025 (Scottish Council’s with rented stock) Page 82 of 304
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3 Maintenance service ➢ Amongst tenants whose homes have been repaired in the last year, 79.1% are satisfied with the last repair whilst 11.2% are dissatisfied. During the 2022 survey, 72.4% of tenants were satisfied with their most recent repair whereas 19.3% were dissatisfied. The Scottish Council housing sector average for repairs satisfaction (which includes transactional data), is 85.7%. ➢ As regards maintenance, the most satisfied tenants by property type are those living in mid terraced homes (84.5% satisfied) and amenity/wheelchair properties (81.8%), whereas the least satisfied tenants live in four in a block (ground or upper) properties (76.5% satisfied) and houses (bungalows or detached) - 63.6%. ➢ An analysis of repair service satisfaction by tenant profile illustrates that the most satisfied tenants (in terms of repairs carried out in the last year) are those who are not of working age (85.2% satisfied) or retired (86.0%) whereas the amongst the least satisfied tenants are those who are of working age (76.0%), and tenants who have lived in their home for up to 1 year (66.7% - caution 18 tenants only). ➢ A review of repair service satisfaction by period (within the last year) shows that tenants with repairs that were completed up to four months ago are more positive about the service (85.3% satisfied) than those tenants who homes have received repairs in an earlier period (i.e. more than 6 months ago - 70.3% satisfied. Damp and mould ➢ Around one in five tenants (17.1%) said they had experienced issues with damp and mould in their home during the last 12 months (80.9% said this was not the case) and 2.0% responded ‘don’t know’. ➢ Analysis shows that awareness of damp and mould is closely associated with the tenant’s view of the repair service i.e. where the tenant is not aware of this problem, 83.3% are satisfied with their most recent property repair. Conversely, where the tenant considers that there might be damp and mould in their home, satisfaction with repairs declines to 65.3%, with approx. one in four (20.8%) saying they are dissatisfied with their last repair. ➢ Considering only those tenants that are aware of damp and mould, the majority (71.5%) have reported this matter to the Council. For those tenants who have reported damp and mould, most (63.4%) are waiting on the issue to be addressed, whilst 14.0% say that the issue has returned. Around one in four tenants (21.5%) say that the damp and mould problem has been resolved after reporting it to the Council. Information, participation and contact ➢ In 2025, 81.8% of tenants rated ‘being kept informed’ as good, whilst 5.3% said that the Council is poor on this measure (and 12.9% replied ‘neither good nor poor’). Tenant satisfaction with being kept informed is slightly higher than the 2022 survey (80.1% saying good). The sector average for this figure in 2025 is 82.8%. ➢ Approx. eight in ten tenants (77.5%) are satisfied with opportunities to participate whilst 3.8% are dissatisfied on this measure. In 2022, 77.9% were satisfied whilst the current Scottish Council sector average for tenant participation is 80.6%. ➢ In 2025, most tenants (49.2%) are not particularly interested in getting involved in giving their views to their landlord (55.5% in 2022). However, where tenants do wish to give their views, surveys is the most popular method of participating – 40.4%. ➢ Most tenants (88.6%) agree with the statement ‘My landlord’s staff treat me fairly and with respect’. Around one in twenty tenants (5.1%) answered ‘neither agree nor disagree’ whilst 2.8% disagreed (and 3.7% said ‘don’t know). We observe that where a tenant agrees that staff are fair and respectful, 85.6% of tenants are satisfied with services overall; this contrast with 35.0% tenant satisfaction when a tenant disagrees that staff are fair and respectful. Page 83 of 304
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4 ➢ Tenants’ preferences for contacting the Council in the future are principally telephone i.e. mobile (65.9%) and landline (13.2%). Digital methods e.g. email (12.0%) are also popular with tenants as a way of contacting the Council. The preferred means by which tenants prefer to be kept informed by their landlord are letter (36.3%), telephone (21.5%) and email (21.0%). Rent ➢ Around eight in ten tenants (8.17%) consider rent to be good value for money, whilst 5.9% say that rent is poor value (and 12.4% answered ‘neither good nor poor’ value). In 2022, 80.8% rated rent as good value, whilst the 2025 Council sector average is 80.4%. ➢ Analysis of rent value by property and household size and shows that tenants living in one bed homes are the most positive on this measure (85.2% say rent is good value) alongside single person households (84.8%). Households with two or more persons (especially those living in 2 bed homes) are the least positive on rent value for money (79.6%). ➢ In relation to property type, tenants living in amenity/wheelchair adapted homes (91.9% say ‘good value’) are the most likely to say that rent is good value for money whilst the least likely to rate rent value as good are tenants living in flats (77.1%) and houses (bungalows or detached) (70.8%). ➢ Considering tenant profile, rent value for money varies somewhat with retired tenants (85.0%) being the most likely to say that rent is good value for money. This contrasts with the view of those who are unable to work where 77.5% say that rent is good value. Neighbourhoods ➢ Most tenants, (85.3%) are satisfied with neighbourhood management whilst 5.1% are dissatisfied. In 2022, a very similar proportion of tenants (85.5%) was satisfied with ‘neighbourhood management’ whilst the sector average in 2025 is 79.5%. Conclusions The 2025 tenant satisfaction survey indicates that the majority of tenants (82.1%) are satisfied with the overall service they receive from their landlord and that satisfaction across several areas has improved since 2022. Possible areas for further investigation Whist a majority of tenants have expressed satisfaction with the housing service they receive from the Council, a minority have identified some dissatisfaction and based on the tenant feedback in these and other areas, we would propose the following as having potential for further investigation. − Considering what actions might improve the Council’s service overall, the three main improvements are: o Providing a better repair service (13.2% of all tenant responses) o Improving the inside of the home (8.9%) o Upgrading the outside of the home (5.3%). − On improving housing quality, the three main improvement items are: o Improving kitchen (13.0% of all tenant responses) Page 84 of 304
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5 o Improving the bathroom (14.5%) o reducing cold and draughts (8.4%). − Additionally, on the matter of housing quality, making it easier for tenants to heat their home by providing more internal insulation (16.4% of all tenant responses) and improving draughty windows (15.7%) and doors (13.4%). − From the perspective of property repairs, the three main areas for improvement are: o Reducing the time it takes to complete a repair (13.4% of all tenant responses) o Reducing the time it takes to start a repair (12.8%) o Completing a repair on the first visit (10.7%) − In relation to damp and mould (which 17.1% of tenants say they are aware of), increasing the level of reporting (28.5% of tenants say they have not reported this issue) and improving the perceived outcomes in relation to resolving cases of damp and mould. − Considering rent value for money, the three main suggestions for improving rent value are: o Reducing the level of rent increases (14.9% of all tenant responses) o Reducing the amount of rent charged (12.3%) o Improving the repair service (9.7%). − The three main improvements that tenants are seeking in relation to neighbourhood management are: o Maintaining trees, shrubs, and grass areas (7.9% of all tenant responses) o Tackling dog fouling (7.6%) o Dealing with problem neighbours (5.8%). Page 85 of 304
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6 Introduction This tenant satisfaction survey was carried out by Knowledge Partnership on behalf of Midlothian Council’s Housing Service (the Council) using an interviewer led face to face questionnaire. The survey was administered between September 22nd 2025 and November 10th 2025. Survey sampling and survey response The survey sampling frame comprised a stratified random sample of 2,991 tenant properties drawn from a population comprising all housing units (being 7,129 properties). Face to face (door to door) interviewing took place using a proportionate sampling method whereby interviews were administered according to factors such as location, number of bedrooms, property type etc. The adjusted survey response rate based on completing 760 interviews is 25.4%; this excludes 9 tenants who asked to be withdrawn from the interview process at the pre-survey stage2. Property and location profile Property type As illustrated in table B, most interviews were carried out with tenants living in mid-terraced homes (23.7%); this compares to 22.7% of all tenants living in this type of property. Table B – Survey sample by property type Property type Interviews % interviews Property type Stock % stock House Mid Terrace 180 23.7% House Mid Terrace 1619 22.7% House Semi Detached 130 17.1% House End Terrace 1166 16.4% House End Terrace 108 14.2% House Semi Detached 1142 16.0% Four in Block Ground 95 12.5% Four in Block Ground 875 12.3% Four in Block Upper 81 10.7% Four in Block Upper 833 11.7% Flat - Stair Ground 46 6.1% Flat - Stair 1st Flr 442 6.2% Flat - Stair 1st Flr 37 4.9% Flat - Stair Ground 380 5.3% House Amenity 27 3.6% Flat - Stair 2nd Flr 226 3.2% Flat - Stair 2nd Flr 22 2.9% House Amenity 214 3.0% House Bungalow 14 1.8% House Detached 83 1.2% House Detached 10 1.3% House Bungalow 82 1.2% House Wheelchair 10 1.3% House Wheelchair 53 0.7% Other 0 0.0% Other e.g. studio 14 0.1% Total 760 100.0% Total 7,169 100.0% Property size As set out in table C, across a total of 760 completed surveys, there was a close match between the proportion of ‘completes’ by number of bedrooms and the ‘all stock’ percentages e.g. 50.1% of all interviews were completed with tenants living in 2 bed homes compared to 53.9% of all tenants who live in this size of property . 2 Effective sample was 2,991 Page 86 of 304
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7 Table C – Survey sample by number of bedrooms Beds Interviews % interviews Beds Stock % stock 1 bed 115 15.1% 1 bed 998 14.0% 2 bed 381 50.1% 2 bed 3,842 53.9% 3 bed 229 30.1% 3 bed 1,947 27.3% 4 or more 35 4.6% 4 or more 342 4.8% Totals 760 100.0% Total 7,169 100.0% Allocation area Table D considers the breakdown of completed surveys by allocation area. This shows a close match between the locations that were surveyed and the spread of these areas within the Council’s population e.g., 19.3% of surveys were completed with tenants living in Dalkeith which compares to 19.8% of all tenants living within this allocation area. Table D - Survey sample by allocation area Interview area Interviews % interviews Stock area Stock % stock Dalkeith 147 19.3% Dalkeith 1411 19.8% Bonnyrigg 145 19.1% Bonnyrigg 1352 19.0% Penicuik 126 16.6% Penicuik 1061 14.9% Gorebridge 84 11.1% Gorebridge 805 11.3% Mayfield 74 9.7% Mayfield 723 10.1% Loanhead 58 7.6% Loanhead 580 8.1% Danderhall 38 5.0% Danderhall 356 5.0% Newtongrange 38 5.0% Newtongrange 331 4.6% Pathhead 14 1.8% Pathhead 136 1.9% Roslin 13 1.7% Bilston 113 1.6% Rosewell 12 1.6% Roslin 112 1.6% Bilston 11 1.4% Rosewell 98 1.4% Other areas 0 0.0% Other areas e.g. Carrington 51 0.7% Totals 760 100.0% Total 7,169 100.0% Person profile As illustrated in table E, a wide range of tenant ages took part in the survey e.g., 12.2% of respondents were aged 25 to 34. Note in the case of table E comparisons between the survey interviews and household percentages should be treated with care as a large proportion of tenant ages in the Council’s database have not been reported (8.2%). Table E - Survey sample age break Age Interviews % interviews Age Stock % stock 16 to 24 23 3.0% 16-24 239 3.4% 25 to 34 93 12.2% 25-34 834 11.7% 35 to 44 106 13.9% 35-44 1399 19.6% 45 to 54 118 15.5% 45-54 1222 17.1% 55 to 64 146 19.2% 55-64 1348 18.9% Page 87 of 304
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8 Age Interviews % interviews Age Stock % stock 65 to 74 150 19.7% 65-74 884 12.4% 75 plus 117 15.4% 75 plus 615 8.6% Rather not say 7 0.9% Rather not say 588 8.2% Total 760 100.0% Total 7,129 100.0% Table F illustrates the break-down of survey responses by household size/type. This shows a wide range of households for example, 15.0% of all surveyed households comprised one adult under 60 years of age, 30.1% comprised one adult aged 60 and over etc. Households containing children represent 21.6% of all households that were surveyed. Table F –Survey sample by household size/composition (base 760) Household size/composition % all surveys Household size/composition % all surveys One adult under 60 15.0% 1 adult with children 11.4% One adult aged 60 or over 30.1% 2 adults with children 8.6% Two adults both under 60 9.2% 3 or more adults with children 1.6% Two adults, at least one 60 or over 12.6% Other/rather not say 1.4% Three or more adults 16 or over 10.1% Totals 100.0% As set out in table G, most surveyed tenants were working (37.0%), retired (33.3%), or unable to work (17.4%). This table will add to more than 100% because tenants may have chosen more than one status e.g. part time work and student. Table G –Survey sample by tenant status (base 760) Status % all surveys Status % all surveys Full time/part time work 37.0% Carer 3.9% Retired 33.3% Job seeker 3.0% Unable to work 17.4% Student/training 0.3% Not seeking work/at home with children 4.3% Rather not say 3.9% Ethnic origin Most tenants surveyed were white, e.g. 91.7% declared themselves to be ‘White Scottish’, 4.1% said they were ‘White British’. Housing benefit status Just over five in ten tenants (52.2%) received government assistance to pay their rent whilst 40.3% were in not in receipt of any government help to pay their rent. A proportion of tenants did not know or declined to answer this question (7.5%). Report layout This report sets out tenant feedback on the questions that were posed in the survey. For each section, figures are provided alongside the relevant commentary. Note that because of the way Excel deals with rounding (rounding up all data), some figures in the charts and tables contained within this report may not sum to exactly 100%. To make it easier to read the Excel charts, any figures of less than 3% have been excluded from the chart displays. Page 88 of 304
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9 When we refer to a base as comprising ‘tenant responses’ or ‘responses’ in the charts and tables, these figures relate to multiple-choice questions where the base is the total number of responses given for each question rather than the total number of tenants. The data supplied in this report is unweighted. Weighting can be applied following discussion with the Council if required. Margin of error Based on population of 7,169 households, and a response rate of 760 completed surveys, the margin of error for the data contained in this survey is +-3.4%. This is well within the margin of error proposed by the Scottish Housing Regulator for service users surveys (+-5.0%). Comparisons Throughout the report we have made comparisons where possible with the Council’s previous tenant satisfaction survey (2022). Page 89 of 304
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10 Overall tenant satisfaction Figure 1 sets out the level of tenant satisfaction with the overall service provided by Midlothian Council (the Council) and illustrates that 82.1% of tenants are satisfied in 2025. Approx. one in ten tenants (11.0%) are dissatisfied with the Council’s housing service overall. The comparable Council satisfaction figure for 2022 was 81.5% with 11.7% dissatisfied, whilst the Scottish social housing average satisfaction level for all councils is currently 81.2%.3 Figure 1 –Satisfaction with the overall service provided by the Council (base 760) Q-Taking everything into account, how satisfied or dissatisfied are you with the overall service provided by Midlothian Council’s Housing Service? Tenant profile Table 2 illustrates tenant satisfaction by profile and shows a broadly consistent pattern with some of the highest levels of satisfaction found amongst those tenants who are beyond working age (85.8% satisfied) and those who have lived in their home for up to 1 year ( 85.7%). Satisfaction is lower amongst tenants who have occupied their homes for between 1 and 7 years (78.1% satisfied) and tenants who are ‘other not working’ i.e. job seekers, carers, stay at home tenants and those in training or education (72.5%). 3 Source SHR data published 2025 (Scottish Council’s with rented stock) 33.2% 48.9% 7.0% 5.3% 5.7% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Very satisfied Fairly satisfied Neither-nor Fairly dissatisfied Very dissatisfied Page 90 of 304
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11 Table 1 - Overall satisfaction by tenant profile (base 760) Q- Taking everything into account, how satisfied or dissatisfied are you with the overall service provided by the Council? Tenant profile Satisfied Neither-nor Dissatisfied Not working age 85.8% 4.9% 9.4% Working age 80.0% 8.2% 11.7% Up to 1 year 85.7% 8.2% 6.1% 1 to 7 years 78.1% 9.8% 12.1% 7 years or more 83.3% 5.7% 11.0% Children in household 85.4% 8.5% 6.1% No children in household 81.2% 6.5% 12.3% Single person 81.9% 6.4% 11.7% Two or more persons 82.3% 7.4% 10.3% Employed 82.8% 6.8% 10.4% Other not working 72.5% 16.3% 11.3% Retired 86.2% 4.7% 9.1% All tenants 82.1% 7.0% 10.9% Allocation area Tenant satisfaction by allocation area is shown in table 2 and illustrates some degree of variation e.g. 87.6% overall satisfaction in Bonnyrigg compared to 80.2% in Penicuik. Some of the lowest levels of tenant satisfaction are accounted for by those living in Dalkeith (75.5%) and the group comprising Loanhead, Roslin, Bilston and Rosewell (74.5%). Table 2 - Overall satisfaction by allocation area (base 760) Q- Taking everything into account, how satisfied or dissatisfied are you with the overall service provided by the Council? Allocation area Satisfied Neither-nor Dissatisfied Bonnyrigg 87.6% 7.6% 4.8% Dalkeith 75.5% 5.4% 19.0% Danderhall-Newtongrange-Pathhead 85.6% 6.7% 7.8% Gorebridge 86.9% 7.1% 6.0% Loanhead-Roslin-Bilston-Rosewell 74.5% 8.5% 17.0% Mayfield 87.8% 5.4% 6.8% Penicuik 80.2% 7.9% 11.9% All tenants 82.1% 7.0% 10.9% Page 91 of 304
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12 Service improvements All tenants were asked to say how the Council could improve its overall service. The results of this enquiry are set out in figure 2 and indicate that providing a better repair service (13.2% of all responses), improving the inside of the house (8.9%) and upgrading the external parts of the home (5.3%) are the three main improvement actions in terms of overall satisfaction. We observe that 34.7% of tenant responses were that nothing needed to be improved about the service whilst 5.3% were ‘don’t know’. Figure 2 – Service improvements (965 responses from 760 tenants Q- What if anything should your landlord do to improve its overall service? Other comments/suggestions One hundred and twenty three tenants made a comment relating to the housing service and these are listed in annex 1 by allocation area. Some examples of the comments made are provided below: Q- What if anything should your landlord do to improve its overall service? (comments) ✓ Actually do the repairs that they say that they will do ✓ Been in touch with them in March but still waiting, so better communication ✓ Dampness in living room needs looked at ✓ Front and back doors jam and are draughty. Also, draughty windows throughout house ✓ It’s a cold house and the electrics should be brought up to date ✓ Need guttering replaced and repairs take too long to start ✓ Sealant in doors, windows and bathroom are causing dampness ✓ The gardening service is not as good as it used to be. 12.7% 1.0% 2.1% 2.4% 3.1% 3.6% 3.8% 3.8% 5.3% 8.9% 13.2% Comment Improve or maintain common areas such as closes, stairwells, door entry systems etc. Provide an improved communication channel with tenants Sort out tenants' gardens Reduce the level of rent rises Improve or maintain the local landscaped areas Deal with problem neighbours or anti Deal with parking problems Upgrade or improve the outside of the house e.g. cladding, painting, roofs etc. Upgrade or improve the inside of the house e.g. kitchen, bathroom, windows etc Provide a better repairs service 0.0% 5.0% 10.0% 15.0% 20.0% Page 92 of 304
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13 Housing quality satisfaction Overall tenant satisfaction with the quality of housing is set out in figure 3 and reveals that 85.3% of tenants are satisfied with their home whilst 6.6% are dissatisfied in 2025. The current year figure for satisfaction on this measure is above that that found during the 2022 survey (83.9% satisfied) and is also ahead of the Scottish Council average (80.5%). Figure 3 –Satisfaction with housing quality overall (base 760) Q- Overall, how satisfied or dissatisfied are you with the quality of your home? Housing quality satisfaction is highest for tenants living in smaller homes, e.g., 1 bed properties (90.4% satisfied), and lowest for those living 2 bed, homes (82.7%) - (table 3). Table 3 - Satisfaction with housing quality by property size (base 760) Q- Overall, how satisfied or dissatisfied are you with the quality of your home? Bedrooms Satisfied Neither-nor Dissatisfied 1 bed 90.4% 5.2% 4.3% 2 beds 82.7% 8.7% 8.7% 3 beds or more 86.7% 8.7% 4.5% All sizes 85.3% 8.2% 6.6% 34.7% 50.6% 8.2% 4.6% 2.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Very satisfied Fairly satisfied Neither-nor Fairly dissatisfied Very dissatisfied Page 93 of 304
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14 Table 4 illustrates a small amount variation in satisfaction with housing quality by property type e.g. amenity/wheelchair (91.9% satisfied) and semi/detached (89.2%), compared to end terraced houses (80.6%). Table 4 - Satisfaction with housing quality by property type (base 760) Q- Overall, how satisfied or dissatisfied are you with the quality of your home? Property type (surveys) Satisfied Neither-nor Dissatisfied Amenity/Wheelchair (37) 91.9% 2.7% 5.4% Flat (105) 87.6% 8.6% 3.8% Four in a Block (G/U) (176) 83.5% 8.5% 8.0% House (B/D) (24) 83.3% 4.2% 12.5% House End Terrace (108) 80.6% 11.1% 8.3% House Mid Terrace (180) 84.4% 9.4% 6.1% House Semi-Detached (130) 89.2% 5.4% 5.4% All sizes 85.3% 8.2% 6.6% In relation to tenant profile, table 5 illustrates that satisfaction with housing quality is highest amongst tenants who have lived in their home for up to one year (93.9% satisfied) and amongst single person households (87.8%). Conversely, satisfaction is lowest amongst tenants who are of working age (81.5% satisfied) and households who are unable to work (77.5%). Table 5 - Satisfaction with housing quality by tenant profile (base 760) Q- Overall, how satisfied or dissatisfied are you with the quality of your home? Tenant profile Satisfied Neither-nor Dissatisfied Not working age 91.8% 5.2% 3.0% Working age 81.5% 9.9% 8.6% Up to 1 year 93.9% 2.0% 4.1% 1 to 7 years 81.3% 11.2% 7.6% 7 years or more 86.0% 7.4% 6.6% Children in household 84.8% 6.1% 9.1% No children in household 85.3% 8.7% 6.0% Single person 87.8% 7.3% 5.0% Two or more persons 83.0% 8.8% 8.1% Pay full rent 87.3% 7.5% 5.2% Rent benefits 83.9% 8.3% 7.8% Employed 86.0% 9.3% 4.7% Other not working 78.8% 6.3% 15.0% Retired 90.9% 5.9% 3.2% Unable to work 77.5% 9.2% 13.3% All tenants 85.3% 8.2% 6.6% Energy efficiency and heating the home Approximately two in three tenants (66.6%) agreed that their home is energy efficient whilst 23.7% disagreed and 9.7% said ‘don’t know’. During the 2022 survey, a similar proportion (64.4%) said that there home was energy efficient whereas 25.9% said this was not the case. Page 94 of 304
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15 In relation to heating, approx. seven in ten tenants (72.8%) said they could afford to heat their home whilst around one than one in four (21.8%) said this was not the case (5.4% did not know). Figure 4 shows the impact of ‘heating the home’ and ‘energy efficiency’ on tenants’ views of housing quality and illustrates for example that where a tenant can afford to heat their home, 88.4% are satisfied with housing quality whereas in the case of tenants who cannot afford to heat their home, housing quality drops to 75.6%. A similar picture is evident for tenant views on their home’s energy efficiency. Figure 4 – Heating the home and energy efficiency v housing quality (base 760) Q- Can you afford to heat your home and is your home energy efficient v. housing quality? Making it easier to heat the home Tenants who said that they found it difficult to afford to heat their home were asked to say what their landlord could do to help them heat their home more easily. The results of this enquiry are shown in table 6 and illustrate that better internal insulation of the home (16.4% of all responses), improving draughty windows (15.7%) and improving draughty doors (13.4%), are the three main ways in which the Council could help tenants heat their home more easily. 88.4% 75.9% 90.9% 70.6% 85.3% 6.5% 13.3% 5.7% 13.3% 8.2% 5.1% 10.8% 3.4% 16.1% 6.6% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Can afford to heat home Cannot afford to heat home Home is energy efficient Home is not energy efficcient All tenants Satisfied Neither-nor Dissatisfied Page 95 of 304
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16 Table 6 – Landlord help with heating costs (base 268 responses from 166 tenants) Q- How could your landlord help you to heat your home more easily? Improvement % Improvement % Better internal insulation of the home 16.4% Offer energy saving tips/advice 5.2% Improve windows (draughty) 15.7% Offer help with changing gas/electricity supplier 4.5% Improve doors (draughty) 13.4% Improve boiler 3.7% Better external insulation e.g. cladding 10.8% Comment 6.3% Better heating system 6.7% Seventeen tenants added a comment about heating the home and these are set out below. Q- How could your landlord help you to heat your home more easily? (comment) ✓ Better, larger radiators ✓ Deal with water ingress ✓ Deal with damp ✓ Deal with dampness in living room ✓ Do something about the energy firms ✓ Heating prices with utility firms are ridiculously out of control ✓ Help to reduce bills ✓ Improve seals around windows causing dampness ✓ Invest in solar panels in existing housing ✓ It's these energy companies who are just getting so greedy and must realise that a lot of folk just can't keep affording these huge increases ✓ Make rents manageable for most tenants ✓ Not a landlord problem. Utility companies need to stop the increases ✓ Put solar panels on the roof ✓ Solar panels would make a huge difference to my bills ✓ Sort out the cavity wall insulation ✓ Stop increasing rents all the time ✓ Supposed to be getting a new boiler and radiators. Property improvements All tenants were asked to say how the Council could improve the quality of their home. Figure 5 indicates that improving kitchens (13.0% of all tenant comments), improving the bathroom (9.6%), and reducing cold and draughts (8.4%) are the three main housing quality improvement actions required by tenants. We observe here that 26.8% of tenant responses were that nothing needed to be improved about the quality of their home whilst 2.0% of responses were ‘don’t know’. Page 96 of 304
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17 Figure 5 – Housing improvements (base 1,122 responses from 760 tenants) Q- What specific improvements if any should your landlord make to provide you with a better quality home? Other comments/suggestions One hundred and twenty five tenants made a comment relating to their housing and these are listed in annex 2 by allocation area. Some examples of the comments made are provided below. We note that approx. one in four comments (24.0%) concerned internal or external doors. Q- What specific improvements if any should your landlord make to provide you with a better quality home? (comments) ✓ Back door needs to be replaced. It has been measured about 4 years ago but not yet done ✓ Better heating needed ✓ Better storage space & we need access to the loft ✓ Damp all over – needs sorted ✓ Far too small as a home ✓ Floor is warped due to flooding ✓ Front door replaced 2 years ago but there is still a draught coming in ✓ Lack of storage cupboards ✓ Radiators are too small. 11.1% 1.2% 1.6% 2.0% 3.7% 4.1% 4.4% 5.3% 6.9% 8.4% 9.6% 13.0% Comments Improve/upgrade the common stairs e.g. painting/repair Improve/upgrade the door entry system Provide better noise insulation Improve/upgrade the boiler/heating system Improve/upgrade the outside of the building e.g. roof Deal with dampness/condensation in my home Improve/upgrade the windows Improve/clean the gutters/pipework Reduce cold/draughts and provide better insulation Improve/upgrade the bathroom Improve/upgrade the kitchen 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Page 97 of 304
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18 Maintenance service Satisfaction with repairs Amongst tenants whose homes have been repaired in the last year, 79.1% are satisfied with the last repair whilst 11.2% are dissatisfied (figure 6). During the 2022 survey, 72.4% of tenants were satisfied with their most recent repair whereas 19.3% were dissatisfied. The Scottish Council housing sector average for repairs satisfaction (which includes transactional data), is 85.7%. Figure 6 – Satisfaction with the repair service (base 340 repair in last year only) Q- Thinking about the last time you had repairs carried out, how satisfied or dissatisfied were you with the repair service provided by the Council? Repairs satisfaction by property factors Table 7 illustrates repairs satisfaction by property type. This table shows that the most satisfied tenants by property type are those living in mid terraced homes (84.5% satisfied) and amenity/wheelchair properties (81.8%), whereas the least satisfied tenants live in four in a block (G/U) properties (76.5% satisfied) and houses (B/D) - 63.6%. 42.0% 37.1% 9.7% 7.1% 4.1% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% Very satisfied Fairly satisfied Neither-nor Fairly dissatisfied Very dissatisfied Page 98 of 304
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19 Table 7 - Satisfaction with the repair service (base 340-repair in last year only) Q- Thinking about the last time you had repairs carried out, how satisfied or dissatisfied were you with the repair service provided by the Council? Property type (surveys) Satisfied Neither-nor Dissatisfied Amenity/Wheelchair (37) 81.8% 0.0% 18.2% Flat (105) 81.1% 10.8% 8.1% Four in a Block (G/U) (176) 76.5% 17.6% 5.9% House (B/D) (24) 63.6% 9.1% 27.3% House End Terrace (108) 78.4% 9.8% 11.8% House Mid Terrace (180) 84.5% 2.4% 13.1% House Semi-Detached (130) 77.0% 9.8% 13.1% All types 79.1% 9.7% 11.2% Repairs satisfaction by period (last year only) Figure 7 analyses repair service satisfaction according to when the repair was completed (within the last year) and shows that tenants with repairs that were completed up to four months ago are more satisfied (85.3%) than those tenants who homes have received repairs in an earlier period (i.e. more than 6 months ago - 70.3% satisfied). Figure 7 – Satisfaction with the repair service (base 340 -repair in last year only) Q- Thinking about the last time you had repairs carried out, how satisfied or dissatisfied were you with the repair service provided by the Council? 79.1% 70.3% 81.9% 83.8% 85.3% 9.7% 15.3% 8.3% 5.9% 5.3% 11.2% 14.4% 9.7% 10.3% 9.3% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% All dates More than 6 months ago More than 4 months up to 6 months ago Up to 2 months ago More than 2 months up to 4 months ago Satisfied Neither-nor Dissatisfied Page 99 of 304
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20 Repairs satisfaction by tenant profile Table 8 analyses repair service satisfaction by the tenant profile and illustrates that the most satisfied tenants in terms of repairs carried out in the last year are those who are not of working age (85.2% satisfied), or retired (86.0%), whilst the amongst the least satisfied tenants are those who are of working age (76.0%), and tenants who have lived in their home for up to 1 year (66.7%)4. Table 8 – Satisfaction with the repair service (base 340-repair in last year only) Q- Thinking about the last time you had repairs carried out, how satisfied or dissatisfied were you with the repair service provided by the Council? Tenant profile Satisfied Neither-nor Dissatisfied Not working age 85.2% 7.0% 7.8% Working age 76.0% 11.3% 12.7% 1 to 7 years 75.0% 13.5% 11.5% 7 years or more 81.9% 7.2% 10.9% Up to 1 year 66.7% 22.2% 11.1% Children in household 80.2% 9.3% 10.5% No children in household 78.7% 10.0% 11.2% Single person 77.1% 13.6% 9.3% Two or more persons 80.5% 7.2% 12.3% Employed 80.8% 7.5% 11.7% Other not working 74.5% 10.6% 14.9% Retired 86.0% 6.5% 7.5% Unable to work 69.4% 18.4% 12.2% All tenants 79.1% 9.7% 11.2% Repair satisfaction by allocation area is set out in table 9 and shows a somewhat mixed picture e.g. 87.3% repair service satisfaction in Bonnyrigg compared to 70.2% in Penicuik. We observe that compared to other allocation areas, Penicuik contains a higher than average proportion of employed tenants (44.7%), a lower than average degree of satisfaction with housing quality (79.4%) and a higher level of experience of damp and mould (see table 10) which may all be contributory factors to explaining this area’s comparatively low overall satisfaction with repairs. Table 9 – Satisfaction with the repair service (base 340-repair in last year only) Q- Thinking about the last time you had repairs carried out, how satisfied or dissatisfied were you with the repair service provided by the Council? Allocation area Satisfied Neither-nor Dissatisfied Bonnyrigg 87.3% 0.0% 12.7% Dalkeith 78.3% 8.7% 13.0% Danderhall-Newtongrange-Pathhead 73.0% 16.2% 10.8% Gorebridge 87.0% 4.3% 8.7% Loanhead-Roslin-Bilston-Roswell 71.2% 19.2% 9.6% Mayfield 88.2% 5.9% 5.9% Penicuik 70.2% 14.9% 14.9% All areas 79.1% 9.7% 11.2% 4 Caution – 18 tenants only Page 100 of 304
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21 Improving the repair service As shown in figure 8, the top four improvement suggestions for the repair service are: 1. Reduce the time it takes to complete a repair (13.4% of all tenant comments) 2. Reduce the time it takes to start the repair (12.8%) 3. Complete the repairs on the first visit (10.7%) 4. Improve the quality of repair work (9.1%). Figure 8 – Improving the repair service (base 514 responses from 340 tenants) Q- How if at all, do you think that your landlord should improve its repair service? Comments The other comments made in relation to the repair service (2.5% of all responses) are set out below: Q- How if at all, do you think that your landlord should improve its repair service? (Comments) ✓ Boiler needs replaced. Radiators are not secured onto the wall ✓ Both extractor fans do not work and have been reported on 2 occasions ✓ Do the repairs we ask for ✓ Hallway wall is crumbling and needs repair ✓ Kitchen is missing a unit door (needs fixed) ✓ Mould and no insulation in loft - roof wasn't changed either ✓ Phoned one time about the gutter but they never came or got in touch ✓ Replace rather than repair 2.5% 1.0% 1.2% 1.4% 1.6% 1.6% 2.7% 3.3% 3.9% 9.1% 10.7% 12.8% 13.4% Comments Repair workers should have a better attitude Have more flexible times available for completing a… Ask repair workers to clean up after themselves Make it easier to report a repair Make sure workers do not come to my home without an… Ensure repair workers turn up when they say they will Improve communication with the Contractor's staff Improve communication with the landlord's staff Improve the quality of repair work including the quality… Complete the repairs on the first visit whenever possible Reduce the time it takes to start the repair Reduce the time it takes to complete a repair 0.0% 5.0% 10.0% 15.0% Page 101 of 304
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22 ✓ Shower leaking and bathroom ceiling needs fixed. Shower needs checked for dampness. Windows throughout house now getting dampness ✓ Sometimes they don't get back to you ✓ Still a lot of dampness in daughter's bedroom and they've been out a few times ✓ Take more care not to damage property ✓ Turn up when they're meant to - housing officer never comes out - has been requested 3 times. Damp and mould Around one in five tenants (17.1%) said they had experienced issues with damp and mould in their home during the last 12 months (80.9% said this was not the case) and 2.0% responded ‘don’t know’. Table 10 shows some degree of variation by allocation area on this measure e.g. 20.4% experience in Dalkeith compared to 16.2% in Mayfield. Table 10 – Experience of damp and mould (base 760) Q- Have you experienced damp and mould in your home over the last 12 months? Allocation area Yes No Don’t know Bonnyrigg 16.6% 79.3% 4.1% Dalkeith 20.4% 78.9% 0.7% Danderhall-Newtongrange-Pathhead 10.0% 88.9% 1.1% Gorebridge 19.0% 78.6% 2.4% Loanhead-Roslin-Bilston-Rosewell 14.9% 81.9% 3.2% Mayfield 16.2% 83.8% 0.0% Penicuik 19.8% 78.6% 1.6% All areas 17.1% 80.9% 2.0% Figure 9 illustrates tenant experience of damp and mould by property type e.g. 25.0% of tenants living in houses (B/D) have experienced damp and mould compared to 13.3% in flats. Figure 9 – Tenants experiencing damp and mould in the home (base 760) Q – Have you experienced damp and mould in your home over the last 12 months? (Yes) 16.2% 13.3% 17.0% 25.0% 19.4% 16.1% 18.5% Amenity/Wheelchair (37) Flat (105) Four in a Block (G/U) (176) House (B/D) (24) House End Terrace (108) House Mid Terrace (180) House Semi-Detached (130) 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Page 102 of 304
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23 Damp, mould and repair service As illustrated in table 11, awareness of damp and mould is closely associated with the tenant’s view of the repair service i.e. where the tenant is not aware of this problem, 83.3% are satisfied with their most recent property repair. Conversely, where the tenant considers that there might be damp and mould in their home, satisfaction with repairs declines to 65.3%, with approx. one in four (20.8%) saying they are dissatisfied with their last repair. Table 11 – Damp and mould and repair service (base 340) Q – Have you experienced any issues with damp, mould or condensation in your home in the last year? v. Overall satisfaction with last repair Damp and mould status Satisfaction with repair service Satisfied Neither-nor Dissatisfied Aware of damp and mould 65.3% 13.9% 20.8% Not aware of damp and mould 83.3% 8.0% 8.7% All tenants 79.1% 9.7% 11.2% Considering only those tenants that are aware of damp and mould, the majority (71.5%) have reported this matter to the Council. Figure 10 shows that for those tenants who have reported damp and mould to the Council, most (63.4%) are waiting on the issue to be addressed, whilst 14.0% say that the issue has returned. Around one in four tenants (21.5%) say that the damp and mould problem has been resolved after reporting it to the Council. Figure 10 –Damp and mould reporting (base 93 tenants) Q- Which of the following statements best describes what has happened with the damp and mould in your property? Issue has been resolved, 21.5% Waiting on issue to be addressed, 63.4% Advised it was condensation, 11.8% Problem has come back again, 14.0% Page 103 of 304
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24 Information, participation and contact In 2025, 81.8% of tenants rated ‘being kept informed’ as good, whilst 5.3% said that the Council was poor on this measure (and 12.9% replied ‘neither good nor poor’) (figure 11). Tenant satisfaction with being kept informed is slightly higher than the 2022 survey (80.1% saying good). The sector average for this figure in 2025 is 82.8%. Figure 11 – Information (base 760) Q- How good or poor do you feel the Council is at keeping you informed about their services and decisions? Tenant participation As illustrated in table 12, approx. eight in ten tenants (77.5%) are satisfied with opportunities to participate whilst 3.8% are dissatisfied on this measure. In 2022, 77.9% were satisfied whilst the current Scottish Council sector average for tenant participation is 80.6%. Satisfaction on this aspect of service varies by tenant profile and allocation area (table 12) ranging from 80.5% for tenants who are who not of working age to 65.0% for tenants who are ‘other not working’. In terms of allocation areas, tenant satisfaction is highest in the Loanhead-Roslin-Bilston-Rosewell grouping (80.9%) and lowest in Gorebridge (71.4%). Table 12 - Satisfaction with tenant participation (760) Q- How satisfied or dissatisfied are you with opportunities given to you to participate in your landlord's decision-making process? Tenant profile Satisfied Neither-nor Dissatisfied Total 77.5% 18.7% 3.8% Not working age 80.5% 17.6% 1.9% Working age 76.1% 19.3% 4.5% Up to 1 year 75.5% 22.4% 2.0% 1 to 7 years 75.0% 21.0% 4.0% 7 years or more 79.2% 17.4% 3.4% 22.5% 59.3% 12.9% 3.2% 2.1% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% Very good Fairly good Neither-nor Fairly poor Very poor Page 104 of 304
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25 Tenant profile Satisfied Neither-nor Dissatisfied Children in household 72.0% 24.4% 3.7% No children in household 79.5% 17.2% 3.2% Single person 83.1% 14.6% 2.3% Two or more persons 73.5% 22.4% 4.2% Employed 78.9% 17.6% 3.6% Other not working 65.0% 28.8% 6.3% Retired 80.6% 17.4% 2.0% Unable to work 77.5% 18.3% 4.2% Bonnyrigg 79.3% 17.9% 2.8% Dalkeith 80.3% 15.6% 4.1% Danderhall-Newtongrange-Pathhead 74.4% 23.3% 2.2% Gorebridge 71.4% 27.4% 1.2% Loanhead-Roslin-Bilston-Rosewell 80.9% 17.0% 2.1% Mayfield 79.7% 18.9% 1.4% Penicuik 74.6% 15.1% 10.3% Total 77.5% 18.7% 3.8% Preferred ways of offering tenant views Most tenants (49.2%) are not particularly interested in getting involved in giving their views to their landlord (55.5% in 2022). Where tenants do wish to give their views, surveys is the most popular method of participating – 40.4%, (table 13). Table 13 – Consultation preferences (799 responses from 760 tenants) Q- How do you prefer to give your views about your landlord's activities and decisions? Method % Method % Through surveys (paper, online, phone etc.) 40.4% Other e.g. face-face, email, social media 1.0% Taking part in meetings and events 5.5% Don’t know 2.4% Focus groups 1.5% Not interested in giving my views, happy to leave this to others 49.2% Contact experience Most tenants (88.6%) agree with the statement ‘My landlord’s staff treat me fairly and with respect’. Around one in twenty tenants (5.1%) answered ‘neither agree nor disagree’ whilst 2.8% disagreed (and 3.7% said ‘don’t know). We observe that where a tenant agrees that staff are fair and respectful, 85.6% of tenants are satisfied with services overall; this contrast with 35.0% tenant satisfaction when a tenant disagrees that staff are fair and respectful. Contact preferences Tenants’ preferences for contacting the Council in the future are principally telephone i.e. mobile (65.9%) and landline (13.2%). Digital methods e.g. email (12.0%) are also popular with tenants as a way of contacting the Council (figure 12). Page 105 of 304
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26 Figure 12 – Contacting the Council (base 917 responses from 760 tenants) Q - What would be your preferred ways of contacting the Council in the future? As illustrated in table 14, the preferred means by which tenants prefer to be kept informed by their landlord are letter (36.3%), telephone (21.5%) and email (21.0%). Table 14 – Information preferences (base 1,130 responses from 760 tenants) Q- And how do you prefer the Council to keep you informed about their services and decisions? Method % preference Letter 36.3% Telephone 25.1% Email 21.0% Newsletter 9.6% Text 6.5% Visits from housing officers 0.7% WhatsApp/Instagram etc. 0.6% Comment (Deaf Action) 0.1% 0.5% 0.1% 1.2% 1.9% 2.1% 3.2% 12.0% 13.2% 65.9% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% Page 106 of 304
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27 Rent value for money As set out in figure 13, most tenants (81.7%) consider rent to be good value for money, whilst 5.9% say that rent is poor value (and 12.4% answered ‘neither good nor poor’ value). In 2022, 80.8% rated rent as good value, whilst the 2025 Council sector average is 80.4%. Figure 13 – Rating of rent value for money (base 760) Q- Taking into account the accommodation and the services the Council provides, to what extent do you think that the rent for this property represents good or poor value for money? Is it…… Table 15 indicates rent value by property and household size and shows that tenants living in one bed homes are the most positive on this measure (85.2% say rent is good value) alongside single person households (84.8%). Households of two or more persons (especially those living in 2 bed homes) are the least positive on rent value for money (79.6%). Table 15 - Rating of rent value for money by property and household size (base 760) Q- Taking into account the accommodation and the services the Council provides, to what extent do you think that the rent for this property represents good or poor value for money? Is it…… Beds and household size Good Neither-nor Poor 1 bed 85.2% 7.0% 7.8% 2 beds 80.6% 12.6% 6.8% 3 beds plus 81.8% 14.4% 3.8% Single person 84.8% 10.2% 5.0% Two or more persons 79.6% 13.8% 6.6% All sizes 81.7% 12.4% 5.9% 23.9% 57.8% 12.4% 4.7% 1.2% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% Very good Fairly good Neither-nor Fairly poor Very poor Page 107 of 304
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28 In relation to property type, tenants living in amenity/wheelchair adapted homes (91.9% say ‘good value’) are the most likely to say that rent is good value for money whilst the least likely to rate rent value as good are tenants living in flats (77.1%) and houses (B/D) (70.8%) – table 16. Table 16 - Rating of rent value for money by property type (base 760) Q- Taking into account the accommodation and the services the Council provides, to what extent do you think that the rent for this property represents good or poor value for money? Is it…… Property type (surveys) Good Neither-nor Poor Amenity/Wheelchair (37) 91.9% 5.4% 2.7% Flat (105) 77.1% 16.2% 6.7% Four in a Block (G/U) (176) 84.7% 8.0% 7.4% House (B/D) (24) 70.8% 25.0% 4.2% House End Terrace (108) 78.7% 13.9% 7.4% House Mid Terrace (180) 81.7% 11.1% 7.2% House Semi-Detached (130) 83.1% 15.4% 1.5% All sizes 81.7% 12.4% 5.9% Across different tenant characteristics, rent value for money varies somewhat with retired tenants (85.0%) being the most likely to say that rent is good value for money. This contrasts somewhat with those who are unable to work, 77.5% of whom say that rent is good value. Table 17 - Rating of rent value for money by tenant (base 760) Q- Taking into account the accommodation and the services the Council provides, to what extent do you think that the rent for this property represents good or poor value for money? Is it…… Tenant profile Good Neither-nor Poor Not working age 84.3% 9.0% 6.7% Working age 80.5% 14.2% 5.3% Up to 1 year 87.8% 8.2% 4.1% 1 to 7 years 84.4% 14.3% 1.3% 7 years or more 79.9% 11.9% 8.3% Children in household 84.8% 14.6% 0.6% No children in household 81.2% 11.4% 7.3% Pay full rent 80.7% 11.4% 7.8% Rent benefits 83.1% 12.1% 4.8% Employed 82.4% 11.5% 6.1% Other not working 78.8% 18.8% 2.5% Retired 85.0% 8.3% 6.7% Unable to work 77.5% 15.8% 6.7% All sizes 81.7% 12.4% 5.9% Improving value for money All tenants were asked to say what the Council should do to improve rent value. The results for this question are set out in figure 14 and show that reducing the level of rent increases (14.9% of all tenant responses), reducing the amount of rent charged (12.3%), providing a better repair service (9.7%) and improving the insider of the home Page 108 of 304
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29 (9.6%) are the four main ways in which value for money could be improved. We would observe here that most tenant responses (32.8%) were that nothing needed to be improved about rent value whilst 8.8% of responses were ‘don’t know’. Figure 14 – Improving rent value for money (base 1,107 responses from 760 tenants) Q – What if anything should the Council do improve value for money? Tenants’ comments in relation to rent value for money are set out below and mainly relate to property matters. Q – What if anything should the Council do improve value for money? ✓ Do something about the heating ✓ Fix the damp ✓ Fix dampness in living room ✓ Follow up work on windows is required ✓ Holes in the gutters need fixed ✓ If my back door was replaced and my garden was maintained more often it would make it better value for money ✓ Issues with vermin in this area ✓ It's getting a bit high (the rent) ✓ Need a wet room due to a disability ✓ Need to invest more money into all tenants' homes ✓ Rent forms are very complicated/need simplified ✓ Replace back and front garden fences 1.9% 1.8% 3.1% 5.0% 9.6% 9.7% 12.3% 14.9% Comments Reduce the amount of antisocial behaviour Improve/upgrade the external parts of my home e.g. common stairs, door entry systems, back courts Carry out more building maintenance e.g. painting, roughcasting etc. Improve/upgrade the inside of my home Provide a better repair service Reduce the level of rent charged Reduce the amount of annual rent increases 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% Page 109 of 304
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30 ✓ Sort dampness in bathroom ✓ Sort out our living room as the dampness is killing us ✓ Too many people coming into this area and not paying rent ✓ Workers in the house should take more care when they are here ✓ Would improve if they would just get my house sorted ✓ Would like a move from here. Page 110 of 304
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31 Neighbourhood management satisfaction Tenants were asked if they were satisfied or dissatisfied with how their landlord managed the neighbourhood they lived in. Table 18 shows that 85.3% of tenants are satisfied on this measure whilst 5.1% are dissatisfied. In 2022, a very similar proportion of tenants (85.5%) was satisfied with ‘neighbourhood management’ whilst the sector average in 2025 is 79.5%. Table 18 – Neighbourhood management (base 760) Q- Overall, how satisfied or dissatisfied are you with the Council’s contribution to the management of the neighbourhood you live in? Very satisfied Fairly satisfied Neither-nor Fairly dissatisfied Very dissatisfied 31.2% 54.1% 9.6% 3.7% 1.4% Neighbourhood management by town Table 19 illustrates neighbourhood management satisfaction by town and shows range of satisfaction with the highest figure for Newtongrange (92.1% satisfied) and the lowest for Lasswade and Easthouses (both 80.0%). Note that some of the towns set out in table 19 comprise a small number of surveys which reduces the reliability of the figures. Table 19 – Neighbourhood management (760) Q – Overall, how satisfied or dissatisfied are you with the Council’s contribution to the management of the neighbourhood you live in? Town - surveys Satisfied Neither-nor Dissatisfied Bilston-11 81.8% 18.2% 0.0% Bonnyrigg-131 86.3% 12.2% 1.5% Dalkeith-147 80.3% 8.2% 11.6% Danderhall-38 86.8% 10.5% 2.6% Easthouses-5 80.0% 20.0% 0.0% Gorebridge-78 91.0% 6.4% 2.6% Gowkshill-6 83.3% 0.0% 16.7% Lasswade-5 80.0% 0.0% 20.0% Loanhead-58 82.8% 15.5% 1.7% Mayfield-69 87.0% 10.1% 2.9% Newtongrange-38 92.1% 2.6% 5.3% Pathhead-14 85.7% 14.3% 0.0% Penicuik-126 84.9% 7.1% 7.9% Poltonhall-9 88.9% 11.1% 0.0% Rosewell-12 83.3% 16.7% 0.0% Roslin-13 84.6% 15.4% 0.0% Total-760 85.3% 9.6% 5.1% Page 111 of 304
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32 Improving the neighbourhood All tenants were asked to say what might improve their neighbourhood as a place to live. As illustrated in figure 15, the top six neighbourhood improvements are maintaining trees, shrubs, and grass areas (7.9% of all responses), tackling dog fouling (7.6%), dealing with problem neighbours (5.8%), improving parking (5.5%), dealing with fly tipping (5.0%) and tackling litter (4.9%). Figure 15 – Improving the neighbourhood (base 1,104 response from 760 tenants) Q- In your view, what if anything, should be done to improve your neighbourhood as a place to live? 6.4% 0.5% 0.6% 1.0% 1.1% 1.3% 2.5% 2.9% 3.4% 3.7% 3.8% 4.9% 5.0% 5.5% 5.8% 7.6% 7.9% Comments Limit storage in the common landings e.g. bikes, prams, mobility scooters etc. Tackle racial/other harassment Modernise the bin stores Improve communal areas e.g. bins; fencing; storage; vandalism/graffiti Improve access to support services for tenants Improve how tenancies are managed Have more communication with the neighbourhood and community Better maintain tenants' gardens Tackle youth disorder Tackle drug use/drug dealing Deal with litter Deal with fly tipping Improve parking Deal with problem neighbours Tackle dog fouling Maintain trees, shrubs and grass areas 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% Page 112 of 304
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33 Other neighbourhood issues Seventy one tenants made a comment on improvements to their neighbourhood and these comments and suggestions are supplied at annex 3 by allocation area. These include for example: Q- In your view, what if anything, needs to be done to improve your neighbourhood as a place to live? ✓ Better close cleaning ✓ Better management of traffic ✓ Cut trees back and pick up leaves in autumn ✓ Deal with our neighbour ✓ Get street cleaners back - clean out the gulleys ✓ Make the place tidier ✓ Sort out the roads all the pot holes ✓ Speed bumps needed on main road on Queensway ✓ Things for kids & community things for adults ✓ Traffic flow is too fast - should be 20 speed limit. Page 113 of 304
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34 Annex 1 – overall satisfaction and related comments Q – What if anything should your landlord do to improve its overall service? (comments) Comment Area Awaiting bathroom suite being replaced. Bathroom fan is damaged. Spare room outside door is flaking away and draughty Bilston Living room wall needs fixed. Dampness in living room and draughty windows throughout Bilston Loft insulation is badly needing done .Window handles and catches are needing fixed Bilston Units in kitchen were to be replaced but only the bit over sink was done which doesn't match with the rest of the units which are older. Also, there is a broken fence at side of house Bilston Address problems quicker Bonnyrigg Be more efficient Bonnyrigg Deal with private landlord next door as hedge is taking over Bonnyrigg Guttering off the roof-needs repaired Bonnyrigg Improve housing selection Bonnyrigg Kitchen wiring needs looked at. Shower in bathroom. Front bedroom can't be closed and is left open Bonnyrigg Living wall moves. Mould in every single bedroom Bonnyrigg Make it easier to get a move Bonnyrigg Returned bins to house block the wheelchair access Bonnyrigg Allow permission to convert loft Dalkeith Be more responsive when you ask for something. Asked for clerk of works to contact me about something but they have never got back to me that's been more than six months Dalkeith Better care needed when emptying bins Dalkeith Better housing allocation policy especially for those already in Midlothian houses as we are then giving up a house to be rehoused Dalkeith Better insulation Dalkeith Drop the kerb Dalkeith Fly tipping issues at neighbour’s house Dalkeith Fly tipping, and it's going to cause rats and whatever and the council do nothing for you anymore Dalkeith Lack of air vents at the rear bedroom door making the room very hot and stuffy Dalkeith My kitchen has not been fitted to a good standard i.e. damage to the worktops Dalkeith Ongoing issues with sewerage system causes an overspill of sewage Dalkeith Rubbish that has been reported outside now it has been there for nearly two years - it has been reported and nothing is being done about the fly tipping issue Dalkeith The slabs in my garden need to be evened out so that I can use my mobility scooter Dalkeith The subcontractors that they use are substandard; an example would be they have installed new windows and they have left them draughty and with cracks on the silicone Dalkeith Traffic speed is dangerously high - needs speed bumps Dalkeith Waiting times for repairs and waiting times for the customer service to get back to you are too long Dalkeith Hire more staff Gorebridge Rubbish collection Gorebridge Awaiting a boiler sensor - still not got the part yet. Front door is very stiff as it warps with the weather Loanhead Back porch needs painted in the roof. Rats are a problem Loanhead Bad dampness in hall cupboard and in bedroom. Installed damp meters and readings are off the scale. They aren't taking responsibility for the dampness Loanhead Banister required in staircase Loanhead Boiler keeps playing up. Kitchen and bathroom fans are both not working either Loanhead Page 114 of 304
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35 Comment Area Dampness in daughter’s bedroom and dampness in ceiling. Gutters need cleared of moss Loanhead Dampness in the hallway Loanhead Dog fouling is becoming a problem Loanhead Doorbell not working. High fence required at backdoor at both sides – needed for privacy. Slabs required at left hand side of back door to enable shed to be placed there Loanhead Draughts front and back Loanhead Eradicate draughts Loanhead Flooding in front garden can get really bad. Down pipe is broken and guttering needs fixed. Possibly causing dampness Loanhead Front and back doors jam and are draughty. Also, draughty windows throughout house Loanhead Front door is leaking and dampness in the staircase Loanhead Hallway ceiling and rear bedroom are needed getting fixed Loanhead I have had a leak in my bathroom for over 1year now which has caused dampness; still not resolved. Also a leak into back bedroom again causing dampness, again not rectified also waiting on them fixing my ceiling yet as well Loanhead Main bedroom, cupboard and bedroom is bad with damp Loanhead Solar panels not working. Windows not closing properly. Loft door came down. Mice in house under the floorboards. Banister needs fixed, On housing list for on the level due to medical condition Loanhead Still awaiting any news on bigger 4 bedroom home. If not can permission be approved to one room into two? Loanhead Three years ago due to being disabled I'd been promised and surveyed through Occupational Health. I was to get a new kitchen but am still awaiting adaptions. Loanhead Tiny radiators and behind doors so losing all the heat Loanhead Two radiators in living room and 1 in kitchen have slight leaks Loanhead When new windows were fitted, the painting wasn't finished for ages Loanhead A house has been lying empty for 3 years at Willow Road the garden is in a state of disrepair Mayfield Been waiting 4 weeks for confirmation of a house exchange Mayfield New steps needed Mayfield The drain at the front of my house needs to be cleared out Mayfield The kids play park has been removed within the past few months and I would like to know why? Mayfield The vennel or alleyway is full of cans, smashed bottles and dog fouling Mayfield Back garden fencing needs to be repaired Newtongrange Been waiting since February for a garden uplift Newtongrange Deal with fly tipping issues at Bryans Wood Newtongrange Grit bin has been removed we would like it back again! Newtongrange Had some issues with fly tipping and vermin Newtongrange It takes a long time to cut the communal grass and we pay £28 a week for this! Newtongrange More speed bumps or cameras to slow the traffic down are needed Newtongrange My kitchen was measured up in March and no one has been in touch since Newtongrange Still waiting on my garden being maintained and the grass cut Newtongrange The gardening service is not as good as it used to be Newtongrange There is an alarm going off between mine and my neighbour’s house Newtongrange Follow the rules and regulations set out in tenancy booklet as neighbours are not adhering to this Pathhead A quicker repair service Penicuik A quicker repair service took 4 months to come out for dampness Penicuik A quicker service as electrical fault took too long to get sorted Penicuik Page 115 of 304
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36 Comment Area Act faster Penicuik Actually do the repairs that they say that they will do Penicuik Be more accessible - worker came out says I need a new shower then heard nothing for over a month Penicuik Been in touch with them in March but still waiting so better communication Penicuik Been waiting 10 or more years for a bigger house and still nothing Penicuik Build more houses for single people Penicuik Clean gutters and more landscape the public area - listen to the public views Penicuik Communication poor and sloppy tradesman Penicuik Damp is everywhere Penicuik Do the gardens before handing out housing Penicuik Do the gardens for OAPs Penicuik Faster service overall Penicuik Follow through on promises of new kitchen and ceiling - there is no record of it Penicuik Get repairs done a lot quicker Penicuik Give housing to those that need it not junkies or those that don’t work who cost you money Penicuik Give me a new house that’s appropriate i.e. an accessible house as I’m disabled Penicuik Had electricians here twice - nothing gets done - have to phone many times Penicuik Had problems with ceiling for years -meant to have been repaired but still a great gaping hole. Workman have no respect and roof needs repaired Penicuik House is full of damp my – we’re high on list to move house due to health but still waiting. No one’s been out to see us Penicuik Housing officer never appears Penicuik I’ve had to spend £5000 plus to sort out drainage. I can hear neighbours upstairs talking so it needs sound proofing Penicuik It’s a cold house and the electrics should be brought up to date Penicuik Make it easier to find out if you’re either ahead or behind with rent Penicuik Midlothian Council have closed our kitchen Penicuik Need guttering replaced and repairs take too long to start Penicuik Needing to jump between depts make it hard at times Penicuik Pay more attention when we call with problems Penicuik Quicker repairs Penicuik Roof tiles came off a year ago & still waiting to get them fixed Penicuik Rough casting is falling off; should modernise the properties Penicuik Sort out pavements ; sort pot holes so I can walk Penicuik Sort out the junkies above me. A workman came out borrowed my key and didn’t give it back Penicuik The house is absolute rubbish Penicuik They never do what they’re meant do Penicuik Took 5 years 2 clerk of works to sort out bannisters for me as I’m disabled. When you complain I think they don’t listen Penicuik When we came here we were meant to have a meal service and it’s been closed down -also, the heating system leaks a lot Penicuik Why does it take so long to answer questions or phones - took 12 weeks to get hand rails put in after authorisation Penicuik Back garden needs chopped down Rosewell Bedroom door to be replaced. Chimney is crumbling and due to come down. Bathroom ceiling is peeling off and needs fixed. Bit of moisture getting through bathroom ceiling Rosewell Chimney crumbling - all fallen apart Rosewell Page 116 of 304
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37 Comment Area Dampness in living room needs looked at Rosewell I'm not fit enough to cut my grass which is very long Rosewell Poor work done in bathroom – was revamped but didn’t do a great job Rosewell Dripping tap in kitchen. Water leaking down at the back of the building. Draughts in doors at front of building Roslin No lights in bathroom. Heater in kitchen needs fixed. I am disabled and can't manage my garden Roslin Plaster needs repair in living room Roslin Sealant in doors and windows and bathroom are causing dampness Roslin Some people who are in bad health and have nobody to help them or they have medical issues and are unfit to keep their gardens tidy Roslin Page 117 of 304
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38 Annex 2 – housing quality satisfaction and related comments Q – What if anything should your landlord do to provide you with a better quality home? (comments) Comment Area A new back door Bonnyrigg Better heating Bonnyrigg Better layout Bonnyrigg Ceiling in living room very bad and kitchen falling to bits Bonnyrigg Do the repairs Bonnyrigg Fix the roof Bonnyrigg Front door Bonnyrigg Front door needs fixed Bonnyrigg Improve repairs Bonnyrigg Interior doors Bonnyrigg Internal door needs fixed Bonnyrigg It's too small Bonnyrigg Leak in my pipes Bonnyrigg Lights don't work Bonnyrigg More cupboard space in kitchen Bonnyrigg Need to move the cabinet for new boiler to be fitted and waiting to see what's happening with the wood under the window - been waiting over 12 months Bonnyrigg New back door Bonnyrigg New house but a lot of problems Bonnyrigg Side gate needed Bonnyrigg Water damage means my ceilings need replaced but it's taking such a long time Bonnyrigg Wiring for lights Bonnyrigg Would like a smaller house Bonnyrigg Would prefer a house Bonnyrigg Back garden needs looked at Dalkeith Bathroom door does not lock Dalkeith Cold water is not working for over 1 year Dalkeith Damp and mould issues Dalkeith External door is heavy to push Dalkeith External door needs to be replaced Dalkeith External doors Dalkeith External doors to be fixed Dalkeith Handrails for accessibility Dalkeith Heating system does not always work Dalkeith Kitchen replaced last year but I have a draught that comes from underneath the sink area Dalkeith Letter box needs repaired Dalkeith More plug sockets Dalkeith New kitchen linoleum Dalkeith Step outside coming away from the building. Vent falling off the wall after the harling was done Dalkeith The flat needs better ventilation as it’s too warm Dalkeith They did the windows recently but they are much more draughty and let a lot of cold in Dalkeith Top floor flat is not suitable for my age and needs Dalkeith Upgrade the shower Dalkeith When kitchen was replaced they left an open vent which has made it very cold and draughty Dalkeith Page 118 of 304
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39 Comment Area Windows were replaced but they have done a poor job as they are more draughty than the old ones Dalkeith Would like some help to decorate my house Dalkeith Need to move to a bigger home Danderhall Better doors Gorebridge Ceilings lights need fixed Gorebridge Dampness (deal with it) Gorebridge Far too small as a home Gorebridge Fix the gutters Gorebridge Floor in living room Gorebridge Gaps under windows Gorebridge Hole in porch Gorebridge Issues with the floors Gorebridge New front door Gorebridge Replace bathroom floor Gorebridge Roof needs a fix Gorebridge Conduct repairs that need to be done Loanhead Keep rents increases to a minimum Loanhead Slow on the follow up with repairs Loanhead Trying to buy this Council house. Can I still buy it? Loanhead Upgrade standard of repairs Loanhead Window was measured to be replaced but not done yet Loanhead Birds are getting into my loft. I have reported that my roof is damaged and needs repaired. I reported this 2 years ago Mayfield Front and back door Mayfield Front door needs replaced Mayfield Front door replaced 2 years ago there is still a draught coming in Mayfield Internal wall at front door needs to be replaced Mayfield Issues with the shower and also draughty windows and doors Mayfield My roof is leaking and is causing dampness and condensation Mayfield Rough casting is cracked Mayfield Rowen needs replaced - I reported this 2 years ago Mayfield Slater insects are coming into my house through the top of my window Mayfield Sort back door garden wall as it’s crumbling Mayfield Back door needs to be replaced. It has been measured about 4 years ago but not yet done Newtongrange I have a wheelchair access front door which still has not been replaced Newtongrange Lack of storage cupboards Newtongrange Patio door reported 3 weeks ago and new part is required Newtongrange Radiators are too small Newtongrange The radiators are too small compared to the size of the rooms Newtongrange Floorboards need replacing Pathhead A wet room Penicuik Better maintenance Penicuik Better outside lighting Penicuik Better storage space & we need access to the loft Penicuik Ceiling needs replaced as leak from bathroom above Penicuik Cladding to get done please Penicuik Damp all over – needs sorted Penicuik Page 119 of 304
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40 Comment Area Do the repairs and come out Penicuik Front and back doors Penicuik Front door Penicuik Front door Penicuik Generally need to improve quality Penicuik Got dampness Penicuik Harling needs upgraded Penicuik Improve painting Penicuik Just an old house – it’s creaking Penicuik Just the layout Penicuik Make it open plan as corridor for coal not needed now Penicuik Need larger property Penicuik Needs decoration and back gardens need to be better Penicuik New carpets Penicuik New doors Penicuik New doors Penicuik New doors and facings; also, paint the halls Penicuik New radiators Penicuik Put pipes back to how they were in the house Penicuik Roof has hole in it Penicuik Roughcasting Penicuik Sort out the electrics Penicuik Sort the front door Penicuik Stand in shower needed Penicuik The heating timer is not good and window handles are too stiff Penicuik The trip switch keeps going meaning my freezer loses power and frozen food is getting wasted Penicuik Tree behind house needing attending to Penicuik Tree outside needs attention as damaging my property Penicuik Update kitchen Penicuik Walls in poor condition Penicuik Wider doors and updated Penicuik Grass badly needs cut and I'm in bad health Rosewell Just dampness in living room Rosewell Solar panels needed on the roof Rosewell Fix boiler problem Roslin Floor is warped due to flooding Roslin Page 120 of 304
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41 Annex 3 – neighbourhood satisfaction and related comments Q – What if anything should be done to improve your neighbourhood? (comments) Comment Area School kids on main road up on bikes. Road is safety is a problem Bilston Better close cleaning Bonnyrigg Better management of traffic Bonnyrigg Improve street lighting Bonnyrigg More for kids needed Bonnyrigg More for kids to do Bonnyrigg Pavement maintenance is shocking Bonnyrigg Problems with anti-social behaviour -door kicked in because of neighbours Bonnyrigg Reported issues with neighbours but nothing done Bonnyrigg Stop people hanging about the shops Bonnyrigg Traffic management needs improved Bonnyrigg Deal with speeding bikes Dalkeith Issues with potholes Dalkeith Roads in poor condition Dalkeith Stop motorbikes and e-scooters Dalkeith Street lighting poor. Broken glass and dogs allowed to roam free with no control Dalkeith Sweeping leaves on public pathways needs improvement so that it's not treacherous to walk on in winter. Better street lighting is also needed Dalkeith The drains need to be cleared Dalkeith Traffic flow is too fast - should be 20 speed limit Dalkeith We need speed bumps on the road to reduce traffic speed Dalkeith Cut trees back and pick up leaves in autumn Danderhall Grit paths in winter Danderhall Blocked drains need sorted Gorebridge Do away with speed limit and plan traffic flow – have one way streets Gorebridge More for kids Gorebridge Slow traffic in the street Gorebridge Speed bumps needed Gorebridge Speed management required Gorebridge Things for kids & community things for adults Gorebridge Dog fouling problems with neighbours. Charging point required for electric cars Loanhead Need to deal with the unoccupied house Mayfield Speed measures on main road Mayfield Speed measures on road Mayfield Street light in back alleyway has been out since about January this year which is a safety risk. There have been house breaks ins in this area this year Mayfield Fly tipping issues at Bryans Wood this past 12 months Newtongrange Homeless house upstairs causing issues with anti-social behaviour; and the garden grass and trees needs to be cut Newtongrange Issues with seagulls fouling the front gate area Newtongrange Just the back garden fencing needs fixed Newtongrange Lack of public transport in this area. Car parking is a serious problem. Problem with neighbour’s smoking Newtongrange More time needed to cut and maintain the grass areas and lift up the grass to take away Newtongrange Need better road signage Newtongrange Page 121 of 304
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42 Comment Area This area would benefit from having a swing park Newtongrange Three street lights have been out for the past 2 years on Morris road at Easthouses Road Newtongrange Better shops and improve bus services Pathhead Improve bus service. Pavement maintenance and gritting of paths in winter Pathhead Deal with neighbours Penicuik Deal with our neighbour Penicuik Deal with vandals and have better security Penicuik Drug dealers in the park - Pentland House us full of drug dealers and paedophiles Penicuik Gardens are a disgrace Penicuik Get rid of Pentland House residents Penicuik Get street cleaners back clean out the gulleys Penicuik Have more recycling Penicuik it’s gone downhill - it’s a tip Penicuik Lack of privacy as too exposed due to pitches right next to building Penicuik Look at who gets put into houses Penicuik Look at who’s getting access to the houses ; dogs barking all the time Penicuik Make the place tidier Penicuik More for teenagers Penicuik Need to set up a youth club Penicuik Pavements and pot holes - please fix them Penicuik Pot holes need sorted Penicuik Problems here during snow because of lack of gritting Penicuik Sort our drains which smell after washing Penicuik Sort out the roads all the pot holes Penicuik Speed bumps needed on main road on Queensway Penicuik Stop folk having multiple cars Penicuik Stop kids bullying from other streets Penicuik Stop speeding drivers Penicuik Stop the food bank leaving food outside Penicuik Bollards needed at walkway to prevent driving here Roslin Page 122 of 304
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Midlothian Council Tuesday 24 February 2026 Item No 8.4 Housing Revenue Account - Revenue Budget 2025/26 - 2026/27 and Capital Plan 2025/26 - 2028/29 Report by David Gladwin, Chief Financial Officer and Section 95 Officer Report for Decision 1 Recommendations Council is recommended to: • Approve the Housing Revenue Account (HRA) Capital Plan for 2026/27 (appendix D); • Approve the HRA Revenue Budget for 2026/27 (appendix E); • Note the indicative HRA Revenue and Capital Budgets for 2027/28 and 2028/29 as detailed in appendices D and E; and otherwise • Note the remaining contents of this report. 2 Purpose of Report / Executive Summary The purpose of this report is to provide Council with: • A summary of expenditure and income to the end of quarter 3 in 2025/26 for the Capital Plan and a projected outturn for both the Revenue Account and Capital Plan for 2025/26; • An update on the Capital Plan and Revenue budget 2026/27-2028/29 which reflects approval of the recommendation to increase rents by 5.42% as presented to Council today in the Housing Revenue Account – Rent Setting Strategy 2026/27-2028/29 paper, agenda item 8.3. The summarised financial performance for 2025/26 is: • Capital investment in the year totalling £59.999 million; • A net overspend of £1.763 million on the Revenue Account; • A projected HRA general reserve at 31st March 2026 of £29.655 million. The HRA Capital Plan 2026/27 – 2028/29 provides for: • £61.990 million for Phases 3-5 of New Build Social Housing; • £59.781 million for a further Phase 6 of New Social Housing; • £41.054 million for investment in Energy Efficiency Standards in Social Housing (EESSH); and • £42.733 million for Housing-led Dalkeith Town Centre Regeneration, off- market purchases and other investment in existing stock. The Revenue Budget Reflects: • An update of the multi-year financial model prepared in line with the Social Housing Investment Plan (SHIP); • A 5.42% rent increase as recommended to Council today; • A projected HRA Reserve of £28.387 million at 31st March 2027, which will be required to finance the majority of approved investment commitment and is projected to reduce to £2.165 million at 31st March 2041. Page 123 of 304
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Date: 16th January 2026 Report Contact: Lisa Young lisa.young@midlothian.gov.uk 3 Background 3.1 Capital Plan 2025/26 The 2025/26 Capital Plan budget has been revised to reflect the current profile of spend as shown in appendix B. Capital investment in the year is projected to be £59.999 million. As previously reported to Council 16th December 2025, there are still currently no other material variances to be reported. 3.2 Revenue Account 2025/26 The projected overspend reported to Council on 16th December 2025 was £1.067 million. The overspend has increased by £0.696 million to £1.763 million against budget, as shown in appendix C. The main reason for the movement is the continued increase in volume of reactive repairs works being conducted resulting in a further increase in overspend of £0.853 million. This is offset by a reduction in loan charges of £0.172 million due to a decrease in the borrowing requirement for the year and lower than budgeted for interest rates. The HRA general reserve balance is projected to be £29.655 million at 31st March 2026 and this is committed to finance existing investment plans to 2040/41. 3.3 Capital Plan 2026/27-2028/29 The current approved Housing Revenue Account Capital Plan provides for investment of £142.207 million over the period 2026/27 – 2028/29, of which £61.990 million and £41.054 million is earmarked for completion of Phase 2 – Phase 4 of the New Social Housing Programme and Energy Efficiency Standards in Social Housing (EESSH), respectively; The proposed 5.42% rent increase per annum for 2026/27 – 2028/29 and the longer term assumption of a 4.77% annual increase to 2031/32 will continue to support current investment in new social housing and in existing stock, including EESSH works as well as provide additional investment of £97.812 million for a further phase of New Social Housing, £59.781 of which is earmarked over the period 2026/27-2028/29 and £3.570 million for open market purchases. This additional investment would fund approximately 300 new homes and 21 open market purchases. The HRA Capital Plan is detailed in appendix D and has been amended to reflect the latest estimated costs of ongoing and planned projects. Page 124 of 304
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3.4 Revenue Account 2026/27 The HRA revenue model has been updated and projected forward to 2040/41 and reflects the revised Capital plan as well as the following key assumptions: • The borrowing cost of the capital investment detailed in appendix D together with estimated investment in existing properties over the remaining years of the projection; • The impact on rental income stream as a result of a 5.42% rent increase for 2026/27 - 2028/29, longer-term assumption of 4.77% to 2031/32 to continue to support investment in Energy Efficiency Standard in Social Housing (EESSH) and 3% thereafter; • Projected provision for inflation over future years as per the GDP Deflator and BCI Tender Prices Index; • The longer-term requirement that the rents for new build properties will converge with that of the existing stock. These, together with a number of other minor adjustments to the previous financial projections, show that the HRA can continue to support the existing investment plans. The revised revenue budget for 2026/27 and indicative budget for 2027/28 - 2028/29 is detailed in appendix E. 4 Report Implications 4.1 Resource There are no direct resource implications arising from this report. 4.2 Digital There are no direct digital implications arising from this report. 4.3 Risk The principal risks are around the issue of affordability, ensuring that the investment in new build and the existing stock can be made without having to impose unacceptable increases on weekly rents. This is mitigated by the adoption of a long term financial strategy and modelling which demonstrates that existing investment commitments are sustainable. There is also the risk of capital spend being lower than projected due to delays on projects, particularly in the current climate , this could result in lower debt charges causing the Housing Revenue Account Reserve balance to increase more than projected. 4.4 Ensuring Equalities There are no equality issues arising directly from this report. Page 125 of 304
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4.5 Additional Resource Implications See Appendix A. Appendices Appendix A – Additional Resource Implications Appendix B - Capital Plan 2025/26 Appendix C – Revenue Account 2025/26 Appendix D – Capital Plan 2026/27 – 2028/29 Appendix E – Revenue Account 2026/27 – 2028/29 Page 126 of 304
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APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan Not applicable A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value The report does not directly impact on Delivering Best Value. A.5 Involving Communities and Other Stakeholders The report does not directly relate to involving communities. A.6 Impact on Performance and Outcomes The report does not directly impact on Midlothian Council’s performance and outcomes. A.7 Adopting a Preventative Approach The report does not directly relate to adopting a preventative approach. A.8 Supporting Sustainable Development The report does not directly relate to supporting sustainable development. Page 127 of 304
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MIDLOTHIAN COUNCIL Appendix B HOUSING REVENUE ACCOUNT CAPITAL PLAN 2025/26 Revised Budget Actuals To Date Projected Outturn (Under)/Over Spend CAPITAL GRANTS AND RECEIPTS £'000 £'000 £'000 £'000 Scottish Government Grants -Affordable housing supply programme 8,451 3,011 8,451 0 -Off market purchases 612 0 612 0 -Social housing net-zero 1,046 0 1,046 0 Council tax on second homes 59 0 39 (20) Other capital receipts 0 420 420 420 Borrowing requirement 49,831 26,565 49,431 (400) Total Capital Grants and Receipts 59,999 29,996 59,999 0 APPROVED CAPITAL EXPENDITURE £'000 £'000 £'000 £'000 Investment in Additional Housing Stock -New social housing phase 3-5 41,970 22,603 41,970 0 -Dalkeith town centre regeneration - social housing 50 11 50 0 -Open market purchases 1,700 190 1,700 0 Capital Repairs and Enhancement of Existing Stock -Scottish Housing Quality Standards (SHQS) Repairs 4,191 2,572 4,191 0 -Energy Efficiency Standard for Social Housing (EESSH) 5,918 2,087 5,918 0 -Upgrade Central Heating Systems 2,831 1,184 2,831 0 -Damp remediation works 1,800 1,108 1,800 0 Other Capital Expenditure -Aids and adaptations 529 241 529 0 -Backdated developer contributions 1,000 0 1,000 0 -Bonnyrigg District Heating Scheme (BDHS) meters 10 0 10 0 Total Capital Expenditure 59,999 29,996 59,999 0 Page 129 of 304
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MIDLOTHIAN COUNCIL Appendix C HOUSING REVENUE ACCOUNT 2025/26 Revised Budget Projected Outturn (Under)/Over Spend Average Number of Houses 7,747 7684 (63) £'000 £'000 £'000 EXPENDITURE Repairs and Maintenance -Responsive 5,513 7,207 1,694 -Planned 930 902 (28) -Void 2,678 3,083 405 -Decant/Compensation 78 78 0 Total Repairs 9,199 11,270 2,071 Supervision and Management -Allocations to General Fund 5,801 5,801 0 -Landscaping 616 715 99 -Insurance 324 463 139 -Other Supervision and Management 275 291 16 Total Supervision and Management 7,016 7,270 254 Capital Financing Costs 18,554 17,750 (804) Void Rent and Council Tax 1,247 1,343 96 Other Expenditure 2,296 2,539 243 Total Expenditure 38,312 40,172 1,860 INCOME Dwelling Rents (36,767) (36,832) (65) Garage Rents (710) (710) 0 Service Charge Income (273) (305) (32) Other Income (70) (70) 0 Total Income (37,820) (37,917) (97) Net (Income)/Expenditure for HRA Services 492 2,255 1,763 Movement in Housing Revenue Account Reserve Housing Revenue Account Reserve Opening Balance (31,910) (Enhancement)/impairment during the year as above 2,255 Reserve earmarked to fund capital investment plans (29,655) Page 130 of 304
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MIDLOTHIAN COUNCIL Appendix D HOUSING REVENUE ACCOUNT CAPITAL PLAN 2026/27-2028/29 Proposed Budget 2026/27 Indicative Budget 2027/28 Indicative Budget 2028/29 CAPITAL GRANTS AND RECEIPTS £'000 £'000 £'000 Scottish Government Grants -Affordable housing supply programme 7,109 14,396 11,625 -Off market purchases 472 649 590 -Social housing net-zero 0 0 0 Council tax on second homes 60 62 64 Borrowing requirement 80,779 54,676 35,076 Total Capital Grants and Receipts 88,420 69,783 47,355 APPROVED CAPITAL EXPENDITURE £'000 £'000 £'000 Investment in Additional Housing Stock -New social housing phase 3-5 41,921 13,027 7,042 -Dalkeith town centre regeneration - social housing 9,500 10,374 0 -Open market purchases 1,496 0 0 Capital Repairs and Enhancement of Existing Stock -Scottish Housing Quality Standards (SHQS) Repairs 3,474 2,178 0 -Energy Efficiency Standard for Social Housing (EESSH) 15,354 15,100 10,600 -Damp remediation works 2,000 2,000 2,000 Other Capital Expenditure -Aids and adaptations 540 550 561 -Backdated developer contributions 1,000 1,000 1,000 -Bonnyrigg District Heating Scheme (BDHS) meters 1,490 0 0 Current Approved Capital Plan 76,775 44,229 21,203 Additional Investment as a result of 5.42% rent increase -New social housing phase 6 - funded via rent increase* 11,645 23,684 24,452 -Additional 21 Open market purchases 0 1,870 1,700 Total Capital Expenditure 88,420 69,783 47,355 *remaining budget of £38.031 million is allocated to future years as not anticipated to be fully spent until 2030/31 Page 131 of 304
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MIDLOTHIAN COUNCIL Appendix E HOUSING REVENUE ACCOUNT 2026/27-2028/29 2026/27 2027/28 2028/29 Proposed Budget Indicative Budget Indicative Budget Average Number of Houses 7,951 8165 8,333 £'000 £'000 £'000 EXPENDITURE Repairs and Maintenance -Responsive 7,400 7,753 8,072 -Planned 938 958 978 -Void 3,181 3,244 3,309 -Decant/Compensation 79 81 83 Total Repairs 11,598 12,036 12,442 Supervision and Management -Allocations to General Fund 6,004 6,124 6,246 -Landscaping 740 755 770 -Insurance 451 451 451 -Other Supervision and Management 342 292 298 Total Supervision and Management 7,537 7,622 7,765 Capital Financing Costs 20,353 23,851 26,248 Void Rent and Council Tax 1,414 1,487 1,563 Other Expenditure 1,665 1,734 1,804 Total Expenditure 42,567 46,730 49,822 INCOME Dwelling Rents (40,134) (43,593) (47,096) Garage Rents (748) (789) (832) Service Charge Income (347) (366) (386) Other Income (70) (70) (70) Total Income (41,299) (44,818) (48,384) Net (Income)/Expenditure for HRA Services 1,268 1,912 1,438 Movement in Housing Revenue Account Reserve Housing Revenue Account Reserve Opening Balance (29,655) (28,387) (26,475) (Enhancement)/impairment during the year as above 1,268 1,912 1,438 Reserve earmarked to fund capital investment plans (28,387) (26,475) (25,037) Page 132 of 304
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Midlothian Council Tuesday 24 February 2026 Item No 8.5 General Services Capital Plan 2025/26 Quarter 3 Monitoring and 2026/27 to 2029/30 Budgets Report by David Gladwin, Chief Financial Officer and Section 95 Officer Report for Decision 1 Recommendations It is recommended that Council:- a) Note the inclusion of the project listed in Section 3.1 in the General Services Capital Plan (GSCP); b) Approve the addition of the new projects to the GSCP, as outlined in Section 3.2; c) Approve the scope change of the project in Section 3.3 d) Note the forecast outturn for 2025/26 for expenditure, funding and borrowing as outlined in Section 4; e) Note the planned expenditure and funding levels in the GSCP for 2025/26 to 2029/30 (as outlined in Section 5 and shown in Appendices 1 and 2). 2 Purpose of Report The purpose of this report is to provide Council with:- • An update of the GSCP incorporating information on further additions to the Capital Plan for approval (Section 3); • Information on the projected performance against budget for 2025/26 (Section 4); • Forecast expenditure and income for the GSCP for 2026/27 through to 2029/30 (Section 5) • Update on the Capital Fund (Section 6). Date 6 February 2026 Report Contact: Name Gary Thomson Email gary.thomson@midlothian.gov.uk Page 133 of 304
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3 Update of General Services Capital Plan 3.1 Projects endorsed by Council and to be added into the Plan The plan now incorporates the following project approved by Council on 16 December 2025:- 16 December 2025 • Penicuik High School Refurbishment and Expansion: Revised capital expenditure budget of £55.378 million, replacing the existing capital expenditure budget of £44.710m (an increase of £10.668m). Expenditure phased across 2025/26 to 2028/29, fully funded by prudential borrowing. 3.2 Projects presented for endorsement in the Plan The following projects are presented for endorsement to be fully adopted within the GSCP:- Capital Plan & Asset Management Board 17 March 2025 • Equipped for Learning (EfL): Phase 2: As phase 1 nears completion, Phase 2 of the EfL project will be rolled out to ensure that young people of school age are equipped with a digital device for learning. Capital expenditure budgetary provision of £4.169m million, phased across 2026/27 to 2030/31 which will be fully funded by prudential borrowing. Capital Plan & Asset Management Board 3 February 2026 • Gore Glen Primary School Landscaping Works: Footpaths and hard/soft landscaping works at Gore Glen Primary School. Capital expenditure budget of £0.063m fully phased in 2025/26 and fully funded by already collected developer contributions. 3.3 Adjustment to Scope of Project for endorsement The scope of the Acoustic Upgrades project, with a remaining GSCP budget of £0.091 million, has been widened to cover Acoustic Works required at Danderhall Primary School, which along with remaining works at Newtongrange & Roslin Primary Schools can be fully funded from the existing £0.091 million budgetary provision. Approved by Capital Plan & Asset Management Board on 03.02.2026. Page 134 of 304
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4 2025/26 Projection against budget 4.1 2025/26 Budget & Rephasing The Capital Plan expenditure budget for 2025/26 as reported to Council at Quarter 2 on 16 December 2025 was £66.027 million, with a funding budget of £24.068 million and an in-year borrowing requirement of £41.959 million. After accounting for the new projects and adjustments to project budgets as outlined in Section 3, the capital plan budgets for 2025/26 equate to £66.090 million (expenditure), £24.131 million (funding) and £41.959 million (borrowing). Project expenditure budgets have been rephased based on the latest information available from Project Managers and Service Leads as noted in Tables 1 and 2 below. Table 1: Rephasing of project expenditure budgets – acceleration of expenditure Project Description of amendment to budget Previous 2025/26 Budget £000’s Revised 2025/26 Budget £000’s 2025/26 Budget Movement £000’s ASSET MANAGEMENT PROGRAMME BOARD Property & Estates Asset Management Programme (Property AMP) Acceleration of spend following approval of Property AMP at October 2025 Council, as follows:- £0.360m: Adaptations at Mauricewood Primary £0.112m: Local Exhaust Ventilation systems in CDT departments at Dalkeith Campus £0.100m: Tarmac works at Destination Hillend due to heavy usage and inclement weather on bottom tier of the car park which required top surface upgrade £0.100m: Material purchases for planned works to Lasswade High School roof 1,600 2,272 +672 Total 1,600 2,272 +672 Page 135 of 304
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Table 2: Rephasing of project expenditure budgets – slippage of expenditure Project Description of amendment to budget Previous 2025/26 Budget £000’s Revised 2025/26 Budget £000’s 2025/26 Budget Movement £000’s CHILDREN, YOUNG PEOPLE & ESTATES PROGRAMME BOARD Bilston Primary School Following recent commercial close, activity schedules have now been agreed with project team and contractor, allowing the project cashflow to be firmed up 1,378 1,260 -118 Penicuik High School Due to planned asbestos management, an additional 11+ weeks have been added into the programme. This has resulted in the works having to be prolonged with expenditure rephased into 2026/27 7,702 4,472 -3,230 ASSET MANAGEMENT PROGRAMME BOARD Digital Services Asset Management Plan Public wi-fi replacement now scheduled for 2026/27 1,370 1,260 -110 Digital Equipped for Learning Work to be carried out in the 2026/27 academic year, beyond the 2026/27 financial year end 2,489 2,239 -250 Play Park Renewal 2024/25 Large works programme coupled with increased lead time from suppliers has pushed an element of expenditure back in to 2026/27 315 142 -173 REGENERATION & DEVELOPMENT PROGRAMME BOARD Midlothian House RetroFit Rephasing reflects value engineering exercise required with subsequent rephasing of project programme. 4,936 4,150 -786 Recycling Improvement Fund: Stobhill Recycling Centre Extension to the transfer shed at Stobhill is set for completion in June. £2.2 million of Zero Waste Scotland funding is expected to be drawn down in 2025/26, with the remainder in line with the completion of the shed in 2026/27. 2,530 2,200 -330 OTHER Others Minor rephasing 2,412 1,901 -511 Total 23,132 17,624 -5,508 This results in a rephased capital expenditure budget for 2025/26 of £61.254 million. In line with this, the expected level of funding available to finance the plan has also been rephased from £24.131 million to £23.275 million, a decrease of £0.856 million. This reduces the projected in-year borrowing requirement from £41.959 million to £37.979 million. The projected performance against budget for 2025/26 is shown in table 3 overleaf:- Page 136 of 304
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Table 3: General Services Capital Plan Projected Performance against Budget 2025/26 – as at Quarter 3 Item 2025/26 2025/26 Actual 2025/26 2025/26 2025/26 Budget Rephased To Projected Variance Carry Q2* £000’s Budget Q3 Outturn £000’s Forward £000’s £000’s £000’s £000’s £000’s Expenditure 66,090 61,254 24,747 59,004 -2,250 -4,836 Funding 24,131 23,275 10,557 22,806 -469 -856 Borrowing Required 41,959 37,979 14,190 36,198 -1,781 *including new projects as per Section 3 4.2 Expenditure Expenditure to Quarter 3 is £24.747 million with a projected expenditure outturn of £59.004 million, and an expected £2.250 million underspend against the budgeted expenditure as shown in Table 4 below/overleaf (with this reflecting £0.219m of underspends previously reported at Q2 and £2.031m of underspends now reported at Q3):- Table 4: Project Over/(Under) Spends Project Description of project over/(under)spend Rephased 2025/26 Budget £000’s Forecast 2025/26 Outturn £000’s 2025/26 Budget Over/ (Under) Spend £000’s CHILDREN, YOUNG PEOPLE & ESTATES PROGRAMME BOARD Woodburn Primary School Extension Release of remaining contingency on project 376 225 -151 Burnbrae Primary School – Conversion of ASN to GP space All works complete and within allocated budget 26 0 -26 Lasswade High School – Enhancement of Facilities to Support School Capacity Further review of capacity & community space requirements is being undertaken and will be reported to Council at the earliest opportunity as noted in Appendix 4. Fully developer contribution funded 452 0 -452 Page 137 of 304
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Project Description of project over/(under)spend Rephased 2025/26 Budget £000’s Forecast 2025/26 Outturn £000’s 2025/26 Budget Over/ (Under) Spend £000’s ASSET MANAGEMENT PROGRAMME BOARD Digital Services Asset Management Plan Underspend as a result of laptops and desktops for front office and schools being less expensive than expected 1,260 924 -336 Digital Equipped for Learning Cost of Classroom Display Solutions being delivered at below the original predicted amount. In addition, part of the originally planned IT infrastructure is not required 2,239 1,510 -729 Analogue to Digital Transition Some care packages have not required the full range of equipment that was budgeted for to be provided. In addition, growth in number of packages has been less than anticipated with some service users now opting to arrange alternative digital solutions 501 164 -337 SubTotal 4,854 2,823 -2,031 Over/(Under)spends reported at Q2 -219 Total Over/(Under)spends -2,250 The expenditure to Quarter 3 (£24.747 million) equates to 42% of the forecast outturn expenditure (£59.004 million). This means that the remaining £34.257 million, or 58% of expenditure, is projected to be incurred by the end of the financial year, with only 31% of the financial year remaining. The expenditure forecasts are based on the latest assessment of project expenditure by service leads and project managers. The risk in these forecasts is that expenditure is materially less than forecast, with overly optimistic forecasts from service leads and project managers resulting in underspends within the current financial year and/or rephasing from 2025/26 to 2026/27. The actual outturn position will be presented as part of the General Services Capital Plan – Outturn 2025/26 report to Council in June 2026, with prior reporting, challenge and assessment at Capital Plan & Asset Management Board. 4.3 Funding The funding available to finance the Capital Plan in 2025/26 is expected to total £22.806 million, £0.469 million less than the revised budget and reflecting the variances as noted in Table 4 above, and redetermination of an additional £0.042 million of General Capital Grant funding from the Scottish Government in Finance Circular 01/2026 dated 13 January 2026. Funding of £10.557 million has been received at Quarter 3. Page 138 of 304
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4.4 Borrowing The original budgeted level of borrowing for 2025/26 was £62.900 million. This has been rephased at Quarter 1 and Quarter 2 (as previously reported to Council) and Quarter 3 (as outlined in Section 4.1 above) to a budgeted level of borrowing for 2025/26 of £37.979 million – a total reduction in the forecast level of borrowing of £24.921 million. Based on the forecast outturn expenditure and funding levels as noted above, the revised estimate of the level of borrowing required for 2025/26 is £36.198 million, which is £1.781 million less than the rephased Q3 budget, reflecting the movements as noted in Sections 4.2 and 4.3 above. The impact on the Council’s borrowing costs is reflected in the Financial Monitoring 2025/26 General Fund Revenue report elsewhere on today’s agenda. 5 Capital Plan 2026/27 to 2029/30 5.1 Rephasing of Project Expenditure & Funding In addition to the rephasing of project expenditure and funding from 2025/26 to/from 2026/27 as reported in Section 3, expenditure and income forecasts covering the remainder of the period of the plan have been rephased to reflect the most recent information available from Project Managers and Service Leads. Capital expenditure budgets have been established for 2029/30 to reflect the inclusion of block budgets for the Council’s asset management strands, equating to £13.619 million, as follows:- Table 5: Asset Management Strand Block Budgets Asset Management Strand 2029/30 Budget £000’s Business Applications 75 Digital Services 1,000 Street Lighting 1,000 Footway & Footpaths 500 Road Upgrades 1,500 Fleet* 3,318 Property** 6,076 Assistive Technology 150 Total 13,619 * as per report to Council 17 December 2024 ** as per report to Council 21 October 2025 Page 139 of 304
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In addition, expenditure budgets from later years for already approved Learning Estate Strategy and other projects which are expected to fall into 2029/30 have also been included. £0.180 million for Member’s Environmental Funds have also been included. A target has been set in the Capital Plan for the release of project contingencies, with the annual target equating to 2.5% of prior year’s expenditure. Over the life of the plan (2025/26 to 2029/30), this equates to a total provision for the return of project contingencies of £11.410 million, based on a total of £443.980 million of capital expenditure. Project managers are therefore tasked with working within the approved budgets to deliver the release of contingencies in line with this. 5.2 Scottish Government Capital Grant Funding General Capital Grant The General Capital Grant in Local Government Finance Circular 01/2026 issued on 13 January 2026 provides General Capital Grant funding of £7.466 million for the 2026/27 financial year. This is a decrease in General Capital Grant funding for Midlothian of c. 15% or £1.274 million from 2025/26 levels (£8.740 million) and reflects Midlothian’s share of the £569.150 million total General Capital Grant for Scottish Local Authorities (2025/26 value £643.500 million). An element of the 2026/27 General Capital Grant has been earmarked to fully fund capital expenditure budgets for Contaminated Land (£0.070m) and Public Sector Housing Grants (£0.291m). The planning assumption for the level of General Capital Grant funding from the Scottish Government over the period 2027/28 to 2029/30 is that the annual capital grant will be cash flat from 2026/27 levels, equating to £7.466 million per annum. Over the 4 year forward looking life of the plan (2026/27 to 2029/30), this equates to a total level of General Capital Grant funding of £29.864 million, a decrease of £5.096 million in total over previous planning assumptions. Specific Grants Specific Capital Grant to fund Active Travel Infrastructure of £0.428 million is also included as Midlothian’s estimate of the share of the currently undistributed £40 million Scotland wide capital grant funding for 2026/27. As a planning assumption, this level of grant funding for Active Travel Infrastructure is expected to be maintained across the life of the Plan to 2029/30. Page 140 of 304
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5.3 Borrowing As a result of these revised expenditure and funding forecasts, the possible forecast expenditure and funding levels are as outlined in Table 6 below (with the level of borrowing shown for illustration purposes only). Table 6: General Services Capital Plan 2025/26 to 2029/30 Item 2025/26 Forecast Outturn £000’s 2026/27 Budget £000’s 2027/28 Budget £000’s 2028/29 Budget £000’s 2029/30 Budget £000’s Total Budget £000’s Total Expenditure 59,004 107,038 132,248 101,566 34,436 434,292 Total Funding 22,806 31,069 17,346 19,877 13,013 104,111 Total Borrowing Required 36,198 75,969 114,902 81,689 21,423 330,181 6 Capital Fund The Capital Fund at the start of the 2025/26 financial year was £17.600 million. £7.694 million of this is committed to fund the City Deal, with a further £7.061 million committed to support capital investment. The forecast non-committed capital fund balance at 31 March 2026 is £2.834 million, as shown in table 5 below. Table 7: Capital Fund Item Amount £000’s Balance at 01 April 2025 17,600 Forecast Capital Receipts 2025/26 593 Forecast Balance at 31 March 2026 18,193 Committed to fund City Deal Project -7,694 Committed to support Capital Investment -7,061 Developer Contributions earmarked for specific purposes -604 Forecast non-committed balance at 31 March 2026 2,834 7 Report Implications 7.1 Resource The borrowing required to finance investment for fully approved projects and those under development in 2025/26 to 2029/30 is currently £330.181 million. 7.2 Digital There are no Digital Services implications arising from this report. Page 141 of 304
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7.3 Risk The construction materials supply chain has already been subject to unprecedented disruption through a combination of the Coronavirus (COVID-19) Pandemic, the UK leaving the European Union, the conflict in Ukraine and the global inflationary picture. The Construction Leadership Council (CLC) continues to report shortages of construction materials and forecasts this disruption to continue for the foreseeable future. Ongoing engagement with suppliers confirms that materials shortages, longer lead times and steep price increases are highly likely to continue to impact the supply chain. This potentially exacerbates the inherent risk in the Capital Plan that projects will cost more than estimated thus resulting in additional borrowing, or will be subject to significant delay. Strengthened financial monitoring & governance procedures have been approved by CP&AMB, which will ensure that significant variations can be captured and reported to Programme Boards and CP&AMB so that remedial action can be taken to mitigate the risks. In developing the strategy and taking cognisance of the longer term affordability gap it is clear that a number of potential projects which are currently included will only be able to be progressed if they can be delivered on a spend to save basis (i.e. where income or cost savings more than offset the cost of funding the investment) or where they can be delivered on a cost neutral basis or through alternative funding mechanisms. The Capital Plan includes a provision for the return of contingencies of £11.410 million over the period 2025/26 to 2029/30, equating to 2.5% of all project expenditure. The risk is that projects throughout the plan are unable to deliver this which could be in part due to factors outwith the Council’s control. Capital Plan & Asset Management Board will review the level of return of contingencies against the £11.410 million provision on an ongoing basis to ensure that projects can, where possible, deliver against this provision and that the provision continues to be appropriate. 7.4 Ensuring Equalities There are no equalities issues arising directly from this report. 7.5 Additional Report Implications See Appendix A. Page 142 of 304
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Appendix A: Report Implications A.1 Key Priorities within the Single Midlothian Plan Not applicable. A.2 Key Drivers for Change A.3 Key Delivery Streams Themes addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value Actively managing priorities within the GSCP will ensure that capital investment required to ensure Midlothian Council’s priorities as set out in the Single Midlothian Plan achieves Best Value. A.5 Involving Communities and Other Stakeholders No external consultation has taken place on this report. A.6 Impact on Performance and Outcome Actively managing priorities within the GSCP will ensure that capital investment required to ensure Midlothian Council’s priorities as set out in the Single Midlothian Plan achieves shared outcomes. A.7 Adopting a Preventative Approach Not applicable. A.8 Supporting Sustainable Development Actively managing priorities within the GSCP will ensure that capital investment required to ensure Midlothian Council’s priorities as set out in the Single Midlothian Plan are achieved in a financially sustainable way. Background Papers: Appendix 1 – Summary General Services Capital Plan 2025/26 to 2029/30 Appendix 2 – Detailed General Services Capital Plan Monitoring 2025/26 Quarter 3 Appendix 3 – Detailed General Services Capital Plan Expenditure 2025/26 to 2029/30 Appendix 4 – Projects in Development Page 143 of 304
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Appendix 1: Summary General Services Capital Plan 2025/26 to 2029/30 GENERAL SERVICES CAPITAL PLAN 2025/26 2026/27 2027/28 2028/29 2029/30 Total 2025/26 to 2029/30 Budget Budget Budget Budget Budget Budget £000's £000's £000's £000's £000's £'000 EXPENDITURE - PER PROGRAMME BOARD Children, Young People & Estates 21,998 71,726 106,520 84,850 18,590 303,684 Asset Management 18,593 19,262 17,066 14,250 14,811 83,982 Transport, Energy & Infrastructure 5,821 8,654 2,233 428 428 17,563 Regeneration & Development 13,343 8,604 8,963 5,232 3,050 39,192 Other 465 297 180 180 180 1,302 Provision for return of contingencies -1,194 -1,505 -2,714 -3,374 -2,624 -11,410 Total Expenditure 59,004 107,038 132,248 101,566 34,436 434,292 FUNDING Government Grants - General Capital Grant 8,782 7,466 7,466 7,137 7,466 38,317 Government Grants - Early Years 1,082 2,055 1,366 53 0 4,557 Government Grants - Others 6,280 550 428 428 428 8,114 City Deal Funding (Scottish Government) 1,137 6,936 1,002 0 0 9,075 Receipts from Sales 593 525 200 200 200 1,718 Receipts from Sales transferred to General Fund Reserve -593 -525 -200 -200 -200 -1,718 Developer Contributions - Learning Estate Strategy 2,811 12,828 5,630 11,481 4,341 37,092 Developer Contributions - Learning Estate Retrospective 750 750 750 750 750 3,750 Developer Contributions - A701/702 0 0 676 0 0 676 Developer Contributions - Other Projects 1,950 484 28 28 28 2,518 Other Contributions 14 0 0 0 0 14 Total Available Funding 22,806 31,069 17,346 19,877 13,013 104,111 Total Borrowing Required 36,198 75,968 114,902 81,689 21,423 330,181 Page 144 of 304
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Appendix 2 Detailed General Services Capital Plan Monitoring 2025/26 Quarter 3 Rephased Rephased 2025/26 2025/26 2025/26 2025/26 2025/26 2025/26 GENERAL SERVICES CAPITAL PLAN Budget Budget Actual Forecast Variance Carry P9 Monitoring Q2 Q3 to P9 Outturn Q3 Q3 Forward Q3 £000's £000's £000's £000's £000's £000's CHILDREN, YOUNG PEOPLE & ESTATES PROGRAMME BOARD FULLY APPROVED PROJECTS Education - Primary Woodburn Primary 9 class & activity hall extension 511 376 13 225 (151) 135 Easthouses Primary School 300 300 0 300 - - Mayfield & St. Luke's School Campus 12,223 12,223 5,329 12,223 - - Burnbrae Primary - Conversion of ASN to GP Space 26 26 - - (26) - Modular Units 2023/24 8 8 8 8 - - Bilston Primary School Extension 1,378 1,270 215 1,270 - 108 Roslin Primary School Modular Units 538 538 485 538 - - Education - Secondary Lasswade High - Enhancement of Faciltiies to Support School Capacity 452 452 - - (452) - Beeslack CHS Replacement 1,699 1,684 158 1,684 - 15 Penicuik High School 7,702 4,472 2,346 4,472 - 3,230 Shawfair All-through Campus 470 470 87 470 - - Education - ASN Hawthornden Primary - ASN Unit 4 4 21 21 17 - ASN Provision - Social Complex Needs 212 212 134 212 - - Education - Early Years Vogrie Outdoor Early Learning Centre 108 108 1 108 - - Other Outdoor Spaces 8 8 8 8 - - Education - Primary - Projects near completion Paradykes Primary Replacement 5 5 139 139 134 - New Danderhall Primary hub 64 64 (53) 64 - - Acoustic Upgrades 91 91 - 91 - - Education - General Gore Glen Primary - Landscaping Works - 63 63 63 - - Learning Estate Strategy: Development Budget 200 100 6 100 - 100 TOTAL - CHILDREN, YOUNG PEOPLE & ESTATES PROGRAMME BOARD26,000 22,475 8,960 21,997 (478) 3,588 Page 145 of 304
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Rephased Rephased 2025/26 2025/26 2025/26 2025/26 2025/26 2025/26 GENERAL SERVICES CAPITAL PLAN Budget Budget Actual Forecast Variance Carry P9 Monitoring Q2 Q3 to P9 Outturn Q3 Q3 Forward Q3 £000's £000's £000's £000's £000's £000's ASSET MANAGEMENT PROGRAMME BOARD Digital Business Applications 137 38 14 38 - 99 Front Office - Hardware, Software & Services 625 688 158 499 (189) (63) Back Office - Hardware, Software & Services 35 39 - 39 - (4) Network, Software & Services 185 94 0 94 - 92 Schools - Hardware, Software & Services 400 440 46 293 (147) (40) Recharge of Staffing 125 - 125 - - 125 Digital: Equipped for Learning 2,489 2,239 881 1,510 (729) 250 Roads & Street Lighting Street Lighting and Traffic Signal Upgrades - New 969 969 651 969 - - Footway & Footpath Asset Management Plan - New 518 518 - 518 - - Road Upgrades - Asset Management Plan 1,986 1,986 862 1,986 - - Roads: Resurface Residential Schemes 2,674 2,674 1,227 2,674 - - Roads Asset Management Plan - Temple Ground Stabilisation6 6 6 - - Fleet Vehicle & Plant Replacement Programme 4,989 4,989 2,416 4,691 (298) - Property Property Upgrades 1,613 2,285 1,411 2,272 (13) (672) Property Upgrades - LES 843 843 121 843 - - Open Spaces / Play Areas Outdoor Play Equipment - Rosewell 43 43 43 43 - - Roslin Wheeled Sports Facility 59 59 59 59 - - Millerhill Park Asphalt Path 5 5 5 5 - - Welfare Park, Newtongrange 39 - - - - 39 Play Park Renewal 2023/24+ 80 80 70 80 - - Play Park Renewal 2024/25 315 142 29 142 - 173 Nature Restoration Fund 2023/24 24 24 20 24 - - Contaminated Land 70 70 49 70 - - Public Sector Housing Grants 291 291 106 291 - - Sport & Lesiure Tennis Court Upgrades 42 42 33 42 - - Gym Refurbishment & Transformation 737 737 37 737 - Bonnyrigg Rose Football Club: Engineering & Ground Works101 101 88 101 - - Flotterstone Car Park Infrastructure & Charging 16 16 - 16 - - UKSPF: Infrastructure Improvements 2025/26: Birkenside & Pathhead Pavillions330 330 8 330 - - Adult Social Care Assistive Technology 58 58 41 58 - - Analogue to Digital Transition 501 501 164 164 (337) - TOTAL - ASSET MANAGEMENT PROGRAMME BOARD20,305 20,306 8,661 18,593 (1,713) (1) Page 146 of 304
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Rephased Rephased 2025/26 2025/26 2025/26 2025/26 2025/26 2025/26 GENERAL SERVICES CAPITAL PLAN Budget Budget Actual Forecast Variance Carry P9 Monitoring Q2 Q3 to P9 Outturn Q3 Q3 Forward Q3 £000's £000's £000's £000's £000's £000's TRANSPORT, ENERGY & INFRASTRUCTURE PROGRAMME BOARD Transport A701 Relief Road: Bush Loan Junction 431 410 273 410 - 21 A701 Relief Road: A701 Active Travel Corridor 238 219 147 219 - 19 A701 Relief Road: Phases 4-8 556 508 248 508 - 48 Sustainable Transport A7 Urbanisation 1,246 1,246 885 1,246 - - Active Travel Infrastructure: Tier 1 1,045 1,045 140 1,045 - - Active Travel Infrastructure: Tier 2 1,220 1,220 (102) 1,220 - - Bus Infrastructure Fund: Tier 1 192 192 5 192 - Bus Infrastructure Fund: Tier 2 (Part 1): Destination Hillend Bus Stop44 44 - 44 - Bus Infrastructure Fund: Tier 2 (Part 2): Urban Traffic Control735 735 - 735 - - Sustrans - People & Places Equipment Purchases 197 197 - 197 - - Community Bus Fund 4 4 - 4 - - Road Safety Improvement Fund - - 83 - - - TOTAL - TRANSPORT, ENERGY & INFRASTRUCTURE PROGRAMME BOARD5,909 5,821 1,679 5,821 - 88 REGENERATION & DEVELOPMENT PROGRAMME BOARD Regeneration Place Based Investment Fund 2021/22 276 276 1 217 (59) - Place Based Investment Fund 2022/23 85 85 4 85 - - Place Based Investment Fund 2023/24 118 118 - 118 - - Rosewell Development Trust - The Steading Infrastructure Upgrades55 55 13 55 - - Penicuik THI: Public Realm Scheme 171 171 2 171 - - Development - Destination Hillend 1,120 1,120 875 1,120 - - Midlothian House RetroFit 4,936 4,150 487 4,150 - 786 Highbank Intermediate Care Reprovisioning 4,626 4,626 3,579 4,626 - - Day Care Centre 494 494 198 494 - - General Fund Share of Extra Care Housing 107 107 76 107 - - Recycling Improvement Fund (Stobhill Recycling Depot)2,530 2,200 81 2,200 - 330 TOTAL - REGENERATION & DEVELOPMENT PROGRAMME BOARD14,518 13,402 5,316 13,343 (59) 1,116 Page 147 of 304
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Rephased Rephased 2025/26 2025/26 2025/26 2025/26 2025/26 2025/26 GENERAL SERVICES CAPITAL PLAN Budget Budget Actual Forecast Variance Carry P9 Monitoring Q2 Q3 to P9 Outturn Q3 Q3 Forward Q3 £000's £000's £000's £000's £000's £000's OTHER (PROGRAMME BOARD NOT YET DEFINED) PLACE Digital Council Hybrid Meetings 16 16 - 16 - - Property/Development - Midlothian & Fairfield House Shower Upgrades 5 5 3 5 - - Millerhill Pavilion 7 7 - 7 - - PEOPLE & PARTNERSHIPS - Education - Free School Meal Provision 186 186 - 186 - - Communities & Partnerships - Members Environmental Improvements 300 250 148 250 - 50 TOTAL NOT ALLOCATED TO PROGRAMME BOARDS515 465 151 465 - 50 COST OF SALES Disposal Costs - - 2 - - - TOTAL COST OF SALES - - 2 - - - SUBTOTAL - PRE RETURN OF CONTINGENCIES 67,284 62,448 24,747 60,198 (2,250) 4,836 Provision for Return of Contingencies (1,194) (1,194) - (1,194) - - GENERAL SERVICES CAPITAL PLAN TOTAL 66,090 61,254 24,747 59,004 (2,250) 4,836 Page 148 of 304
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Appendix 3 Detailed General Services Capital Plan Expenditure 2025/26 to 2029/30 GENERAL SERVICES CAPITAL PLAN 2025/26 2026/27 2027/28 2028/29 2029/30 Total 2025/26 to 2029/30 Budget Budget Budget Budget Budget Spend £000's £000's £000's £000's £000's £'000 CHILDREN, YOUNG PEOPLE & ESTATES PROGRAMME BOARD FULLY APPROVED PROJECTS Education - Primary Woodburn Primary 9 class & activity hall extension 225 135 - - - 360 Easthouses Primary School 300 - - - - 300 Mayfield & St. Luke's School Campus 12,223 27,799 2,927 478 - 43,427 Modular Units - 2023/24 8 - - - - 8 Bilston Primary School Extension 1,270 2,012 - - - 3,282 Roslin Primary School - Modular Units 538 13 - - - 551 Education - Secondary Beeslack CHS Replacement 1,684 9,993 24,820 57,283 16,430 110,210 Penicuik High School 4,472 8,212 33,290 6,850 684 53,508 Shawfair All-through Campus 470 21,999 44,000 20,000 1,476 87,945 Education - ASN Hawthornden Primary - ASN Unit 21 - - - - 21 ASN Provision - Social Complex Needs 212 - - - - 212 Education - Early Years Mount Esk Nursery School Replacement @ Hawthornden - 1,263 1,283 39 - 2,585 Vogrie Outdoor Early Learning Centre 108 - - - - 108 Other Outdoor Spaces 8 - - - - 8 Education - Primary - Projects near completion Paradykes Primary Replacement 139 - - - - 139 New Danderhall Primary hub 64 - - - - 64 Acoustic Upgrades 91 - - - - 91 Education - General Gore Glen Primary - Landscaping Works 63 - - - - 63 Learning Estate Strategy: Development Budget 100 300 200 200 - 800 TOTAL - CYPP FULLY APPROVED 21,998 71,726 106,520 84,850 18,590 303,684 Page 149 of 304
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GENERAL SERVICES CAPITAL PLAN 2025/26 2026/27 2027/28 2028/29 2029/30 Total 2025/26 to 2029/30 Budget Budget Budget Budget Budget Spend £000's £000's £000's £000's £000's £'000 ASSET MANAGEMENT PROGRAMME BOARD Digital Business Applications 38 140 75 75 75 403 Front Office - Hardware, Software & Services 499 334 325 250 250 1,658 Back Office - Hardware, Software & Services 39 131 80 250 250 750 Network, Software & Services 94 735 150 250 250 1,478 Schools - Hardware, Software & Services 293 292 804 250 250 1,888 Recharge of Staffing - 329 136 - - 465 Digital: Equipped for Learning Phase 1 1,510 250 - - - 1,760 Digital: Equipped for Learning Phase 2 - 451 1,053 987 831 3,322 Roads & Street Lighting Street Lighting Upgrades 969 1,000 1,000 1,000 1,000 4,969 Footway & Footpath Network Upgrades 518 500 500 500 500 2,518 Road Upgrades 1,986 1,050 1,500 1,500 1,500 7,536 Roads: Resurface Residential Schemes 2,674 3,250 2,500 - - 8,424 Roads Asset Management Plan - Temple Ground Stabilisation 6 303 - - - 309 Fleet Vehicle & Plant Replacement Programme 4,691 3,912 2,694 2,812 3,318 17,427 Property Property Upgrades 2,272 4,793 5,661 5,865 6,076 24,667 Property Upgrades - LES 843 - - - - 843 Open Spaces / Play Areas Outdoor Play Equipment - Rosewell 43 - - - - 43 Roslin Wheeled Sports Facility 59 - - - - 59 Mauricewood Road Bus Shelter - 4 - - - 4 Millerhill Park Asphalt Path 5 - - - - 5 Welfare Park, Newtongrange - 39 - - - 39 Play Park Renewal 2023/24+ 80 - - - - 80 Play Park Renewal 2024/25 142 405 - - - 547 Play Park Renewal 2025/26 - 495 - - - 495 Callander Park Play Equipment 19 - - - 19 Nature Restoration Fund 2023/24 24 - - - - 24 Contaminated Land 70 70 70 70 70 350 Public Sector Housing Grants 291 291 291 291 291 1,455 Sport & Lesiure Tennis Court Upgrades 42 - - - - 42 Gym Refurbishment & Transformation 737 - - - - 737 Bonnyrigg Rose Football Club: Engineering & Ground Works 101 - - - - 101 Flotterstone Car Park Infrastructure & Charging 16 - - - - 16 UKSPF: Infrastructure Improvements 2025/26: Birkenside & Pathhead Pavillions 330 - - - - 330 Adult Social Care Assistive Technology 58 468 227 150 150 1,053 Analogue to Digital Transition 164 - - - - 164 TOTAL - ASSET MANAGEMENT PROGRAMME BOARD 18,593 19,262 17,066 14,250 14,811 83,982 Page 150 of 304
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GENERAL SERVICES CAPITAL PLAN 2025/26 2026/27 2027/28 2028/29 2029/30 Total 2025/26 to 2029/30 Budget Budget Budget Budget Budget Spend £000's £000's £000's £000's £000's £'000 TRANSPORT, ENERGY & INFRASTRUCTURE PROGRAMME BOARD Transport A701 Relief Road: Bush Loan Junction 410 5,537 119 - - 6,066 A701 Relief Road: A701 Active Travel Corridor 219 1,399 1,686 - - 3,304 A701 Relief Road: Phases 4-8 508 - - - - 508 Sustainable Transport A7 Urbanisation 1,246 250 - - - 1,496 Active Travel Infrastructure: Tier 1 1,045 428 428 428 428 2,757 Active Travel Infrastructure: Tier 2 1,220 - - - - 1,220 Bus Infrastructure Fund: Tier 1 192 - - - - 192 Bus Infrastructure Fund: Tier 2 (Part 1): Destination Hillend Bus Stop 44 - - - - 44 Bus Infrastructure Fund: Tier 2 (Part 2): Urban Traffic Control 735 - - - - 735 Sustrans - People & Places Equipment Purchases 197 - - - - 197 Community Bus Fund 4 - - - - 4 Road Safety Improvement Fund - - - - - - FCC Zero Waste - Heat Offtake Facility - 1,040 - - - 1,040 TOTAL - TRANSPORT, ENERGY & INFRASTRUCTURE PROGRAMME BOARD5,821 8,654 2,233 428 428 17,563 REGENERATION & DEVELOPMENT PROGRAMME BOARD Regeneration Place Based Investment Fund 2021/22 217 - - - - 217 Place Based Investment Fund 2022/23 85 - - - - 85 Place Based Investment Fund 2023/24 118 - - - - 118 Rosewell Development Trust - The Steading Infrastructure Upgrades 55 - - - - 55 Penicuik THI: Public Realm Scheme 171 - - - - 171 Development Destination Hillend 1,120 1,800 6,968 5,232 3,050 18,170 Midlothian House RetroFit 4,150 6,105 1,995 - - 12,250 Shawfair Town Centre Land Purchase - - - - - - Highbank Intermediate Care Reprovisioning 4,626 341 - - - 4,967 Day Care Centre 494 16 - - - 510 General Fund share of Extra Care Housing 107 12 - - - 119 Recycling Improvement Fund (Stobhill Recycling Depot) 2,200 330 - - - 2,530 TOTAL - REGENERATION & DEVELOPMENT PROGRAMME BOARD 13,343 8,604 8,963 5,232 3,050 39,192 OTHER PLACE Digital Council Hybrid Meetings 16 - - - - 16 Property/Development Midlothian & Fairfield House Shower Upgrades 5 - - - - 5 Millerhill Pavilion 7 - - - - 7 PEOPLE & PARTNERSHIPS Education Free School Meal Provision 186 - - - - 186 Communities & Partnerships Members Environmental Improvements 250 297 180 180 180 1,087 TOTAL NOT ALLOCATED TO PROGRAMME BOARDS 465 297 180 180 180 1,302 COST OF SALES Disposal Costs 2 - - - - 2 TOTAL COST OF SALES 2 - - - - 2 SUBTOTAL - PRE RETURN OF CONTINGENCIES 60,198 108,543 134,962 104,940 37,059 445,702 Provision for Return of Contingencies (1,194) (1,505) (2,714) (3,374) (2,624) (11,410) GENERAL SERVICES CAPITAL PLAN TOTAL 59,004 107,038 132,248 101,566 34,436 434,292 Page 151 of 304
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Appendix 4 – Projects in Development The General Services Capital Plan (GSCP) includes all projects that are currently fully approved. In addition, the following projects are at the development stage and will be brought forward to Council for full approval and adoption in the GSCP if the projects meet the Council’s statutory & policy drivers and an affordable business case has been developed. The following list is not an exhaustive list of projects but represents a wider suite of projects to those already fully approved. Projects in Development Children, Young People and Partnerships Programme Board Gorebridge High School Mauricewood Primary School Extension Lasswade High School – Enhancement of Core & Community Capacity Conversion of Mount Esk Nursery School to ASN provision (for Lasswade High School) St. David’s Primary Extension Asset Management Board Temple Ground Stabilisation B6372 Arniston Embankment Stabilisation Regeneration & Development Programme Board Stobhill Depot Masterplan Hopefield Industrial Estate Woodburn Community Hub Vogrie Renewal Strategy Masterplan Gorebridge Library Relocation Bereavement Campus Transport, Energy & Infrastructure Programme Board A701 Relief Road – Phases 4-8 Page 152 of 304
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Midlothian Council Tuesday 24 February 2026 Item No 8.6 Treasury Management and Investment Strategy 2026/27 and Prudential Indicators Report by David Gladwin, Chief Financial Officer and Section 95 Officer Report for Decision 1 Recommendations Council is recommended to:- a) Approve the restriction of the Authorised Limit to the value of the Capital Financing Requirement at 31 March 2027 (£693.930 million); b) Note that there are no material changes proposed to the Treasury Management and Investment Strategy (TMIS) for 2026/27 from the strategy currently in place, other than to update the Prudential Indicators (Section 5 and Appendix 2), to reflect the revised capital plans; c) Note the continued use of the Asset Life method for the repayment of all loans fund advances as outlined in Section 6; and d) Accordingly approve the Treasury Management and Investment Strategy for 2026/27. 2 Purpose of Report/Executive Summary The purpose of this report to Council is to provide an update on the implementation of the Council’s TMIS 2025/26, and to make recommendations to facilitate consideration of the 2026/27 Strategy, the Prudential and Treasury indicators contained therein, and the approach to the statutory repayment of loans fund advances. In accordance with the Treasury Management Code of Practice, the annual Treasury Management & Investment Strategy (TMIS) & Prudential Indicators report is required to be adequately scrutinised before being recommended to the Council. For Midlothian, this role is undertaken by the Audit Committee, with this report being presented to Audit Committee on 23 February 2026. Any revisions arising from Audit Committee consideration of the report on 23 February 2026 will be verbally updated to Council before discussing the report on 24 February 2026. Date: 4 February 2026 Report Contact: Gary Thomson, Senior Finance Business Partner gary.thomson@midlothian.gov.uk Page 153 of 304
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3. Update on implementation of TMIS for 2025/26 3.1 Borrowing The Council’s borrowing position as set out in the 2025/26 Treasury Management Mid-Year Review Report was £379.445 million at 31 March 2025, and six months later was £418.575 million on 30 September 2025. The principal source of borrowing is the UK Debt Management Office’s Public Works Loans Board (PWLB) and fixed rate loans are taken at a time and tenure which takes cognisance of the PWLB rates (derived from the UK Gilts market) and the management of maturity risk in the long term across the Council’s loan portfolio. The Council’s loan portfolio, as at 30 January 2026, is shown in table 1 below:- Table 1: Current Loan Portfolio as at 30 January 2026 Loan Type Principal Outstanding £000’s Weighted Average Rate PWLB Annuity 332 8.92% PWLB Maturity 340,283 3.12% PWLB EIP 67,542 4.24% LOBO 15,000 4.63% Market Loans 19,866 3.04% Total Loans 443,024 3.34% 3.2 Deposits The Council’s position for funds on deposit fluctuates on a daily basis, with the 2025/26 Treasury Management Mid-Year Review Report setting out the position at 31 March 2025 of £26.484 million and six months later on 30 September 2025, at £39.910 million. The position at 30 January 2026, as set out in Table 2 below, totals £30.372 million. Table 2: Current Deposits as at 30 January 2026 Deposit Type Principal Outstanding £000’s Weighted Average Rate Bank Call Accounts 683 3.51% Money Market Funds 19,689 3.88% Bank Fixed Term Deposits 10,000 4.18% Total Deposits 30,372 3.97% The Council’s current deposit portfolio is broadly reflective of the wider UK Local Authority position, as noted in the Treasury Management & Annual Investment Strategy Statement – 2026/27 Detailed in Appendix 3, Section 4.4. Page 154 of 304
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4. Treasury Management & Investment Strategy 2026/27 4.1 Main Objectives of TMIS 2026/27 The objectives of the proposed TMIS are:- • To secure long-term borrowing to fund capital investment, through locking in to long-term interest rates and de-risking the Council’s Capital Financing Requirement (CFR); • To ensure short-term liquidity to manage the Council’s day-to- day cashflow. This is achieved through the utilisation of instant access Money Market Fund and Bank Accounts, with the amount held in these reflecting the Council’s level of working capital and fluctuating throughout the year due to a number of factors; • To partly (but not fully) cash-back the Council’s usable reserves (see Section 4.4 – Investment Strategy), to allow the Council to defer new borrowing until interest rates are expected to drop. In addition, approval is sought to restriction the Authorised Limit to the value of the Capital Financing Requirement at 31 March 2027 (£693.930 million) (see Section 5 – Prudential Indicators), There are no changes recommended to the Permitted Investments. More detail on the borrowing and investment strategy for 2026/27 is provided in Sections 4.2, 4.3 and 4.4 below. 4.2 Borrowing Requirement 2025/26 to 2029/30 The Council’s capital plans contain projections of capital expenditure and income over the forthcoming financial years. Any expenditure not financed directly by income, requires funding through borrowing. The projected borrowing requirement arising from the Council’s Capital Plans and the maturing long-term loans that require to be refinanced, over the period 2025/26 to 2029/30 is shown in table 3 overleaf:- Page 155 of 304
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Table 3: Total Borrowing Requirement over the period 2025/26 to 2029/30 2025/26 £000’s 2026/27 £000’s 2027/28 £000’s 2028/29 £000’s 2029/30 £000’s Total £000’s Capital Expenditure General Services 59,004 107,038 132,248 101,566 34,436 434,292 HRA 59,999 88,419 69,783 47,355 48,724 314,280 Total Capital Expenditure 119,003 195,457 202,031 148,921 83,160 748,572 Total Available Financing -33,374 -38,710 -32,453 -32,156 -20,054 -156,747 Principal Debt Repayments -10,884 -12,018 -14,472 -16,734 -18,567 -72,675 Capital Expenditure less available Financing 74,745 144,729 155,106 100,031 44,539 519,150 Maturing Long-term Loans 16,424 19,425 19,690 39,697 29,697 124,933 Total Borrowing Requirement 91,169 164,153 174,796 139,728 74,236 644,083 Borrowing secured 2025/26 -80,000 0 0 0 0 -80,000 Total Remaining Borrowing Requirement 11,169 164,153 174,796 139,728 74,236 564,083 4.3 Borrowing Strategy for remainder of 2025/26 and 2026/27 Strategy for remainder of 2025/26 The approved Treasury Management Strategy for borrowing for the remainder of 2025/26 is to fund the in-year Capital Financing Requirements from PWLB for a relatively shorter-term duration (3-5 year debt tenors), to navigate past the current interest rate hump, with gilt yields expected to gradually ease throughout the course of the next 12-36 months. This strategy remains prudent given current & forecast interest rates. The Council’s external loan debt at 31 March 2026 is projected to be £458.024 million. Based on the Council’s historic and current approved Capital Plans, the Underlying Borrowing Requirement (UBR) – which is the Council’s underlying need to borrow for capital purposes (excluding the long-term liability arising from PFI/DBFM projects) – at 31 March 2026 is expected to equate to £549.201 million (see Appendix 2, Table 2.3). This means that the Council is expected to be £91.177 million (17%) under-borrowed at the end of the 2025/26 financial year i.e. the Council has funded the majority (83%) of its underlying borrowing requirement as at 31 March 2026. In the current economic climate, this is a prudent approach which balances (a) de-risking the longer term borrowing requirement at current longer term borrowing rates; against (b) the current year and forthcoming financial year budget projections; and is in line with the majority of other Scottish Local Authorities. Page 156 of 304
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Strategy for 2026/27 Looking forward, as can been noted from Table 3 above, the Council has a significant borrowing requirement across the forthcoming four financial years (2026/27 to 2029/30). The Underlying Borrowing Requirement, driven by the Council’s approved capital plans, is projected to rise to £993.606 million by 31 March 2030 (see Appendix 2, Section 2.3) – more than double the current external debt portfolio value of £443.024 million. The profile of this, and the projected external loan portfolio to fund the Underlying Borrowing Requirement over the period 2025/26 to 2029/30, is shown in graphical format below. Figure 1: Projected Loan Portfolio & Underlying Borrowing Requirement Interest Rates The current PWLB yield curve is bell shaped with the low point in the curve at the time of writing sitting at the shortest tenors (1-3 years @ c. 4.50%; certainty rate) with rates trending upwards towards the 25- 30 year tenor (high point of 6.03%; certainty rate) before easing back slightly to sit at c. 5.79% (certainty rate) in the 50 year duration. Current PWLB rates have generally increased by c. 20-30bps across the medium-longer end of the interest rate curve from levels reported at the time of the 2025/26 TMIS to Council in February 2025, and as noted in the TM Mid-Year Review Report to Council in December 2025, are expected to remain elevated for longer, particularly at the medium-longer end of the curve. The forward-looking Interest Rate Forecast from the Council’s Treasury Advisers, MUFG Corporate Markets, is shown in Table 4 below, with further commentary on this is provided in Appendix 3 Section 3.3 and Appendix 5.1. Page 157 of 304
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Table 4: MUFG Interest Rate Forecasts As can be noted in Table 4 above, the yield curve is expected to remain bell shaped over the short-medium term, with a gradual shift downwards of the entire curve by c. 30-40bps over the next 12 months, a further 10-20bps over the subsequent 12 months and a further 10bps in the medium/longer end over the following 12 months of the forecast period (so 50-60bps total). This is forecast to bring longer-term borrowing rates down from between 5.79%-6.03%, to between:- • 5.60%-5.80% by March 2026; • 5.30%-5.50% by March 2027; and • 5.10%-5.30% by March 2028. Borrowing Strategy The funding of the Council’s in-year and forward CFR is typically for infrastructure with long asset lives (50-60 years), and the tenor of PWLB and market loans are typically drawn with this in mind. Given the Council’s borrowing requirement across 2025/26 to 2029/30 as outlined in Table 3, and the Interest Rate Forecasts as outlined in Table 4, consideration for any new borrowing, to fund the Council’s CFR, will seek to balance:- a) the security/certainty of current relatively high longer-term borrowing rates of upwards of 5.60% in the 30-50 year duration (which are forecast to drop by 30bps within one year and a total of 50bps within 24 months) and the potential additional budgetary pressure that this brings in both the short/medium and longer term; with b) the option to borrow initially for a shorter-term duration from PWLB or other markets, for 3 to 5 years (at say c. 3.80-4.20% at the HRA rate), to allow the Council to fund the immediate in- year borrowing requirement. Based on current interest rate forecasts (see Appendix 3 Section 3.3), this would then allow the Council the option to refinance this borrowing at initial 3-5 year maturity with less expensive, longer term borrowing, e.g. a 45 to 47 year tenor in, say, 36 months at a forecast rate of c. 4.60-4.80% (HRA Rate). Any further long-term borrowing that is undertaken to finance the current & future year capital plans is expected to be sourced by Bank Rate 3.75% 3.50% 3.50% 3.25% 3.25% 3.25% 3.25% 3.25% 3.25% 3.25% 3.25% 3.25% 3.25% 3 month average earnings 3.80% 3.50% 3.50% 3.30% 3.30% 3.30% 3.30% 3.30% 3.30% 3.30% 3.30% 3.30% 3.30% 6 month average earnings 3.80% 3.50% 3.50% 3.40% 3.30% 3.30% 3.30% 3.30% 3.30% 3.30% 3.30% 3.30% 3.30% 12 month average earnings 3.90% 3.60% 3.60% 3.50% 3.40% 3.50% 3.50% 3.50% 3.50% 3.50% 3.60% 3.60% 3.60% 5 year PWLB 4.60% 4.50% 4.30% 4.20% 4.10% 4.10% 4.10% 4.10% 4.10% 4.10% 4.10% 4.10% 4.10% 10 year PWLB 5.20% 5.00% 4.90% 4.80% 4.80% 4.70% 4.70% 4.70% 4.70% 4.60% 4.60% 4.60% 4.70% 25 year PWLB 5.80% 5.70% 5.60% 5.50% 5.50% 5.40% 5.30% 5.30% 5.30% 5.20% 5.20% 5.20% 5.20% 50 year PWLB 5.60% 5.50% 5.40% 5.30% 5.30% 5.20% 5.10% 5.10% 5.10% 5.00% 5.10% 5.00% 5.00% MUFG Corporate Markets Interest Rate View Mar-28 Jun-28 Sep-28 Dec-28 Mar-29Mar-26 Jun-26 Sep-26 Dec-26 Dec-27Sep-27Jun-27Mar-27 Page 158 of 304
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drawing new PWLB loans at the Certainty Rate (which has been available to the Council since 2012 and is priced at Gilts+80bps), and/or the HRA rate. The HRA rate is available to all Councils to fund HRA capital expenditure, at a rate that is priced at Gilts+40bps, with an extension of the availability of this rate beyond 31 March 2026 (and so into financial year 2026/27) announced by the UK Government’s Ministry of Housing, Communities & Local Government (MHCLG) on 28 January 20261. Other market-led longer-term borrowing opportunities will be benchmarked against the prevailing PWLB rates to assess whether they offer value to the Council. Council officers, in conjunction with MUFG, will continue to monitor daily long-term borrowing rates in order to take advantage of any dips in the market or to de-risk any change in the medium-longer term forecast for gilt yields. Forward Borrowing The opportunity also continues to exist to consider further loans on a ‘forward dealing’ basis, and officers will continue to explore the viability of these loans as part of securing the long term borrowing required to meet the Council’s Underlying Borrowing Requirement. Review of Capital Plans & Impact on Borrowing Strategy Both the General Services and HRA capital programmes are being kept under regular review due to the effects of inflationary pressures, shortages of materials and labour, and the ratios of financing costs to the net revenue streams. The Council’s borrowing strategy will, therefore, also be regularly reviewed and then revised, if necessary, to achieve optimum value and risk exposure in the medium-long-term. Debt Rescheduling As noted in the Mid-Year Review Report, the Council elected to reschedule (prematurely repay) PWLB debt as follows:- • £12.700 million PWLB Maturity loan, original drawn date of 2 August 2007 and existing maturity date of 15 May 2053, at a fixed interest rate of 4.55% Any further debt rescheduling will be considered when the difference between the refinancing rate and the redemption rate is most advantageous and the situation will be continually monitored in order to take advantage of any perceived anomalies in the yield curve. The reasons for any rescheduling taking place would include: - the generation of cash savings at minimum risk; - to reduce the average interest rate; - to amend the maturity profile and/or the balance of volatility of the debt portfolio. Council officers will explore debt rescheduling opportunities with MUFG Treasury Solutions; with only prudent and affordable debt 1 Thousands more families to get warm, secure social homes - GOV.UK Page 159 of 304
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rescheduling that considers both the short and medium-longer term impact being considered. 4.4 Investment Strategy for remainder of 2025/26 and 2026/27 No changes are proposed to the Investment Strategy from that approved by Council in the 2025/26 TMIS. As noted in Section 4.1, the Council is partly (but not fully) cash backing its usable reserves, instead using these balances to allow the deferral of borrowing at the current high interest rates payable, to allow the Council to most effectively navigate past the current interest rate plateau of the next 36 months, when rates on longer term borrowing are expected to drop by 50-60bps. All deposits will be placed with high creditworthy counterparties in accordance with the approved creditworthiness policy as outlined in Appendix 1, with a tenor reflective of the expected drawdown of useable reserve forecasts, and at a yield commensurate with this. Environmental, Social & Governance factors will also be considered; however as noted in previous Treasury Management Strategy reports the Governance element (and associated security of deposit) remains the primary criteria for Midlothian. For further detail see Appendix 3, Section 4. The list of Permitted Investments in Appendix 1 remains unchanged from that approved by Council in the 2025/26 TMIS. As required by the CIPFA Treasury Management Code, Local authorities “must not borrow to invest for the primary purpose of financial return.” Midlothian Council does not and has not borrowed to invest for the primary purpose of financial return. 5 Prudential Indicators – Midlothian Council The Prudential Code for Capital Finance in Local Authorities requires that Councils can demonstrate that their Capital Plans are affordable, prudent and sustainable, taking into account the financial provisions made in current and future revenue budgets; and that Treasury Management decisions are taken in accordance with good practice. The Prudential Indicators that Councils need to consider relate to both actual, historic outcomes, and future estimated outcomes (covering the same period as the Council’s Capital Plans), as follows:- • Actual outcomes for 2024/25; • Revised estimates of the 2025/26 indicators; and • Estimates of indicators for 2026/27 to 2029/30. The Prudential Indicators required by the Code are listed individually in Appendix 2. Page 160 of 304
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The key Prudential Indicators relating to the Underlying Borrowing Requirement, the expected Gross External Debt, and the proposed Authorised Limit, are shown in graphical format below. Figure 4: Prudential Indicators for Borrowing The Capital Financing Requirement (CFR) denotes the Council’s underlying need to borrow for capital purposes. The CFR includes borrowing arising as a result of the Council’s Capital Plans, plus the long-term liability arising from the Council’s PPP/DBFM contracts. The Underlying Borrowing Requirement as shown in Figure 4 above strips out the latter of these (long-term liability arising from the Council’s PPP/DBFM contracts) from the CFR. The Authorised Limit for Borrowing represents the limit beyond which borrowing is prohibited, and needs to be set and revised by Members. It is the expected maximum borrowing need with some headroom for unexpected movements. The Authorised Limit for Borrowing for the 2026/27 financial year has been calculated to equate to the maximum value of the Underlying Borrowing Requirement in 2026/27. This equates to £693.930 million as outlined in Table 6 below. Table 6: Authorised Limit for Borrowing: Calculation Authorised Limit for Borrowing Amount £000’s CFR – General Services (31 March 2027) 296,175 CFR – HRA (31 March 2027) 397,755 Proposed Authorised Limit for Borrowing 693,930 Council is therefore asked to approve an authorised limit for borrowing of £693.930 million (see Appendix 2, Section 4.2). 458,024 611,479 775,282 876,652 922,002 £- £100,000 £200,000 £300,000 £400,000 £500,000 £600,000 £700,000 £800,000 £900,000 £1,000,000 2025/26 2026/27 2027/28 2028/29 2029/30 £000's Financial Year Prudential Indicators for Borrowing External Debt Authorised Limit Underlying Borrowing Requirement / Operational Boundary Page 161 of 304
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6 Statutory repayment of loans fund advances Under the Local Government Finance Circular 7/2016, Council is required to set out its policy for the statutory repayment of loans fund advances prior to the start of each financial year. The repayment of loans fund advances ensures that the Council makes a prudent provision each year to pay off an element of the accumulated loans fund advances made in previous financial years. 6.1 New Assets In accordance with Finance Circular 7/2016, for all advances made in relation to the provision of a new asset, the policy will be to defer the commencement of the first principal repayment of the loans fund advance until the financial year following the one in which the asset is first available for use. 6.2 Prudent Repayment of Loans Fund Advances Finance Circular 7/2016 provides a variety of options to Councils for the profiling of the repayment of each loans fund advance, so long as the principle of prudence is maintained. For the 2026/27 financial year, there are 3 options available: (a) Asset Life method; (b) Depreciation method; and (c) Funding/income profile method. In line with the policy adopted in 2025/26, the Asset Life method shall be used for those assets in Table 7. Table 7: Asset Classes adopting the “Asset Life” method Infrastructure Current Loans Fund Advance Period New Primary Schools/Extensions 60 New Leisure Centres 60 New Offices 60 Road Upgrades 50 Street Lighting Columns 50 Structures/Bridges 50 Footway/Cyclepaths 50 Town Centre Environmental Improvements 50 New Care Homes 45 Children’s Play Equipment 20 The annual repayments under the “Asset Life” method for those asset classes as noted above will be calculated using the asset lives and will use the annuity method, in line with previous years. The annuity interest rate that will be used to calculate loans fund principal repayments under the “Asset Life” method will be the in-year loans fund rate, which for 2026/27 is currently estimated to be 2.97%. For all other asset classes, the policy will also be to profile the annual repayments under the “Asset Life” method, with the profile also Page 162 of 304
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calculated using the annuity method. The annuity interest rate that will be used to calculate loans fund principal repayments under the “Asset Life” method will be the in-year loans fund rate, which for 2026/27 is currently estimated to be 2.97%. Whilst neither the Depreciation nor the Funding/income profile methods are currently proposed, Council officers will continue to monitor whether it is appropriate to use this for future capital projects. 7. Report Implications 7.1 Resource There are no direct resource implications arising from this report. 7.2 Digital None 7.3 Risk The strategies outlined in this report are designed to maintain the effectiveness of the overall risk management arrangements for Treasury activity. Providing the limits outlined in the strategies are observed they will support the controls already in place in the Treasury Management Practices within which the treasury function operates. The Prudential Indicators contained in Appendix 2 maintain the effectiveness of the overall risk management of Capital Investment and Treasury Management. 7.4 Ensuring Equalities There are no equality issues arising from this report. 7.5 Additional Report Implications See Appendix A. Page 163 of 304
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Appendix A: Report Implications A.1 Key Priorities within the Single Midlothian Plan Not applicable. A.2 Key Drivers for Change A.3 Key Delivery Streams Themes addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value The report does not directly impact on Delivering Best Value. A.5 Involving Communities and Other Stakeholders Although no external consultation has taken place, cognisance has been taken of professional advice obtained from MUFG Asset Services, the Council’s appointed Treasury Consultants. A.6 Impact on Performance and Outcomes The strategies to be adopted are an integral part of the corporate aim to achieve Best Value as they seek to minimise the cost of borrowing by exercising prudent debt management and investment. This in turn helps to ensure that the Council’s capital expenditure is sustainable in revenue terms. A.7 Adopting a Preventative Approach Not applicable. A.8 Supporting Sustainable Development Not applicable. Background Papers:- Appendix 1:- Permitted Investments Appendix 2:- Prudential Indicators Appendix 3:- Treasury Management & Annual Investment Strategy Statement – 2026/27 Detailed Page 164 of 304
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Permitted Investments Appendix 1 The Council uses the MUFG creditworthiness service for specific categories of permitted investments. This utilises credit ratings from the three main credit rating agencies – Fitch, Moody’s and Standard & Poors, along with credit watches, outlooks, CDS spreads and country sovereign ratings in a weighted scoring system with an end product of a series of colour coded bands which indicate the relative creditworthiness of specific categories of counterparties for investment. These colour codes are used by the Council to determine the maximum suggested duration for investment with that counterparty. These are as follows:- MUFG Colour Code Maximum Suggested Duration for Investment Yellow 6 years* Dark Pink 6 years** Light Pink 6 years** Purple 2.5 years Blue 1.25 years*** Orange 1.25 years Red 7 months Green 120 days No colour Not to be used * Note the yellow colour category is for:- UK Government Debt, or its equivalent, Money Market Funds (MMF's), and collateralised deposits where the collateral is UK Government Debt ** Dark Pink for Ultra Short Dated Bond Funds with a credit score of 1.25; Light Pink for Ultra Short Dated Bond Funds with a credit score of 1.5 *** Only applies to nationalised or semi-nationalised UK banks Note that the maximum suggested durations listed above have been extended by 1 year (when compared to the suggested maximum durations provided by MUFG) for the Yellow, Dark Pink, Light Pink categories (and so to 6 years); the Purple category by 6 months to 2.5 years; the Blue and Orange categories by 3 months to 1.25 years; the Red category by a month to 7 months, and the Green category by 20 days to 120 days. This is to allow flexibility around these durations on the margins e.g. the placement of a 13 month fixed term deposit for a counterparty rated Orange or Blue. A thorough appraisal of the additional risk involved in extending the duration of any deposit (marginally) beyond the maximum suggested by MUFG, against any enhanced value to the portfolio, will be undertaken prior to the placement of any deposit. Page 165 of 304
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1.1 Deposits Investment Category Minimum Credit Criteria Liquidity risk Market risk Max %/£m of total investments Max. maturity period Debt Management Agency Deposit Facility -- Term No 100% 6 months Term deposits – local authorities -- Term No 100% 5 years Call accounts – banks and building societies Green Instant No 100% 1 day Term deposits / Notice Accounts – banks and building societies Yellow Purple Blue Orange Red Green No Colour Term No 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use Fixed term deposits with variable rate and variable maturities: - Structured deposits Yellow Purple Blue Orange Red Green No Colour Term No 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use 1.2 Deposits with counterparties currently in receipt of government support / ownership Investment Category Minimum Credit Criteria Liquidity risk Market risk Max %/£m of total investments Max. maturity period UK nationalised banks – Call accounts Blue Instant No 100% 1 day UK nationalised banks – Term Deposits / Notice Accounts Blue Term No 100% 1.25 years UK nationalised banks – Fixed term deposits with variable rate and variable maturities: - Structured deposits Blue Term No 100% 1.25 years Non-UK(high sovereign rated country) nationalised banks – Call accounts Green Instant No 100% 1 day Non-UK (high sovereign rated country) nationalised banks:- Term Deposits / Notice Accounts Yellow Purple Blue Orange Red Green No Colour Term No 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use Non-UK (high sovereign rated country) nationalised banks:- Fixed term deposits with variable rate and variable maturities: - Structured deposits Yellow Purple Blue Orange Red Green No Colour Term No 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use If forward deposits are made, the forward period plus the deal period equate to the maximum maturity period. Page 166 of 304
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1.3 Collective investment schemes structured as Open Ended Investment Companies (OEICs) Investment Category Minimum Credit Criteria Liquidity risk Market risk Max %/£m of total investments Max. maturity period Government Liquidity Funds AAA Instant No 100% 1 day Money Market Funds CNAV AAA Instant No 100% 1 day Money Market Funds LVNAV AAA Instant No 100% 1 day Money Market Funds VNAV AAA Instant No 100% 1 day Ultra Short Dated Bond Funds with a credit score of 1.25 AAA T+1 to T+5 Yes 100% 1 week Ultra Short Dated Bond Funds with a credit score of 1.5 AAA T+1 to T+5 Yes 100% 1 week Bond Funds AAA T+2 or longer Yes 50% 2 days Gilt Funds AAA T+2 or longer Yes 50% 2 days 1.4 Securities issued or guaranteed by governments Investment Category * Minimum Credit Criteria Liquidity risk Market risk Max %?£m of total investments Max. maturity period Treasury Bills UK sovereign rating Sale T+1 Yes 100% 50 years UK Government Gilts UK sovereign rating Sale T+1 Yes 100% 50 years Bond issuance issued by a financial institution which is explicitly guaranteed by the UK Government e.g. National Rail UK sovereign rating Sale T+3 Yes 100% 50 years Sovereign bond issues (other than the UK govt) AAA (or state your criteria if different) Sale T+1 Yes 100% 50 years Bonds issued by multilateral development banks AAA (or state your criteria if different) Sale T+1 Yes 100% 50 years Page 167 of 304
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1.5 Securities issued by corporate organisations Investment Category * Minimum Credit Criteria Liquidity risk Market risk Max % of total investments Max. maturity period Certificates of deposit issued by banks and building societies Yellow Purple Blue Orange Red Green No Colour Sale T+0 Yes 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use Commercial paper other Yellow Purple Blue Orange Red Green No Colour Sale T+0 Yes 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use Floating rate notes Yellow Purple Blue Orange Red Green No Colour Sale T+2 Yes 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use Corporate Bonds other Yellow Purple Blue Orange Red Green No Colour Sale T+2 Yes 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use 1.6 Other Investment Category Minimum Credit Criteria Liquidity risk Market risk Max %/£m of total investments Max. maturity period Local authority mortgage guarantee scheme. Blue Term No 50% 5 years Loans to Third Parties n/a Term No £25m 25 years Subordinated Debt Subscription to Newbattle Centre SPV n/a Term No £0.326m 22 years Midlothian Energy Limited n/a Term No £10.2m n/a Treasury Risks and Mitigating Controls for each type of investment are as outlined in the Treasury Management & Annual Investment Strategy Statement – 2023/24 Detailed – Appendix 5.3. The Council’s Treasury Management Practices have also been updated in line with the new CIPFA Prudential and Treasury Management Codes which were approved by Audit Committee on 6 December 2022. Page 168 of 304
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Prudential Indicators Appendix 2 1. Prudential Indicators for Affordability These indicators provide an indication of the impact of the capital investment plans on the Council’s overall finances. 1.1 Estimates of Ratio of Financing Costs to Net Revenue Stream This indicator identifies the trend in the cost of capital (borrowing and other long term obligation costs net of investment income) against the net revenue stream. The figures above are based on the current General Services and HRA Capital Plans. 1.2 HRA Ratios The following indicator identifies the ratio of overall debt on the HRA account compared to annual house rent revenue. The following indicator identifies the ratio of overall debt on the HRA account per HRA dwelling. 1.3 Net Income from Service & Commercial Investments as a proportion of Net Revenue Stream An indicator, which is a requirement of the new Prudential Code, identifies the ratio of net income from service and commercial investments as a proportion of the net General Services revenue stream. 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 Actual Estimate Estimate Estimate Estimate Estimate General Services 1.41% 1.81% 2.66% 3.89% 5.20% 6.01% HRA 42.69% 47.04% 51.43% 57.16% 58.14% 58.28% Ratio of Financing Costs to Net Revenue Stream 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 Actual Estimate Estimate Estimate Estimate Estimate HRA debt £000's 283,242£ 325,235£ 397,755£ 442,630£ 466,732£ 496,802£ HRA Revenues £000's 36,382 37,917 41,300 44,818 48,384 51,321 Ratio of HRA Debt to Revenues % 779% 858% 963% 988% 965% 968% HRA Debt as a % of Gross Revenue 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 Actual Estimate Estimate Estimate Estimate Estimate HRA debt £000's 283,242£ 325,235£ 397,755£ 442,630£ 466,732£ 496,802£ Number of HRA dwellings 7,448 7,654 7,951 8,165 8,333 8,432 Debt per dwelling £ 38,029£ 42,492£ 50,026£ 54,211£ 56,010£ 58,919£ HRA Debt per Dwelling Page 169 of 304
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2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 Actual £000's Estimate £000's Estimate £000's Estimate £000's Estimate £000's Estimate £000's Income from Service Investments 34 34 34 34 34 34 Net Revenue Stream 294,134 317,181 327,812 334,347 341,038 347,891 % 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% Net Income from Service Investments as a proportion of Net Revenue Stream % Page 170 of 304
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2. Prudential Indicators for Capital Expenditure The Council’s capital expenditure plans are the key driver of treasury management activity. The output of the capital expenditure plans is reflected in the prudential indicators, which are designed to assist members’ overview and confirm capital expenditure plans. 2.1 Estimated Capital Expenditure This indicator shows the gross capital spend included in the relevant capital plans. 2.2 Financing of Capital Expenditure This indicator shows how the Capital Expenditure forecasts are being financed by capital or revenue resources. Any shortfall of resources results in a funding borrowing need. 2.3 Estimated Capital Financing Requirement This indicator measures the Council’s maximum underlying need to borrow for capital purposes and other long term liabilities over the next three years. 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's General Services Children, Young People & Estates 17,218£ 21,977£ 71,726£ 106,520£ 84,850£ 18,590£ Asset Management 13,334£ 18,593£ 19,262£ 17,066£ 14,250£ 14,811£ Transport, Energy & Infrastructure 2,346£ 5,821£ 8,654£ 2,233£ 428£ 428£ Regeneration & Development 15,078£ 13,343£ 8,604£ 8,963£ 5,232£ 3,050£ Other 1,058£ 465£ 297£ 180£ 180£ 180£ Provision for return of contingencies -£ (1,194)£ (1,505)£ (2,714)£ (3,374)£ (2,624)£ Total General Services 49,034£ 59,004£ 107,038£ 132,248£ 101,566£ 34,436£ Total HRA 53,174£ 59,999£ 88,419£ 69,783£ 47,355£ 48,724£ Combined Total 102,208£ 119,003£ 195,457£ 202,031£ 148,921£ 83,160£ Capital Expenditure 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's Capital Expenditure General Services 49,034£ 59,004£ 107,038£ 132,248£ 101,566£ 34,436£ HRA 53,174£ 59,999£ 88,419£ 69,783£ 47,355£ 48,724£ Total 102,208£ 119,003£ 195,457£ 202,031£ 148,921£ 83,160£ Financed by: Capital receipts 175£ -£ -£ -£ -£ -£ Capital grants 25,191£ 27,390£ 24,588£ 25,307£ 19,833£ 14,869£ Capital reserves -£ -£ -£ -£ -£ -£ Developer/Other Contributions 3,218£ 5,984£ 14,122£ 7,146£ 12,323£ 5,185£ Net financing need for the year 73,624£ 85,629£ 156,747£ 169,578£ 116,765£ 63,106£ Capital Expenditure and Available Financing Page 171 of 304
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3. Prudential Indicators for Prudence 3.1 Net Borrowing Requirement This indicator shows the amount of external borrowing required to finance the current debt outstanding on capital projects. 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's Capital Financing Requirement CFR – General Services 186,624£ 223,966£ 296,175£ 406,407£ 482,336£ 496,804£ CFR – HRA 283,242£ 325,235£ 397,755£ 442,630£ 466,732£ 496,802£ CFR – PFI Schemes 84,815£ 80,661£ 76,277£ 71,663£ 66,819£ 61,745£ Total CFR 554,681£ 629,862£ 770,207£ 920,700£ 1,015,887£ 1,055,351£ Movement in CFR 64,796£ 75,181£ 140,345£ 150,492£ 95,187£ 39,465£ Movement in CFR represented by Net financing need for the year (previous table) 73,624£ 85,629£ 156,747£ 169,578£ 116,765£ 63,106£ MEL Shareholder Injection 4,590£ -£ -£ -£ -£ -£ Less Scheduled Debt Amortisation (9,494)£ (10,884)£ (12,018)£ (14,472)£ (16,734)£ (18,567)£ Less net PFI Finance Lease Principal Payments (3,924)£ (4,154)£ (4,384)£ (4,614)£ (4,844)£ (5,074)£ Movement in CFR 64,796£ 70,591£ 140,345£ 150,492£ 95,187£ 39,465£ Capital Financing Requirement (CFR) 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's External Debt Debt at 1 April 340,871£ 379,445£ 458,024£ 611,479£ 775,282£ 876,652£ Actual/Expected change in Debt 38,574£ 78,579£ 153,456£ 163,802£ 101,370£ 45,351£ Other long-term liabilities (OLTL) at 1 April 88,739£ 84,815£ 80,661£ 76,277£ 71,663£ 66,819£ Actual/Expected change in OLTL (3,924)£ (4,154)£ (4,384)£ (4,614)£ (4,844)£ (5,074)£ Actual/Expected Gross Debt at 31 March 464,260£ 538,685£ 687,756£ 846,945£ 943,471£ 983,747£ The Capital Financing Requirement 554,681£ 629,862£ 770,207£ 920,700£ 1,015,887£ 1,055,351£ Under / (over) borrowing 90,421£ 91,178£ 82,451£ 73,755£ 72,416£ 71,604£ Deposits Cash & Cash Equivalents 20,000£ 20,000£ 20,000£ 20,000£ 20,000£ 20,000£ Short-Term Investments 10,000£ -£ -£ -£ -£ -£ Total Deposits 30,000£ 20,000£ 20,000£ 20,000£ 20,000£ 20,000£ Net Borrowing Requirement Page 172 of 304
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4. Prudential Indicators for External Debt 4.1 Operational Boundary This is the limit beyond which external debt is not normally expected to exceed and will be the focus of day to day treasury management. Typically, this would be a similar figure to the CFR, but may be lower or higher depending on the levels of actual debt. For this Council:- • the Operational Boundary for Borrowing has been calculated to equate directly to the value of the CFR for General Services and HRA combined, over the current financial year and the following 4 financial years (2025/26 to 2029/30); and • the Operational Boundary for Other Long-Term Liabilities has been calculated to equate directly to the in-year CFR for Other Long-Term Liabilities, given the known contractual provisions for the repayment of debt within the Council’s two PPP agreements. Should the Operational Boundary be breached, for example as a result of a decision taken to borrow in advance (should market conditions indicate that it is prudent to do so), this will be reported to Council at the next available opportunity. 4.2 Authorised Limit of Total External Debt This indicator sets the limit for total external debt. The Authorised Limit for Borrowing for the 2026/27 financial year has been calculated to equate to the maximum value of the Underlying Borrowing Requirement in 2026/27. This equates to £693.930 million as outlined below. 2025/26 2026/27 2027/28 2028/29 2029/30 Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's Operational Boundary - Borrowing 549,201£ 693,930£ 849,037£ 949,068£ 993,606£ Operational Boundary - Other long term liabilities 80,661£ 76,277£ 71,663£ 66,819£ 61,745£ Total 629,862£ 770,207£ 920,700£ 1,015,887£ 1,055,351£ Operational Boundary £000's CFR - General Services at 31 March 2027 296,175£ CFR - HRA at 31 March 2027 397,755£ Authorised Limit for Borrowing 693,930£ Authorised Limit for Borrowing Page 173 of 304
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5. Prudential Indicators for Treasury Management 5.1 Upper limits on Fixed and Variable Interest Rates This indicator limits the amount of external debt that may be held at fixed or variable rates. These limits are proposed to be as follows:- 5.2 Maturity Structure of Borrowing This indicator sets the upper and lower limits of the time scales within which external debt may be held. The Treasury Management Code of Practice requires that LOBO’s with a call date in the next 12 months are classified as short-term borrowing rather than longer-term (10 year+) borrowing. In addition, the Code also recommends that where an authority’s debt is typically very long term (i.e. for a period of greater than 10 years), that authorities should break down the period in excess of 10 years into several ranges, for example 10 to 20 years, 20 to 30 years, etc. With the above in mind, the proposed upper and lower limits for each maturity band are shown below, with the overall aim to ensure a spreading approach to avoid a cluster of high value loans maturing/requiring refinancing within a short period of time. Limits on fixed interest rates based on gross debt 100.00% Limits on variable interest rates based on gross debt 30.00% Limits on fixed interest rates based on investments 100.00% Limits on variable interest rates based on investments 100.00% Upper Limits on Exposure to Fixed and Variable Interest Rates 2026/27 Interest rate exposures Upper Limit Page 174 of 304
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5.4 Total Principal Sums Invested for Periods Longer than 365 Days This indicator relates to the total level of investments held for periods longer than 365 days. The current strategy as outlined in the body of these reports is to continue to cash-back the Council’s balance sheet reserves. It is expected that the majority of this will be in the form of fixed term deposits and/or certificates of deposit. Given expected reserve forecasts and the current interest rate environment, in particular the short-medium term forecast for the Council’s Capital Fund and HRA Reserve, the limit for prinicipal sums invested for > 365 days has been retained at £70m. For its cash flow generated balances, the Council will seek to utilise its business reserve instant access accounts and money market funds. 5.5 Liability Benchmark The “Liability Benchmark” identifies future borrowing needs across the short, medium and longer terms, against the maturity profile of the Council’s existing loan portfolio. The Council’s Liability Benchmark in graphical format is as shown below. Maturity structure of fixed interest rate borrowing 2026/27 Lower Upper 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% Maturity structure of variable interest rate borrowing 2026/27 Lower Upper 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 30 years to 40 years Under 12 months 12 months to 2 years 50 years and above 40 years to 50 years Maturity Structure of Borrowing 2026/27 5 years to 10 years 10 years to 20 years 20 years to 30 years 30 years to 40 years 40 years to 50 years 50 years and above Under 12 months 12 months to 2 years 2 years to 5 years 2 years to 5 years 5 years to 10 years 10 years to 20 years 20 years to 30 years Limit £70m Principal Sums Invested for > 365 Days Page 175 of 304
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There are four components to the Liability Benchmark: - 1 Existing loan debt outstanding: the Council’s existing loans that are still outstanding in future years – shown as the stacked bar elements of the figure above. 2 Loans CFR: this is calculated in accordance with the loans CFR definition in the Prudential Code and projected into the future based on approved prudential borrowing and planned Loans Fund advances/Loans Fund principal repayments. 3 Net loans requirement: this shows the Council’s gross loan debt less treasury management investments at the last financial year-end, projected into the future and based on its approved prudential borrowing, planned Loans Fund principal repayments and any other major cash flows (drawdowns/enhancement of reserves) forecast. 4 Liability benchmark (or gross loans requirement): this equals net loans requirement plus short-term liquidity/working capital allowance. The Liability Benchmark Indicator identifies the Council’s expected future capital financing requirement, as driven by the Council’s approved Capital Plans – and therefore the Council’s future borrowing needs; along with how this matches to the existing debt maturity profile. It is therefore a key tool to support the financing risk management of the capital financing requirement. As can be noted from the figure above, the Council has a significant borrowing requirement (which equates to £564.083 million) in the short-medium term, arising as a direct result of the Council’s approved Capital Plans. The proposed approach to securing this borrowing need for the 2026/27 financial year is outlined in the main body of this report, Section 4.3. The Liability Benchmark also outlines the profile of the Council’s CFR over the medium-long term, against the Council’s existing debt portfolio maturity profile. As can be seen from the figure above, the profile of the CFR movements in the medium-long term broadly matches the movements in the Councils external debt portfolio over this period. £0 £200,000 £400,000 £600,000 £800,000 £1,000,000 £1,200,000 Total Am ount (£'000) Liability Benchmark PWLB Loans Market Loans (excl LOBO loans) LOBO Loans Existing Loan Debt Outstanding Net Loans Requirement (forecast net loan debt) Loans CFR Liability Benchmark (Gross Loans Requirement) Page 176 of 304
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The Debt Liability Benchmark will assist the Council with plotting the tenor of borrowing to finance the Council’s approved capital plans that is undertaken in the remainder of 2025/26 and the forthcoming 2026/27 period, to ensure that this aligns with the Council’s future expected CFR profile and Liability Benchmark projections, taking into account the profile of existing loan maturities as identified in the figure above. Page 177 of 304
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Appendix 3 Treasury Management Strategy Statement and Annual Investment Strategy Midlothian Council 2026/27 Page 179 of 304
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INDEX 1 INTRODUCTION ............................................................................................................................ 3 1.1 Background ............................................................................................................................................... 3 1.2 Reporting requirements ............................................................................................................................ 3 1.3 Treasury Management Strategy for 2026/27 ........................................................................................... 5 1.4 Training ...................................................................................................................................................... 5 1.5 Treasury management consultants .......................................................................................................... 6 2 THE CAPITAL PRUDENTIAL INDICATORS 2026/27 – 2029/30 ............................................. 7 2.1 Capital expenditure ................................................................................................................................... 7 2.2 The Council’s borrowing need (the Capital Financing Requirement) ...................................................... 8 3 Borrowing .................................................................................................................................... 11 3.1 Current portfolio position ......................................................................................................................... 11 3.2 Treasury Indicators: limits to borrowing activity ...................................................................................... 13 3.3 Prospects for interest rates ..................................................................................................................... 14 3.4 Borrowing strategy .................................................................................................................................. 16 3.5 Policy on borrowing in advance of need ................................................................................................. 19 3.6 Debt rescheduling ................................................................................................................................... 19 4 ANNUAL INVESTMENT STRATEGY ........................................................................................ 19 4.1 Investment policy ..................................................................................................................................... 20 4.2 Creditworthiness policy ........................................................................................................................... 22 4.3 Country and sector limits ......................................................................................................................... 23 4.4 Investment strategy ................................................................................................................................. 24 4.5 Investment risk benchmarking ................................................................................................................ 26 4.6 End of year investment report ................................................................................................................. 26 5 Appendices .................................................................................................................................. 27 5.1 APPENDIX: Economic Background ....................................................................................................... 28 5.2 APPENDIX: Treasury Management Practice (TMP1): Permitted Investments .................................... 28 5.3 APPENDIX: Treasury Management Practice (TMP1) – Credit and Counterparty Risk Management 41 5.4 APPENDIX: Approved countries for investments .................................................................................. 47 5.5 APPENDIX: Treasury management scheme of delegation .................................................................. 48 5.6 APPENDIX: The treasury management role of the section 95 officer .................................................. 49 Page 180 of 304
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3 1 INTRODUCTION 1.1 Background The main function of the treasury management service is the funding of the Council’s capital plans. These capital plans provide a guide to the borrowing need of the Council, essentially the longer term cash flow planning to ensure that the Council can meet its capital spending obligations. This management of longer term cash may involve arranging long or short term loans, or using longer term cash flow surpluses. On occasion any debt previously drawn may be restructured to meet Council risk or cost objectives. The Council is required to operate a balanced budget, which broadly means that cash raised during the year will meet cash expenditure. As such, the second part of the treasury management operation is to ensure that this cash flow is adequately planned, with cash being available when it is needed. Surplus monies are deposited with low risk counterparties or instruments commensurate with the Council’s low risk appetite, providing adequate liquidity initially before considering investment return. The contribution the treasury management function makes to the authority is critical, as the balance of debt and investment operations ensure liquidity or the ability to meet spending commitments as they fall due, either on day-to-day revenue or for larger capital projects. The treasury operations will see a balance of the interest costs of debt and the investment income arising from cash deposits affecting the available budget. Since cash balances generally result from reserves and balances, it is paramount to ensure adequate security of the sums invested, as a loss of principal will in effect result in a loss to the General Fund Balance. Whilst any loans to third parties, commercial investment initiatives or other non-financial investments will impact on the treasury function, these activities are generally classed as non-treasury activities, (arising usually from capital expenditure),and are separate from the day to day treasury management activities. CIPFA defines treasury management as: “The management of the local authority’s borrowing, investments and cash flows, its banking, money market and capital market transactions; the effective control of the risks associated with those activities; and the pursuit of optimum performance consistent with those risks.” Whilst any commercial initiatives or loans to third parties will impact on the treasury function, these activities are generally classed as non-treasury activities, (arising usually from capital expenditure), and are separate from the day-to-day treasury management activities 1.2 Reporting requirements 1.2.1 Capital Strategy The CIPFA Prudential and Treasury Management Codes require all local authorities to prepare an additional report, a capital strategy report, which provides the following: • a high-level long term overview of how capital expenditure, capital financing and treasury management activity contribute to the provision of services • an overview of how the associated risk is managed • the implications for future financial sustainability Page 181 of 304
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4 The aim of the capital strategy is to ensure that all elected members on the full council fully understand the overall long-term policy objectives and resulting capital strategy requirements, governance procedures and risk appetite. 1.2.2 Treasury Management Reporting The Council is required to receive and approve, as a minimum, three main reports each year, which incorporate a variety of polices, estimates and actuals. a) Prudential and treasury indicators and treasury strategy (this report) - The first, and most important report covers: • the capital plans (including prudential indicators) for 2025/26 to 2029/30; • a policy for the statutory repayment of debt, (how residual capital expenditure is charged to revenue over time); • the treasury management strategy (how the investments and borrowings are to be organised) for 2026/27, including treasury indicators; and • a permitted investment strategy for 2026/27 (the parameters on how investments are to be managed). b) A mid year treasury management report – This will update members with the progress of the capital position, amending prudential indicators as necessary, and whether the actual treasury strategy is meeting the strategy outlined in advance of the year, or whether any policies require revision. c) An annual treasury outturn report – This provides details of a selection of actual prudential and treasury indicators for the previous financial year and actual treasury operations compared to the estimates within the strategy. Scrutiny The above reports are required to be adequately scrutinised before being recommended to the Council. This role is undertaken by the Audit Committee with this report presented to Audit Committee prior to consideration by Council. Any revisions arising from Audit Committee consideration of the report on 23 February 2026 will be verbally updated to Council before discussing the report on 24 February 2026. Page 182 of 304
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5 1.3 Treasury Management Strategy for 2026/27 The strategy for 2026/27 covers two main areas: Capital issues • the capital expenditure plans and the prudential indicators (Section 2 of this report); • The policy for the statutory repayment of loans fund advance (Section 2.4 of this report). Treasury management issues • policy on use of external service providers (Section 1.5); • the current treasury position (Section 3.1); • treasury indicators which limit the treasury risk and activities of the Council (Section 3.2); • prospects for interest rates (Section 3.3); • the borrowing strategy (Section 3.4); • policy on borrowing in advance of need (Section 3.5); • debt rescheduling (Section 3.6); • the investment strategy (Section 4.1); and • creditworthiness policy (Section 4.2). These elements cover the requirements of the Local Government in Scotland Act 2003, the CIPFA Prudential Code, the CIPFA Treasury Management Code and The Scottish Government Local Authority (Capital Finance & Accounting) (Scotland) Regulations 2016. 1.4 Training The CIPFA Code requires the responsible officer to ensure that members with responsibility for treasury management receive adequate training in treasury management. This especially applies to members responsibe for scrutiny. Furthermore, pages 47 and 48 of the Code state that they expect “all organisations to have a formal and comprehensive knowledge and skills or training policy for the effective acquisition and retention of treasury management knowledge and skills for those responsible for management, delivery, governance and decision making. Organisations need to consider how to assess whether treasury management staff and board/ council members have the required knowledge and skills to undertake their roles and whether they have been able to maintain those skills and keep them up to date. As a minimum, authorities should carry out the following to monitor and review knowledge and skills: • Record attendance at training. • Prepare tailored learning plans for treasury management officers and board/council members. • Require treasury management officers and board/council members to undertake self-assessment against the required competencies. • Have regular communication with officers and board/council members, encouraging them to highlight training needs on an ongoing basis.” In further support of the revised training requirements, CIPFA’s Better Governance Forum and Treasury Management Network have produced a ‘self-assessment by members responsible for the scrutiny of treasury management’, which is available from the CIPFA Page 183 of 304
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6 website to download. This was presented to members of the Audit Committee and Council as part of the Council’s Treasury Management 2021-22 Mid-Year Review Report. A formal record of Knowledge & Skills Schedule has been developed as part of the Council’s Treasury Management Practices. This will be periodically reviewed to assess suitability, and updated to reflect ongoing training, knowledge and skills gained. Similarly, a formal record of the treasury management/capital finance training received by members will also be periodically reviewed and updated. 1.5 Treasury management consultants The Council uses MUFG Corporate Markets (former Link, Treasury Solutions Limited) as its external treasury management advisors. The Council recognises that responsibility for treasury management decisions remains with the organisation at all times and will ensure that undue reliance is not placed upon our external service providers. All decisions will be undertaken with regards to all available information, including, but not solely, our treasury advisers. It also recognises that there is value in employing external providers of treasury management services in order to acquire access to specialist skills and resources. The Council will ensure that the terms of their appointment and the methods by which their value will be assessed are properly agreed and documented, and subjected to regular review. Page 184 of 304
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7 2 THE CAPITAL PRUDENTIAL INDICATORS 2025/26 – 2029/30 The Council’s capital expenditure plans are the key driver of treasury management activity. The output of the capital expenditure plans is reflected in the prudential indicators, which are designed to assist members’ overview and confirm capital expenditure plans. 2.1 Capital expenditure This prudential indicator is a summary of the Council’s capital expenditure plans, both those agreed previously, and those forming part of this budget cycle. The table below summarises the Capital Expenditure forecasts:- The table below shows how the Capital Expenditure forecasts are being financed by capital or revenue resources. Any shortfall of resources results in a funding borrowing need. Members are asked to approve the capital expenditure forecasts and the financing of these forecasts:- Note: The above financing need excludes other long term liabilities, such as PFI and leasing arrangements which already include borrowing instruments. 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's General Services Children, Young People & Estates 17,218£ 21,977£ 71,726£ 106,520£ 84,850£ 18,590£ Asset Management 13,334£ 18,593£ 19,262£ 17,066£ 14,250£ 14,811£ Transport, Energy & Infrastructure 2,346£ 5,821£ 8,654£ 2,233£ 428£ 428£ Regeneration & Development 15,078£ 13,343£ 8,604£ 8,963£ 5,232£ 3,050£ Other 1,058£ 465£ 297£ 180£ 180£ 180£ Provision for return of contingencies -£ (1,194)£ (1,505)£ (2,714)£ (3,374)£ (2,624)£ Total General Services 49,034£ 59,004£ 107,038£ 132,248£ 101,566£ 34,436£ Total HRA 53,174£ 59,999£ 88,419£ 69,783£ 47,355£ 48,724£ Combined Total 102,208£ 119,003£ 195,457£ 202,031£ 148,921£ 83,160£ Table 1: Capital Expenditure 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's Capital Expenditure General Services 49,034£ 59,004£ 107,038£ 132,248£ 101,566£ 34,436£ HRA 53,174£ 59,999£ 88,419£ 69,783£ 47,355£ 48,724£ Total 102,208£ 119,003£ 195,457£ 202,031£ 148,921£ 83,160£ Financed by: Capital receipts 175£ -£ -£ -£ -£ -£ Capital grants 25,191£ 27,390£ 24,588£ 25,307£ 19,833£ 14,869£ Capital reserves -£ -£ -£ -£ -£ -£ Developer/Other Contributions 3,218£ 5,984£ 14,122£ 7,146£ 12,323£ 5,185£ Net financing need for the year 73,624£ 85,629£ 156,747£ 169,578£ 116,765£ 63,106£ Table 2: Capital Expenditure and Available Financing Page 185 of 304
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8 2.2 The Council’s borrowing need (the Capital Financing Requirement) The second prudential indicator is the Council’s Capital Financing Requirement (CFR). The CFR is simply the total historic outstanding capital expenditure which has not yet been paid for from either revenue or capital resources. It is essentially a measure of the Council’s underlying borrowing need. Any capital expenditure above, which has not immediately been paid for (financed), will increase the CFR. The CFR does not increase indefinitely, as annual repayments from revenue need to be made which reflect the useful life of capital assets financed from borrowing. From 1st April 2016, Local Authorities may choose whether to use scheduled debt amortisation (loans pool charges) or another suitable method of calculation in order to repay borrowing. The CFR includes any other long term liabilities (e.g. PFI schemes, finance leases). Whilst these increase the CFR, and therefore the Council’s borrowing requirement, these types of scheme already include a borrowing facility and so the Council is not required to separately borrow for these schemes. The Council currently has £88.739m of such schemes within the CFR. The Council is asked to approve the CFR projections below: A key aspect of the regulatory and professional guidance is that elected members are aware of the size and scope of any commercial activity in relation to the authority’s overall financial position. The capital expenditure figures shown in 2.1 and the details above demonstrate the scope of this activity and, by approving these figures, consider the scale proportionate to the Authority’s remaining activity. 2.3 Liability Benchmark A third prudential indicator is the Debt Liability Benchmark (LB). The Authority is required to estimate and measure the LB for the forthcoming financial year and the following two financial years, as a minimum. There are four components to the Liability Benchmark: - 1 Existing loan debt outstanding: the Council’s existing loans that are still outstanding in future years. 2 Loans CFR: this is calculated in accordance with the loans CFR definition in the Prudential Code and projected into the future based on approved prudential borrowing and planned Loans Fund advances/Loans Fund principal repayments. 3 Net loans requirement: this shows the Council’s gross loan debt less treasury management investments at the last financial year-end, projected into the future and based on its approved prudential borrowing, planned Loans Fund principal repayments and any other major cash flows (drawdowns/enhancement of reserves) forecast. 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's Capital Financing Requirement CFR – General Services 186,624£ 223,966£ 296,175£ 406,407£ 482,336£ 496,804£ CFR – HRA 283,242£ 325,235£ 397,755£ 442,630£ 466,732£ 496,802£ CFR – PFI Schemes 84,815£ 80,661£ 76,277£ 71,663£ 66,819£ 61,745£ Total CFR 554,681£ 629,862£ 770,207£ 920,700£ 1,015,887£ 1,055,351£ Movement in CFR 64,796£ 75,181£ 140,345£ 150,492£ 95,187£ 39,465£ Movement in CFR represented by Net financing need for the year (previous table) 73,624£ 85,629£ 156,747£ 169,578£ 116,765£ 63,106£ MEL Shareholder Injection 4,590£ -£ -£ -£ -£ -£ Less Scheduled Debt Amortisation (9,494)£ (10,884)£ (12,018)£ (14,472)£ (16,734)£ (18,567)£ Less net PFI Finance Lease Principal Payments (3,924)£ (4,154)£ (4,384)£ (4,614)£ (4,844)£ (5,074)£ Movement in CFR 64,796£ 70,591£ 140,345£ 150,492£ 95,187£ 39,465£ Table 3: Capital Financing Requirement (CFR) Page 186 of 304
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9 4 Liability benchmark (or gross loans requirement): this equals net loans requirement plus short-term liquidity/working capital allowance. 2.4 Core funds and expected investment balances The application of resources (capital receipts, reserves etc.) to either finance capital expenditure or other budget decisions to support the revenue budget will have an ongoing impact on investments unless resources are supplemented each year from new sources (asset sales etc.). Detailed below are estimates of the year- end balances for each resource and anticipated day-to-day cash flow balances. *Working capital balances shown are estimated year-end; these may be higher mid-year 2.5 Statutory repayment of loans fund advances Under the Local Government Finance Circular 7/2016, Council is now required to set out its policy for the statutory repayment of loans fund advances prior to the start of each financial year. The repayment of loans fund advances ensures that the Council makes a prudent provision each year to pay off an element of the accumulated loans fund advances made in previous financial years. It is proposed to retain the methodology adopted in 2025/26 – that is as follows:- New Assets £0 £200,000 £400,000 £600,000 £800,000 £1,000,000 £1,200,000 Total Amount (£'000) Liability Benchmark PWLB Loans Market Loans (excl LOBO loans) LOBO Loans Existing Loan Debt Outstanding Net Loans Requirement (forecast net loan debt) Loans CFR Liability Benchmark (Gross Loans Requirement) 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's HRA Balances 31,910£ 29,510£ 28,242£ 26,329£ 24,890£ 23,978£ General Fund Balances 9,877£ 7,000£ 6,000£ 6,000£ 6,000£ 6,000£ Earmarked reserves 22,152£ 13,767£ 6,883£ -£ -£ -£ Provisions 3,756£ 3,656£ 3,556£ 3,456£ 3,356£ 3,256£ Capital Fund 17,600£ 18,193£ 18,718£ 18,918£ 19,118£ 19,318£ Total Reserves / Core Funds 85,295£ 72,126£ 63,399£ 54,703£ 53,364£ 52,552£ Working capital* 35,126£ 39,052£ 39,052£ 39,052£ 39,052£ 39,052£ Under/over borrowing 90,421£ 91,178£ 82,451£ 73,755£ 72,416£ 71,604£ Expected investments 30,000£ 20,000£ 20,000£ 20,000£ 20,000£ 20,000£ Reserve Table 4: Balance Sheet Resources Page 187 of 304
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10 In accordance with Finance Circular 7/2016, for all advances made in relation to the provision of a new asset, the policy will be to defer the commencement of the first principal repayment of the loans fund advance until the financial year following the one in which the asset is first available for use. Prudent Repayment of Loans Fund Advances Finance Circular 7/2016 provides a variety of options to Councils for the profiling of the repayment of each loans fund advance, so long as the principle of prudence is maintained. There are 4 options available: (a) Asset Life method; (b) Statutory method; (c) Depreciation method; and (d) Funding/income profile method. In line with the policy adopted in 2025/26, the Asset Life method shall be used for those assets in Table 5. Table 5: Asset Classes adopting the “Asset Life” method Infrastructure Curren Loans Fund Advance Period New Primary Schools/Extensions 60 New Leisure Centres 60 New Offices 60 Road Upgrades 50 Street Lighting Columns 50 Structures/Bridges 50 Footway/Cyclepaths 50 Town Centre Environmental Improvements 50 New Care Homes 45 Children’s Play Equipment 20 The annual repayments under the “Asset Life” method for those asset classes as noted above will be calculated using the asset lives and will use the annuity method, to ensure consistency of approach with the Statutory method for all other asset classes (see below). The annuity interest rate that will be used to calculate loans fund principal repayments under the “Asset Life” method will be the in-year loans fund rate, which for 2025/26 is currently estimated to be 2.97%. For all other asset classes, the policy will also be to profile the annual repayments under the “Asset Life” method, with the profile also calculated using the annuity method. The annuity interest rate that will be used to calculate loans fund principal repayments under the “Asset Life” method will be the in-year loans fund rate, which for 2025/26 is currently estimated to be 2.97%. Whilst neither the Depreciation nor the Funding/income profile methods are currently proposed, Council officers will continue to monitor whether it is appropriate to use this for future capital projects. Page 188 of 304
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11 3 Borrowing The capital expenditure plans set out in Section 2 provide details of the service activity of the Council. The treasury management function ensures that the Council’s cash is organised in accordance with the the relevant professional codes, so that sufficient cash is available to meet this service activity. This will involve both the organisation of the cash flow and, where capital plans require, the organisation of approporiate borrowing facilities. The strategy covers the relevant treasury / prudential indicators, the current and projected debt positions and the annual investment strategy. 3.1 Treasury management portfolio position The overall treasury management portfolio as at 31 March 2025 and for the position as at 30 January 2026 are shown below for both borrowing and investments. Table 6: Portfolio Position 31 March 2025 and 30 January 2026 The Council’s forward projections for borrowing and investments are summarised below. The table shows the actual external debt (the treasury management operations), against the underlying capital borrowing need (the Capital Financing Requirement - CFR), highlighting any over or under borrowing. Within the range of prudential indicators there are a number of key indicators to ensure that the Council operates its activities within well-defined limits. One of these is that the Council needs to ensure that its gross debt does not, except in the short term, exceed Principal Weighted Principal Weighted Outstanding Average Outstanding Average £000’s Rate £000’s Rate PWLB Annuity 395 8.92% 332 8.92% PWLB Maturity 333,502 3.11% 340,283 3.12% PWLB EIP 10,000 4.49% 67,542 4.24% LOBO 15,000 4.63% 15,000 4.63% Market Loans 20,548 3.04% 19,866 3.04% Total Loans 379,445 3.21% 443,024 3.34% Principal Weighted Principal Weighted Outstanding Average Outstanding Average £000’s Rate £000’s Rate Bank Call Accounts 538 4.34% 683 3.51% Money Market Funds 25,946 4.54% 19,689 3.88% Bank Fixed Term Deposits - n/a 10,000 4.18% Total Deposits 26,484 4.54% 30,372 3.97% 30 January 202631 March 2025 31 March 2025 30 January 2026 Loan Type Deposit Type 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's External Debt Debt at 1 April 340,871£ 379,445£ 458,024£ 611,479£ 775,282£ 876,652£ Actual/Expected change in Debt 38,574£ 78,579£ 153,456£ 163,802£ 101,370£ 45,351£ Other long-term liabilities (OLTL) at 1 April 88,739£ 84,815£ 80,661£ 76,277£ 71,663£ 66,819£ Actual/Expected change in OLTL (3,924)£ (4,154)£ (4,384)£ (4,614)£ (4,844)£ (5,074)£ Actual/Expected Gross Debt at 31 March 464,260£ 538,685£ 687,756£ 846,945£ 943,471£ 983,747£ The Capital Financing Requirement 554,681£ 629,862£ 770,207£ 920,700£ 1,015,887£ 1,055,351£ Under / (over) borrowing 90,421£ 91,178£ 82,451£ 73,755£ 72,416£ 71,604£ Deposits Cash & Cash Equivalents 20,000£ 20,000£ 20,000£ 20,000£ 20,000£ 20,000£ Short-Term Investments 10,000£ -£ -£ -£ -£ -£ Total Deposits 30,000£ 20,000£ 20,000£ 20,000£ 20,000£ 20,000£ Table 7: Net Borrowing Requirement Page 189 of 304
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12 the total of the CFR in the preceding year plus the estimates of any additional CFR for 2026/27. The Chief Financial Officer & Section 95 Officer reports that the Council complied with this prudential indicator in the current year and does not envisage difficulties for the future. This view takes into account current commitments, existing plans, and the proposals in this budget report. Page 190 of 304
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13 3.2 Treasury Indicators: limits to borrowing activity The operational boundary This is the limit beyond which external debt is not normally expected to exceed. In most cases, this would be a similar figure to the CFR, but may be lower or higher depending on the levels of actual debt. For this Council:- • the Operational Boundary for Borrowing has been calculated to equate directly to the in-year value of the CFR over the current and following 4 financial years (2025/26 to 2029/30); and • the Operational Boundary for Other Long-Term Liabilities has been calculated to equate directly to the in-year CFR for Other Long-Term Liabilities, given the known contractual provisions for the repayment of debt within the Council’s two PPP agreements. The authorised limit for external debt This indicator sets the limit for total external debt. The Authorised Limit for Borrowing for the 2026/27 financial year has been calculated to equate to the maximum value of the Underlying Borrowing Requirement in 2026/27. This equates to £693.930 million as outlined below. 2025/26 2026/27 2027/28 2028/29 2029/30 Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's Operational Boundary - Borrowing 549,201£ 693,930£ 849,037£ 949,068£ 993,606£ Operational Boundary - Other long term liabilities 80,661£ 76,277£ 71,663£ 66,819£ 61,745£ Total 629,862£ 770,207£ 920,700£ 1,015,887£ 1,055,351£ Table 8: Operational Boundary £000's CFR - General Services at 31 March 2027 296,175£ CFR - HRA at 31 March 2027 397,755£ Authorised Limit for Borrowing 693,930£ Table 9: Authorised Limit for Borrowing 458,024 611,479 775,282 876,652 922,002 £- £100,000 £200,000 £300,000 £400,000 £500,000 £600,000 £700,000 £800,000 £900,000 £1,000,000 2025/26 2026/27 2027/28 2028/29 2029/30 £000's Financial Year Prudential Indicators for Borrowing External Debt Authorised Limit Underlying Borrowing Requirement / Operational Boundary Page 191 of 304
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14 3.3 Prospects for interest rates The Council has appointed MUFG Corporate Markets as its treasury advisor and part of their service is to assist the Council to formulate a view on interest rates. MUFG provided the following forecasts for certainty rates (gilt yields plus 80 bps) on 22 December 2025. MUFG’s revised PWLB rate forecasts below are based on the Certainty Rate (the standard rate minus 20 bps). Table 10: MUFG Interest Rate Forecasts In the second half of 2025, a combination of tepid growth (0.2% q/q GDP for Q2 and 0.1% q/q GDP for Q3), falling inflation (currently CPI is 3.2%), and a November Budget that will place more pressure on the majority of households’ income, has provided an opportunity for the Bank of England’s Monetary Policy Committee to further reduce Bank Rate from 4.00% to 3.75% on 18 December. Surprisingly, to most market commentators, the recent steep fall in CPI inflation in one month from 3.6% to 3.2% did not persuade most “dissenters” from the November vote (Lombardelli, Greene, Mann and Pill) to switch to the rate-cutting side of the Committee. Instead, it was the Bank Governor, Andrew Bailey’s deciding vote which resulted in a rate cut by the slimmest of margins, 5-4. Given the wafer-thin majority for a rate cut it was not unexpected to hear that although rates would continue on a “gradual downward path”, suggesting a further rate cut or cuts in the offing, MPC members want to assess incoming evidence on labour market activity and wage growth. Indeed, with annual wage growth still over 4.5%, the MPC reiterated that the case for further rate cuts would be “a closer call”, and Governor Bailey observed there is “limited space as Bank Rate approaches a neutral level”. Accordingly, the MUFG Corporate Markets forecast has been revised to price in a rate cut in Q2 2026 to 3.50%, likely to take place in the wake of a significant fall in the CPI inflation reading from 3.00% in March to 2.00% in April (as forecast by Capital Economics), followed by a short lull through the summer whilst more data is garnered, and then a further rate cut to 3.25% in Q4. However, threats to this central scenario abound. What if wage increases remain stubbornly high? There are, after all, several sectors of the domestic economy, including social care provision and the building/construction industries, where staff shortages remain severe. Moreover, by May 2026, following the local elections, there will be better clarity on the leadership of the main UK political parties, which will influence gilt markets …and will there be additional geo-political factors to also bake in, particularly the Fed’s monetary policy decisions in 2026 and the ongoing battle to lower rates whilst inflation remains close to 3.00%. Accordingly, MUFG’s updated central forecast is made with several caveats. Whilst the confidence that the central forecast for Bank Rate and the 5-year PWLB Certainty Rate is robust, they have marginally brought forward the timing of the next rate cut(s). However, for the 10-, 25- and 50-years part of the gilt curve, the level of gilt issuance, and the timing of its placement, will be integral to achieving a benign trading Bank Rate 3.75% 3.50% 3.50% 3.25% 3.25% 3.25% 3.25% 3.25% 3.25% 3.25% 3.25% 3.25% 3.25% 3 month average earnings 3.80% 3.50% 3.50% 3.30% 3.30% 3.30% 3.30% 3.30% 3.30% 3.30% 3.30% 3.30% 3.30% 6 month average earnings 3.80% 3.50% 3.50% 3.40% 3.30% 3.30% 3.30% 3.30% 3.30% 3.30% 3.30% 3.30% 3.30% 12 month average earnings 3.90% 3.60% 3.60% 3.50% 3.40% 3.50% 3.50% 3.50% 3.50% 3.50% 3.60% 3.60% 3.60% 5 year PWLB 4.60% 4.50% 4.30% 4.20% 4.10% 4.10% 4.10% 4.10% 4.10% 4.10% 4.10% 4.10% 4.10% 10 year PWLB 5.20% 5.00% 4.90% 4.80% 4.80% 4.70% 4.70% 4.70% 4.70% 4.60% 4.60% 4.60% 4.70% 25 year PWLB 5.80% 5.70% 5.60% 5.50% 5.50% 5.40% 5.30% 5.30% 5.30% 5.20% 5.20% 5.20% 5.20% 50 year PWLB 5.60% 5.50% 5.40% 5.30% 5.30% 5.20% 5.10% 5.10% 5.10% 5.00% 5.10% 5.00% 5.00% MUFG Corporate Markets Interest Rate View Mar-28 Jun-28 Sep-28 Dec-28 Mar-29Mar-26 Jun-26 Sep-26 Dec-26 Dec-27Sep-27Jun-27Mar-27 Page 192 of 304
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15 environment. That is not a “given”, and additionally, the inflation outlook and political factors domestically and, crucially, in the US, are also likely to hold sway. Matters should be clearer by June in the UK, but the US mid-term elections are scheduled for November. MUFG’s revised PWLB rate forecasts are based on the Certainty Rate (the standard rate minus 20 bps) which has been accessible to most authorities since 1 November 2012. The lower Housing Revenue Account (HRA) PWLB rate started on 15 June 2023 for those authorities with an HRA (standard rate minus 60 bps) and has recently been announced as being extended into the 2026/27 financial year. Money market yield forecasts are based on expected average earnings by local authorities for 3 to 12 months. A more detailed interest rate view and economic commentary is provided at appendix 5.1. Page 193 of 304
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16 3.4 Borrowing strategy Borrowing is undertaken to finance the Council’s approved Capital plans and to do so in the most cost-effective way. As can be noted from Table 3 of the main report, the Council has a significant borrowing requirement across the current and forthcoming four financial years (2025/26 to 2029/30). This TMIS provides for this capital investment to be underpinned by long-term borrowing, recognising the current interest rate environment, the significant borrowing requirement arising from the Council’s capital plans, and the long term benefits of de risking the delivery and affordability of these capital plans by locking into the certainty brought by PWLB fixed rate loans. The Council’s external loan debt at 31 March 2026 is projected to be £458.024 million. Based on the Council’s historic and current approved Capital Plans, the Underlying Borrowing Requirement (UBR) – which is the Council’s underlying need to borrow for capital purposes (excluding the long-term liability arising from PFI/DBFM projects) – at 31 March 2026 is expected to equate to £549.201 million. This means that the Council is expected to be £91.177 million (17%) under- borrowed at the end of the 2025/26 financial year i.e. the Council has funded the majority (83%) of its underlying borrowing requirement as at 31 March 2026. In the current economic climate, this is a prudent approach which balances (a) de-risking the longer term borrowing requirement at current longer term borrowing rates; against (b) the current year and forthcoming financial year budget projections. The Council has a relatively low short-medium term exposure to refinancing risk and is therefore in a strong position to plan its new borrowing requirements in advance, taking advantage of any dips in longer-term borrowing rates from PWLB and other sources, and maintain a low weighted average coupon rate on external debt. The Underlying Borrowing Requirement is projected to rise to £993.034 million by 31 March 2030 – more than double the current external debt portfolio value of £443.024 million. The profile of this, and the projected external loan portfolio to fund the Underlying Borrowing Requirement over the period 2025/26 to 2029/30, is shown in graphical format below. Figure 3: Loan Portfolio & Underlying Borrowing Requirement Interest Rates The current PWLB yield curve is bell shaped with the low point in the curve at the time of writing sitting at the shortest tenors (1-3 years @ c. 4.50%; certainty rate) with rates trending upwards towards the 25-30 year tenor (high point of 6.03%; certainty rate) before easing back slightly to sit at c. 5.79% (certainty rate) in the 50 year duration. Page 194 of 304
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17 Current PWLB rates have generally increased by c. 20bps across the majority of the interest rate curve from levels reported at the time of the 2025/26 TMIS to Council in February 2025, and as noted in the TM Mid-Year Review Report to Council in December 2025, are expected to remain elevated for longer, particularly at the medium-longer end of the curve. This reflects ongoing concerns around the stickiness of inflation and international factors emanating from the Trump administration's fiscal, tariff and geo-political policies which continue to play a significant role in market expectations. The forward-looking Interest Rate Forecast from the Council's Treasury Advisers, MUFG Corporate Markets, is as shown in Table 10 in Section 3.3 above, with Further commentary on this is provided in Appendix 3 Section 3.3. As can be noted in Table 4 above, the yield curve is expected to remain bell shaped over the short-medium term, with a gradual shift downwards of the entire curve by c. 30-40bps over the next 12 months, a further 10-20bps over the subsequent 12 months and a further 10bps in the medium/longer end over the following 12 months of the forecast period (so 50-60bps total). This is forecast to bring longer-term borrowing rates down from between 5.79%- 6.03%, to between:- • 5.60%-5.80% by March 2026; • 5.30%-5.50% by March 2027; and • 5.10%-5.30% by March 2028. Borrowing Strategy The funding of the Council's in-year and forward CFR is typically for infrastructure with long asset lives (50-60 years), and the tenor of PWLB and market loans are typically drawn with this in mind. Given the Council's borrowing requirement across 2025/26 to 2029/30 as outlined in Table 3, and the Interest Rate Forecasts as outlined in Table 4, consideration for any new borrowing, to fund the Council's CFR, will seek to balance:- a) the security/certainty of current relatively high longer-term borrowing rates of upwards of 5.60% in the 30-50 year duration (which are forecast to drop by 30bps within one year and a total of 50bps within 24 months) and the potential additional budgetary pressure that this brings in both the short/medium and longer term; with b) the option to borrow initially for a shorter-term duration from PWLB or other markets, for 3 to 5 years (at say c. 3.80-4.20% at the HRA rate), to allow the Council to fund the immediate in-year borrowing requirement. Based on current interest rate forecasts (see Appendix 3 Section 3.3), this would then allow the Council the option to refinance this borrowing at initial 3-5 year maturity with less expensive, longer term borrowing, e.g. a 45 to 47 year tenor in, say, 36 months at a forecast rate of c. 4.60-4.80% (HRA Rate). Any further long-term borrowing that is undertaken to finance the current & future year capital plans is expected to be sourced by drawing new PWLB loans at the Certainty Rate (which has been available to the Council since 2012 and is priced at Gilts+80bps), and/or the HRA rate. The HRA rate is available to all Councils to fund HRA capital expenditure, at a rate that is priced at Gilts+40bps, with an extension of the availability of this rate beyond 31 March 2026 (and so into financial year 2026/27) announced by the UK Government's Ministry of Housing, Communities & Local Page 195 of 304
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18 Government (MHCLG) on 28 January 2026 . Other market-led longer-term borrowing opportunities will be benchmarked against the prevailing PWLB rates to assess whether they offer value to the Council. Council officers, in conjunction with MUFG, will continue to monitor daily long-term borrowing rates in order to take advantage of any dips in the market or to de-risk any change in the medium-longer term forecast for gilt yields. Forward Borrowing The opportunity also continues to exist to consider further loans on a 'forward dealing' basis, and officers will continue to explore the viability of these loans as part of securing the long term borrowing required to meet the Council's Underlying Borrowing Requirement. Review of Capital Plans & Impact on Borrowing Strategy Both the General Services and HRA capital programmes are being kept under regular review due to the effects of inflationary pressures, shortages of materials and labour, and the ratios of financing costs to the net revenue streams. The Council's borrowing strategy will, therefore, also be regularly reviewed and then revised, if necessary, to achieve optimum value and risk exposure in the medium-long-term. Treasury management limits on activity There are three debt related treasury activity limits. The purpose of these are to restrain the activity of the treasury function within certain limits, thereby managing risk and reducing the impact of any adverse movement in interest rates. However, if these are set to be too restrictive they will impair the opportunities to reduce costs / improve performance. The indicators are: • Upper limits on variable interest rate exposure. This identifies a maximum limit for variable interest rates for borrowing based upon the gross debt position, and variable interest rates for investments based upon the total investment position; • Upper limits on fixed interest rate exposure. This is similar to the previous indicator and covers a maximum limit on fixed interest rates for both borrowing and investments; • Maturity structure of borrowing. These gross limits are set to reduce the Council’s exposure to large fixed rate sums falling due for refinancing, and are required for upper and lower limits. The Council is asked to approve the following treasury indicators and limits: Limits on fixed interest rates based on gross debt 100.00% Limits on variable interest rates based on gross debt 30.00% Limits on fixed interest rates based on investments 100.00% Limits on variable interest rates based on investments 100.00% Table 11: Upper Limits on Exposure to Fixed and Variable Interest Rates 2026/27 Interest rate exposures Upper Limit Page 196 of 304
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19 3.5 Policy on borrowing in advance of need The Council will not borrow more than or in advance of its needs purely in order to profit from the investment of the extra sum borrowed. Any decision to borrow in advance will be within forward approved Capital Financing Requirement estimates (as detailed in Section 3.2) and will be considered carefully to ensure that value for money can be demonstrated and that the Council can ensure the security of such funds. Risks associated with any borrowing in advance activity will be subject to prior appraisal and subsequent reporting through the mid-year or annual reporting mechanism. 3.6 Debt rescheduling As noted in the Mid-Year Review Report, the Council elected to reschedule (prematurely repay) PWLB debt as follows:- • £12.700 million PWLB Maturity loan, original drawn date of 2 August 2007 and existing maturity date of 15 May 2053, at a fixed interest rate of 4.55% Any further debt rescheduling will be considered when the difference between the refinancing rate and the redemption rate is most advantageous and the situation will be continually monitored in order to take advantage of any perceived anomalies in the yield curve. The reasons for any rescheduling taking place would include: • the generation of cash savings at minimum risk; • to reduce the average interest rate; • to amend the maturity profile and/or the balance of volatility of the debt portfolio. Council officers will explore debt rescheduling opportunities with MUFG Treasury Solutions; with only prudent and affordable debt rescheduling that considers both the short and medium-longer term impact being considered. Maturity structure of fixed interest rate borrowing 2026/27 Lower Upper 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% Maturity structure of variable interest rate borrowing 2026/27 Lower Upper 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% Table 12: Maturity Structure of Borrowing 2026/27 5 years to 10 years 10 years to 20 years 20 years to 30 years 30 years to 40 years 40 years to 50 years 50 years and above Under 12 months 12 months to 2 years 2 years to 5 years 2 years to 5 years 5 years to 10 years 10 years to 20 years 20 years to 30 years 30 years to 40 years Under 12 months 12 months to 2 years 50 years and above 40 years to 50 years Page 197 of 304
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20 4 ANNUAL INVESTMENT STRATEGY 4.1 Investment policy The Council’s investment policy implements the requirements of the following: - • Local Government Investments (Scotland) Regulations 2010, (and accompanying Finance Circular 5/2010); • CIPFA Treasury Management in the Public Services: Code of Practice and Cross Sectoral Guidance Notes 2021 (“the Code”); • CIPFA Treasury Management Guidance Notes 2021 The Council’s investment priorities will be security first, portfolio liquidity second and then yield, (return). The Council will aim to achieve the optimum return (yield) on its investments commensurate with proper levels of security and liquidity and with the Council’s risk appetite. In the current economic climate, it is considered appropriate to maintain a degree of liquidity to cover cash flow needs but to also consider “laddering” investments for periods up to 12 months with high credit rated financial institutions as we move down the interest rate yield curve. The above regulations and guidance place a high priority on the management of risk. This authority has adopted a prudent approach to managing risk and defines its risk appetite by the following means: - 1. The Council applies minimum acceptable credit criteria in order to generate a list of highly creditworthy counterparties which also enables diversification and thus avoidance of concentration risk. The key ratings used to monitor counterparties are the short-term and long-term ratings. 2. Ratings will not be the sole determinant of the quality of an institution; it is important to continually assess and monitor the financial sector on both a micro and macro basis and in relation to the economic and political environments in which institutions operate. The assessment will also take account of information that reflects the opinion of the markets. To this end the Council will engage with its advisors to maintain a monitor on market pricing such as “credit default swaps” and overlay that information on top of the credit ratings. 3. Other information sources used will include the financial press, share price and other such information pertaining to the banking sector in order to establish the most robust scrutiny process on the suitability of potential investment counterparties. 4. This authority has defined the list of types of investment instruments that are permitted investments authorised for use in appendix 5.2. Appendix 5.3 expands on the risks involved in each type of investment and the mitigating controls. 5. Lending limits, (maturity tenors), for each counterparty will be set through applying the matrix table in Section 4.2 (maturity durations). 6. Investments will only placed with counterparties from countries with a specified minimum sovereign rating, (see paragraph 4.3). 7. Lending per Country and Institution will be set through the application of the criteria in Section 4.3 (amounts). Page 198 of 304
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21 8. Transaction limits are set for each type of investment in appendix 5.2. 9. This authority will set a limit for the amount of its investments which are invested for longer than 365 days, (see paragraph 4.4). 10. This authority has engaged external consultants, (see paragraph 1.5), to provide expert advice on how to optimise an appropriate balance of security, liquidity and yield, given the risk appetite of this authority in the context of the expected level of cash balances and need for liquidity throughout the year. 11. All investments will be denominated in sterling. However, this authority will also pursue value for money in treasury management and will monitor the yield from investment income against appropriate benchmarks for investment performance, (see paragraph 4.5). Regular monitoring of investment performance will be carried out during the year. Page 199 of 304
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22 4.2 Creditworthiness policy This Council applies the creditworthiness service provided by MUFG Corporate Markets. This service employs a sophisticated modelling approach utilising credit ratings from the three main credit rating agencies - Fitch, Moody’s and Standard and Poor’s. The credit ratings of counterparties are supplemented with the following overlays:- • credit watches and credit outlooks from credit rating agencies; • CDS spreads to give early warning of likely changes in credit ratings; • sovereign ratings to select counterparties from only the most creditworthy countries. This modelling approach combines credit ratings, credit watches and credit outlooks in a weighted scoring system which is then combined with an overlay of CDS spreads for which the end product is a series of colour coded bands which indicate the relative creditworthiness of counterparties. These colour codes are used by the Council to determine the suggested duration for investments. The Council will therefore use counterparties within the following durational bands:- Note that the maximum suggested durations listed above have been extended by 1 year (when compared to the suggested maximum durations provided by MUFG) for the Yellow, Dark Pink, Light Pink, Purple, Blue and Orange categories, to allow flexibility around these durations on the margins e.g. the placement of a 13 month fixed term deposit for a counterparty rated Orange or Blue. Equally, the maximum suggested duration for the Red category has been extended by a month to 8 months, on the same basis. A thorough appraisal of the additional risk involved in extending the duration of any deposit (marginally) beyond the maximum suggested by Capita, against any enhanced value to the portfolio, will be undertaken prior to the placement of any deposit. The MUFG Corporate Markets creditworthiness service uses a wider array of information than just primary ratings. Furthermore, by using a risk weighted scoring system, it does not give undue preponderance to just one agency’s ratings. Link Asset Services Colour Code Maximum Suggested Duration for Investment Yellow 6 years* Dark Pink 6 years** Light Pink 6 years** Purple 2.5 years Blue 1.25 years*** Orange 1.25 years Red 7 months Green 120 days No colour Not to be used * Note the yellow colour category is for:- UK Government Debt, or its equivalent, Money Market Funds (MMF's), and collateralised deposits where the collateral is UK Government Debt ** Dark Pink for Ultra Short Dated Bond Funds with a credit score of 1.25 Light Pink for Ultra Short Dated Bond Funds with a credit score of 1.5 *** Applies only to nationalised or semi-nationalised UK Banks Table 13: Recommended Maximum Durations for Investments Page 200 of 304
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23 Typically the minimum credit ratings criteria the Council use will be (Fitch or equivalents):- • Short term rating F1; • Long term rating A-. There may be occasions when the counterparty ratings from one rating agency are marginally lower than these ratings but may still be used. In these instances consideration will be given to the whole range of ratings available, or other topical market information, to support their use. All credit ratings will be monitored weekly. The Council is alerted to changes to ratings of all three agencies through its use of the MUFG Corporate Markets creditworthiness service. • if a downgrade results in the counterparty / investment scheme no longer meeting the Council’s minimum criteria, its further use as a new investment will be withdrawn immediately; • in addition to the use of credit ratings the Council will be advised of information in movements in credit default swap spreads against the iTraxx benchmark and other market data on a daily basis via its Passport website, provided exclusively to the Council by MUFG Corporate Markets. Extreme market movements may result in downgrade of an institution or removal from the Council’s lending list. Sole reliance will not be placed on the use of this external service. In addition this Council will also use market data and market information, information on sovereign support for banks and the credit ratings of that supporting government. UK banks – ring fencing The largest UK banks, (those with more than £25bn of retail / Small and Medium-sized Enterprise (SME) deposits), are required, by UK law, to separate core retail banking services from their investment and international banking activities by 1st January 2019. This is known as “ring-fencing”. Whilst smaller banks with less than £25bn in deposits are exempt, they can choose to opt up. Several banks are very close to the threshold already and so may come into scope in the future regardless. Ring-fencing is a regulatory initiative created in response to the global financial crisis. It mandates the separation of retail and SME deposits from investment banking, in order to improve the resilience and resolvability of banks by changing their structure. In general, simpler, activities offered from within a ring-fenced bank, (RFB), will be focused on lower risk, day-to-day core transactions, whilst more complex and “riskier” activities are required to be housed in a separate entity, a non-ring-fenced bank, (NRFB). This is intended to ensure that an entity’s core activities are not adversely affected by the acts or omissions of other members of its group. While the structure of the banks included within this process may have changed, the fundamentals of credit assessment have not. The Council will continue to assess the new- formed entities in the same way that it does others and those with sufficiently high ratings, (and any other metrics considered), will be considered for investment purposes. 4.3 Country and sector limits The Council has determined that it will only use approved counterparties from the UK, or approved counterparties from other countries with a minimum sovereign credit rating of AA- from Fitch. The list of countries that qualify using the above criteria as at the date of this report are shown in Appendix 5.4. This list will be added to, or deducted from, by officers should ratings change in accordance with this policy. Page 201 of 304
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24 The Council will avoid a concentration of investments in too few counterparties or countries by adopting a spreading approach to investing whereby no more than £30 million will be invested in Lloyds Banking Group and the NatWest (Royal Bank of Scotland) Group, £15 million in any other UK counterparty, and £15 million in any one counterparty, group or country outwith the UK. 4.4 Investment strategy Current Deposits As at 30 January 2025, the Council’s deposits were as shown in Table 14 below:- Table 14: Council’s deposits at 30 January 2025 Counterparty Amount £000’s Security Long/Short Term Rating* (Colour)** Liquidity Yield UK Local Authority Investment*** £000’s MMF Aberdeen 1,683 AAAmmf (Yellow) Instant Access 3.86% 1,598,647 MMF Federated 14,650 AAAmmf (Yellow) Instant Access 3.86% 1,995,304 MMF LGIM 3,357 AAAmmf (Yellow) Instant Access 3.86% 608,296 Bank of Scotland Call Account 622 AA-/F1+ (Orange) Instant Access 3.51% 351,953 Handelsbanken AB Call Account 20 AA/F1+ (Orange) Instant Access 3.65% 103,416 Lloyds Banking Group Corporate Markets 10,000 AA-/F1 (Orange) Start: 29 Apr 2025 End: 29 Apr 2026 4.18% 182,632 Total 30,372 4,840,248 * Credit Rating from Fitch ** Colour represents maximum recommended duration for deposit per MUFG Corporate Markets Credit Scoring methodology – see Appendix 2. *** As at 31 December 2025 In-house funds. Investments will be made with reference to the core balance and cash flow requirements and the outlook for short-term interest rates (i.e., rates for investments up to 12 months, with the yield curve reducing the further out deposits are placed). While an element of cash balances are required in order to manage the ups and downs of cash flow, where cash sums can be identified that could be invested for longer periods, the value to be obtained from longer term investments will be carefully assessed. • If it is thought that Bank Rate is likely to fall within that time period, consideration will be given to locking in higher rates currently obtainable, for longer periods, where this is possible within the Council’s day-to-day and monthly cashflow projections; • Conversely, if it is thought that Bank Rate is likely to rise significantly within the time horizon being considered (unlikely in the current climate), then consideration will be given to keeping most investments as being short term or variable. Investment returns expectations The current forecast shown in paragraph 3.3, includes a forecast for Bank Rate to reduce from the current level of 3.75% at the time of writing (30 January 2026) to 3.25% by the end of the forecast time horizon (December 2027). The suggested budgeted investment earnings rates for returns on investments placed for periods up to about three months during each financial year are as shown in Table 15: - Page 202 of 304
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25 Table 15: Suggested budgeted average earnings per annum Average earnings in each year 2025/26 (residual) 3.80% 2026/27 3.40% 2027/28 3.30% 2028/29 3.30% 2029/30 3.50% Long term later years 3.50% As there are so many variables at this time, caution must be exercised in respect of all interest rate forecasts. Investment treasury indicator and limit - total principal funds invested for greater than 365 days. These limits are set with regard to the Council’s liquidity requirements and expected usable reserve forecasts, and are based on the availability of funds after each year-end. The Council is asked to retain the following treasury indicator and limit: - For its cash flow generated balances, the Council will seek to utilise its business reserve instant access accounts and money market funds. 4.5 Environmental, Social and Governance Criteria in Credit & Counterparty Policies (Treasury Management Practice 1) The inclusion of ESG criteria continues to be an emerging area in the Local Authority environment which will require ongoing monitoring. For the 2026/27 financial year, the Council’s priorities of security, liquidity and then yield remain paramount and unchanged (and in that order), with ESG criteria an added 4th element to consider in the decision making process. For short term investments with counterparties, this Council utilises the MUFG creditworthiness service which uses the ratings provided by Fitch, Moody’s and Standard & Poor’s to assess creditworthiness, which in themselves include analysis of ESG factors, and specifically the “G” element, when assigning ratings. Of the 3 elements of ESG, the most important element when considering treasury deposits is the Governance aspect – given the majority of treasury deposits undertaken by Midlothian Council are naturally short dated in duration, poor governance can have a more immediate impact on the financial circumstances of an entity and potential for a default event that could impact the amount of principal returned on the deposit. Those financial institutions viewed as having poor/weak corporate governance are generally less well credit rated in the first instance or have a higher propensity for being subject to negative rating action, and the Council’s existing creditworthiness policy will therefore take this into account. Environment and Social factors are also important, but relate more to the long-term impact. Council should note that in relation to the security aspect of Treasury deposits, placing an undue weight on the Environmental and Social factors in the decision making process could have an adverse effect of limiting the list of potential counterparty options, thus decreasing diversification. This could then in turn lead to a widening of credit (security) criteria, or those Limit £70m Principal Sums Invested for > 365 Days Page 203 of 304
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26 with a stronger “ESG” performance, in order to restore a balance of diversification across the deposit portfolio, potentially increasing credit risk – and placing the cornerstone of prudent investing at risk. The inclusion of ESG criteria therefore remains an area which requires ongoing review. Council officers, in conjunction with the Council’s treasury advisers MUFG, will therefore continue to monitor and assess ongoing developments and emerging standards in this area, and methods in which the Council can incorporate ESG factors into our creditworthiness assessment process, and report back to Council accordingly. 4.6 Investment risk benchmarking The Council will use an investment benchmark to assess the investment performance of its investment portfolio of 6 month SONIA compounded. The Council also participates in Investment Benchmarking groups with MUFG Corporate Markets whereby performance with other Benchmarking club members and the wider Scottish and UK Local Authority Investment benchmarking is compared. 4.7 End of year investment report At the end of the financial year, the Council will report on its investment activity as part of its Annual Treasury Report. Page 204 of 304
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27 5 Appendices 1. Economic background 2. Treasury Management Practice 1 – Permitted Investments 3. Treasury Management Practice 1 – Credit and Counterparty Risk Management 4. Approved countries for investments 5. Treasury management scheme of delegation 6. The treasury management role of the section 95 officer Page 205 of 304
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28 5.6 APPENDIX: Economic Background The first half of 2025/26 saw:- - A 0.3% pick up in GDP for the period April to June 2025. More recently, the economy flatlined in July, with higher taxes for businesses restraining growth, but picked up to 0.1% m/m in August before falling back by 0.1% m/m in September. - The 3m/yy rate of average earnings growth excluding bonuses has fallen from 5.5% to 4.6% in September. - CPI inflation has ebbed and flowed but finished September at 3.8%, whilst core inflation eased to 3.5%. - The Bank of England cut interest rates from 4.50% to 4.25% in May, and then to 4% in August (and subsequently to 3.75% in December). - The 10-year gilt yield fluctuated between 4.4% and 4.8%, ending the half year at 4.70% (before falling back to 4.43% in early November). From a GDP perspective, the financial year got off to a bumpy start with the 0.3% m/m fall in real GDP in April as front-running of US tariffs in Q1 (when GDP grew 0.7% on the quarter) weighed on activity. Despite the underlying reasons for the drop, it was still the first fall since October 2024 and the largest fall since October 2023. However, the economy surprised to the upside in May and June so that quarterly growth ended up 0.3% q/q (subsequently revised down to 0.2% q/q). Nonetheless, the 0.0% m/m change in real GDP in July, followed by a 0.1% m/m increase in August and a 0.1% decrease in September will have caused some concern. GDP growth for 2025 - 2028 is currently forecast by the Office for Budget Responsibility to be in the region of 1.5%. Sticking with future economic sentiment, the composite Purchasing Manager Index (PMI) for the UK increased to 52.2 in October. The manufacturing PMI output balance improved to just below 50 but it is the services sector (52.2) that continues to drive the economy forward. Nonetheless, the PMIs suggest tepid growth is the best that can be expected in the second half of 2025 and the start of 2026. Indeed, on 13 November we heard that GDP for July to September was only 0.1% q/q. Turning to retail sales volumes, and the 1.5% year-on-year rise in September, accelerating from a 0.7% increase in August, marked the highest gain since April. On a monthly basis, retail sales volumes rose 0.5%, defying forecasts of a 0.2% fall, following an upwardly revised 0.6% gain in August. Household spending remains surprisingly resilient, but headwinds are gathering. Prior to the November Budget, the public finances position looked weak. The £20.2 billion borrowed in September was slightly above the £20.1 billion forecast by the OBR. For the year to date, the £99.8 billion borrowed is the second highest for the April to September period since records began in 1993, surpassed only by borrowing during the COVID-19 pandemic. The main drivers of the increased borrowing were higher debt interest costs, rising government running costs, and increased inflation-linked benefit payments, which outweighed the rise in tax and National Insurance contributions. Following the 26 November Budget, the Office for Budget Responsibility (OBR) calculated the net tightening in fiscal policy as £11.7bn (0.3% of GDP) in 2029/30, smaller than the consensus forecast of £25bn. It did downgrade productivity growth by 0.3%, from 1.3% to 1.0%, but a lot of that influence was offset by upgrades to its near-term wage and inflation forecasts. Accordingly, the OBR judged the Chancellor was going to achieve her objectives with £4.2bn to spare. The Chancellor then chose to expand that headroom to £21.7bn, up from £9.9bn previously. Moreover, the Chancellor also chose to raise spending by a net £11.3bn in 2029/30. To pay for that and to increase n headroom, she raised taxes by £26.1bn in 2029/30. The biggest revenue-raisers were the freeze in income tax thresholds from 2028/29 (+£7.8bn) Page 206 of 304
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29 and the rise in NICs on salary-sacrifice pension contributions (+£4.8bn). The increase in council tax for properties worth more than £2.0m will generate £0.4bn. The weakening in the jobs market looked clear in the spring. May’s 109,000 m/m fall in the PAYE measure of employment was the largest decline (barring the pandemic) since the data began and the seventh in as many months. The monthly change was revised lower in five of the previous seven months too, with April’s 33,000 fall revised down to a 55,000 drop. More recently, however, the monthly change was revised higher in seven of the previous nine months by a total of 22,000. So instead of falling by 165,000 in total since October, payroll employment is now thought to have declined by a smaller 153,000. Even so, payroll employment has still fallen in nearly all the months since the Chancellor announced the rises in National Insurance Contributions (NICs) for employers and the minimum wage in the October 2024 Budget. The number of job vacancies in the three months to November 2025 stood at 729,000 (the peak was 1.3 million in spring 2022). All this suggests the labour market continues to loosen, albeit at a slow pace. A looser labour market is driving softer wage pressures. The 3m/yy rate of average earnings growth excluding bonuses has fallen from 5.5% in April to 4.6% in September (still at that level in November). The rate for the private sector has slipped just below 4% as the year end approaches. CPI inflation remained at 3.8% in September but dropped to 3.2% by November. Core inflation also fell to 3.2% by November while services inflation fell to 4.4%. Nonetheless, a further loosening in the labour market and weaker wage growth may be a requisite to UK inflation coming in below 2.0% by 2027. An ever-present issue throughout recent months has been the pressure being exerted on medium and longer dated gilt yields. The yield on the 10-year gilt moved sideways in the second quarter of 2025, rising from 4.4% in early April to 4.8% in mid-April following wider global bond market volatility stemming from the “Liberation Day” tariff announcement, and then easing back as trade tensions began to de-escalate. By the end of April, the 10-year gilt yield had returned to 4.4%. In May, concerns about stickier inflation and shifting expectations about the path for interest rates led to another rise, with the 10-year gilt yield fluctuating between 4.6% and 4.75% for most of May. Thereafter, as trade tensions continued to ease and markets increasingly began to price in looser monetary policy, the 10-year yield edged lower, and ended June at 4.50%. More recently, the yield on the 10-year gilt rose from 4.46% to 4.60% in early July as rolled-back spending cuts raised fiscal concerns. Although the spike proved short lived, it highlighted the UK’s fragile fiscal position. In an era of high debt, high interest rates and low GDP growth, the markets are now more sensitive to fiscal risks than before the pandemic. During August, long-dated gilts underwent a particularly pronounced sell-off, climbing 22 basis points and reaching a 27-year high of 5.6% by the end of the month. While yields have since eased back, the market sell-off was driven by investor concerns over growing supply-demand imbalances, stemming from unease over the lack of fiscal consolidation and reduced demand from traditional long-dated bond purchasers like pension funds. For 10-year gilts, by late September, sticky inflation, resilient activity data and a hawkish Bank of England kept yields elevated over 4.70% although by late December had fallen back again to a little over 4.50%. The FTSE 100 fell sharply following the “Liberation Day” tariff announcement, dropping by more than 10% in the first week of April - from 8,634 on 1 April to 7,702 on 7 April. However, the de-escalation of the trade war coupled with strong corporate earnings led to a rapid rebound starting in late April. As a result, the FTSE 100 ended June at 8,761, around 2% higher than its value at the end of March and more than 7% above its level at the start of 2025. Since then, the FTSE 100 has enjoyed a further 4% rise in July, its strongest monthly gain since January and outperforming the S&P 500. Strong corporate earnings and progress in trade talks (US-EU, UK-India) lifted share prices and the index hit a record 9,321 in mid-August, driven by hopes of peace in Ukraine and dovish signals Page 207 of 304
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30 from Fed Chair Powell. September proved more volatile and the FTSE 100 closed September at 9,350, 7% higher than at the end of Q1 and 14% higher since the start of 2025. Future performance will likely be impacted by the extent to which investors’ global risk appetite remains intact, Fed rate cuts, resilience in the US economy, and AI optimism. A weaker pound will also boost the index as it inflates overseas earnings. In early November, the FTSE100 climbed to a record high just above 9,900. By late December, the index had clung on to most of those gains standing at 9,870 on 23 December. MPC meetings: 8 May, 19 June, 7 August, 18 September, 6 November, December 2025 There were six Monetary Policy Committee (MPC) meetings held between April and December. In May, the Committee cut Bank Rate from 4.50% to 4.25%, while in June policy was left unchanged. In June’s vote, three MPC members (Dhingra, Ramsden and Taylor) voted for an immediate cut to 4.00%, citing loosening labour market conditions. The other six members were more cautious, as they highlighted the need to monitor for “signs of weak demand”, “supply-side constraints” and higher “inflation expectations”, mainly from rising food prices. By repeating the well-used phrase “gradual and careful”, the MPC continued to suggest that rates would be reduced further. In August, a further rate cut was implemented. However, a 5-4 split vote for a rate cut to 4.00% laid bare the different views within the Monetary Policy Committee, with the accompanying commentary noting the decision was “finely balanced” and reiterating that future rate cuts would be undertaken “gradually and carefully”. Ultimately, Governor Bailey was the casting vote for a rate cut but with the CPI measure of inflation expected to reach at least 4% later this year, the MPC was wary of making any further rate cuts until inflation begins its slow downwards trajectory back towards 2%. With wages still rising by just below 5%, it was no surprise that the September meeting saw the MPC vote 7-2 for keeping rates at 4% (Dhingra and Taylor voted for a further 25bps reduction). Moreover, the Bank also took the opportunity to announce that they would only shrink its balance sheet by £70bn over the next 12 months, rather than £100bn. The repetition of the phrase that “a gradual and careful” approach to rate cuts is appropriate suggested the Bank still thought interest rates will fall further. At the 6 November meeting, Governor Bailey was once again the deciding vote, keeping Bank Rate at 4% but hinting strongly that a further rate cut was imminent if data supported such a move. By 18 December, with November CPI inflation having fallen to 3.2%, and with Q2 GDP revised down from 0.3% q/q to only 0.2% q/q, and Q3 GDP stalling at 0.1%, the MPC voted by 5-4 to cut rates further to 3.75%. However, Governor Bailey made it clear that any further reductions would require strong supporting data, and the pace of any further decreases would be slow compared to recent months. The markets expect Bank Rate to next be cut in April 2026. Page 208 of 304
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31 5.7 APPENDIX: Treasury Management Practice (TMP1): Permitted Investments This Council is asked to approve the following forms of investment instrument for use as permitted investments as set out in tables 1.1-1.4. Treasury risks All the investment instruments in tables 1.1-1.4 are subject to the following risks:- 1. Credit and counter-party risk: this is the risk of failure by a counterparty (bank or building society) to meet its contractual obligations to the organisation particularly as a result of the counterparty’s diminished creditworthiness, and the resulting detrimental effect on the organisation’s capital or current (revenue) resources. There are no counterparties where this risk is zero although AAA rated organisations have the highest, relative, level of creditworthiness. 2. Liquidity risk: this is the risk that cash will not be available when it is needed. While it could be said that all counterparties are subject to at least a very small level of liquidity risk as credit risk can never be zero, in this document, liquidity risk has been treated as whether or not instant access to cash can be obtained from each form of investment instrument. However, it has to be pointed out that while some forms of investment e.g. gilts, CDs, corporate bonds can usually be sold immediately if the need arises, there are two caveats: - a. cash may not be available until a settlement date up to three days after the sale b. there is an implied assumption that markets will not freeze up and so the instrument in question will find a ready buyer. The column in tables 1.1-1.4 headed as ‘market risk’ will show each investment instrument as being instant access, sale T+3 = transaction date plus 3 business days before you get cash, or term i.e. money is locked in until an agreed maturity date. 3. Market risk: this is the risk that, through adverse market fluctuations in the value of the principal sums an organisation borrows and invests, its stated treasury management policies and objectives are compromised, against which effects it has failed to protect itself adequately. However, some cash rich local authorities may positively want exposure to market risk e.g. those investing in investment instruments with a view to obtaining a long term increase in value. 4. Interest rate risk: this is the risk that fluctuations in the levels of interest rates create an unexpected or unbudgeted burden on the organisation’s finances, against which the organisation has failed to protect itself adequately. This authority has set limits for its fixed and variable rate exposure in its Treasury Indicators in this report (see Section 3.4). 5. Legal and regulatory risk: this is the risk that the organisation itself, or an organisation with which it is dealing in its treasury management activities, fails to act in accordance with its legal powers or regulatory requirements, and that the organisation suffers losses accordingly. Page 209 of 304
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32 Controls on treasury risks 1. Credit and counter-party risk: this authority has set minimum credit criteria to determine which counterparties and countries are of sufficiently high creditworthiness to be considered for investment purposes. See Sections 4.2 and 4.3. 2. Liquidity risk: this authority has a cash flow forecasting model to enable it to determine how long investments can be made for and how much can be invested. 3. Market risk: this authority does not purchase investment instruments which are subject to market risk in terms of fluctuation in their value. 4. Interest rate risk: this authority manages this risk by having a view of the future course of interest rates and then formulating a treasury management strategy accordingly which aims to maximise investment earnings consistent with control of risk or alternatively, seeks to minimise expenditure on interest costs on borrowing. See Section 4.4. 5. Legal and regulatory risk: this authority will not undertake any form of investing until it has ensured that it has all necessary powers and also complied with all regulations. Unlimited investments Regulation 24 states that an investment can be shown in tables 1 / 2 as being ‘unlimited’ in terms of the maximum amount or percentage of the total portfolio that can be put into that type of investment. However, it also requires that an explanation must be given for using that category. The authority has given the following types of investment an unlimited category: - 1. Debt Management Agency Deposit Facility. This is considered to be the lowest risk form of investment available to local authorities as it is operated by the Debt Management Office which is part of H.M. Treasury i.e. the UK Government’s sovereign rating stands behind the DMADF. It is also a deposit account and avoids the complications of buying and holding Government issued treasury bills or gilts. 2. High credit worthiness banks and building societies. See paragraph 4.2 for an explanation of this authority’s definition of high credit worthiness. While an unlimited amount of the investment portfolio may be put into banks and building societies with high credit worthiness, the authority will ensure diversification of its portfolio ensuring that no more than £15 million can be placed with any one institution or group at any one time, other than the Bank of Scotland or Royal Bank of Scotland where the limit is £30 million. Page 210 of 304
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33 Objectives of each type of investment instrument Regulation 25 requires an explanation of the objectives of every type of investment instrument which an authority approves as being ‘permitted’. 1. DEPOSITS The following forms of ‘investments’ are actually more accurately called deposits as cash is deposited in an account until an agreed maturity date or is held at call. a) Debt Management Agency Deposit Facility. This offers the lowest risk form of investment available to local authorities as it is effectively an investment placed with the Government. It is also easy to use as it is a deposit account and avoids the complications of buying and holding Government issued treasury bills or gilts. As it is low risk it also earns low rates of interest. However, it is very useful for authorities whose overriding priority is the avoidance of risk. The longest period for a term deposit with the DMADF is 6 months. b) Term Deposits – Local Authorities. They are quasi-Government bodies with low counterparty and value risk. Typical deposit terms vary from 1 month to 2 years, with longer term deposits offering an opportunity to increase investment returns by locking in high rates ahead of an expected fall in the level of interest rates. At other times, longer term rates can offer good value when the markets incorrectly assess the speed and timing of interest rate increases. This form of investing therefore, offers a lot of flexibility and typically higher earnings than the DMADF. Where it is restricted is that once a longer term investment is made, that cash is locked in until the maturity date other than with agreement of the counterparty, at which point penalties would typically apply. c) Call accounts with high credit worthiness banks and building societies. See Section 4.2 for an explanation of this authority’s definition of high credit worthiness. These typically offer a much higher rate of return than the DMADF and now that measures have been put in place to avoid over reliance on credit ratings, the authority feels much more confident that the residual risks around using such banks and building societies are at a low, reasonable and acceptable level. There is instant access to recalling cash deposited (or short-dated notice e.g. 15-30 days). This generally means accepting a lower rate of interest than that which could be earned from the same institution by making a term deposit (see 1d below). However, there are a number of call accounts which at the time of writing, offer rates 2 – 3 times more than term deposits with the DMADF. Some use of call accounts is highly desirable to ensure that the authority has ready access to cash when needed to pay bills. d) Term deposits with high credit worthiness banks and building societies. The objectives are as for 1c. These offer a much higher rate of return than the DMADF and deposits made with other Local Authorities (dependent upon term) and, similar to 1c, now that measures have been put in place to avoid over reliance on credit ratings, the authority feels much more confident that the residual risks around using such banks and building societies are at a low, reasonable and acceptable level. This is the most widely used form of investing used by local authorities. The authority will ensure diversification of its portfolio of deposits ensuring that no more than £15 million is invested with any (non-nationalised) UK counterparty, and no more than £15 million is invested with any other non-UK counterparty, group or country. In addition, longer term deposits offer an opportunity to increase investment returns by locking in high rates ahead of an expected fall in the level of interest rates. At other times, longer term rates can offer good value when the markets incorrectly assess the speed and timing of interest rate increases. This form of investing therefore, offers a lot of flexibility and higher earnings than the DMADF. Where it is restricted is that once a longer term investment is made, that cash is locked in until the maturity date. e) Fixed term deposits with variable rate and variable maturities (structured deposits). This encompasses ALL types of structured deposits. There has been considerable change in the types of structured deposits brought to the market over the last few years, some of which are already no longer available. In view of the fluidity of Page 211 of 304
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34 this area, this is a generic title for all structured deposits so as to provide councils with greater flexibility to adopt new instruments as and when they are brought to the market. This line encompasses ALL types of structured deposits. There has been considerable change in the types of structured deposits brought to the market over the last few years, some of which are already no longer available. In view of the fluidity of this area, this is a generic title for all structured deposits so as to provide greater flexibility to adopt new instruments as and when they are brought to the market. 2. DEPOSITS WITH COUNTERPARTIES CURRENTLY IN RECEIPT OF UK GOVERNMENT SUPPORT / OWNERSHIP These banks offer another dimension of creditworthiness in terms of UK Government backing through either direct (partial or full) ownership. The view of this authority is that such backing makes these banks attractive institutions with whom to place deposits, and that will remain our view if the UK sovereign rating were to be downgraded in the coming year. a. Call accounts. As for 1c. but UK Government stated support implies that the UK Government stands behind these banks and building societies and will be deeply committed to providing whatever support that may be required to ensure the continuity of such institutions. This authority feels this indicates a low and acceptable level of residual risk. b. Term deposits with high credit worthiness banks which are fully or semi nationalised. As for 1d. but Government ownership partial or full implies that the UK Government stands behind this bank and will be deeply committed to providing whatever support that may be required to ensure the continuity of that bank. This authority considers this indicates a low and acceptable level of residual risk. c. Fixed term deposits with variable rate and variable maturities (structured deposits). As for 1e but UK Government stated support implies that the UK Government stands behind eligible banks and building societies and will be deeply committed to providing whatever support that may be required to ensure the continuity of such institutions. This authority feels this indicates a low and acceptable level of residual risk. This line encompasses ALL types of structured deposits. There has been considerable change in the types of structured deposits brought to the market over the last few years, some of which are already no longer available. In view of the fluidity of this area, this is a generic title for all structured deposits so as to provide greater flexibility to adopt new instruments as and when they are brought to the market. Page 212 of 304
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35 3. COLLECTIVE INVESTMENT SCHEMES STRUCTURED AS OPEN ENDED INVESTMENT COMPANIES (OEICS) a. Government liquidity funds. These are the same as money market funds (see below) but only invest in government debt issuance with highly rated governments. Due to the higher quality of underlying investments, they offer a lower rate of return than MMFs. However, their net return is typically on a par with the DMADF, but with instant access. b. Money Market Funds (MMFs). By definition, MMFs are AAA rated and are widely diversified, using many forms of money market securities including types which this authority does not currently have the expertise or capabilities to hold directly. However, due to the high level of expertise of the fund managers and the huge amounts of money invested in MMFs, and the fact that the weighted average maturity (WAM) cannot exceed 60 days, MMFs offer a combination of high security, instant access to funds, high diversification and good rates of return compared to equivalent instant access facilities. They are particularly advantageous in falling interest rate environments as their 60 day WAM means they have locked in investments earning higher rates of interest than are currently available in the market. MMFs also help an authority to diversify its own portfolio as e.g. a £2m investment placed directly with HSBC is a 100% risk exposure to HSBC whereas £2m invested in a MMF may end up with say £10,000 being invested with HSBC through the MMF. For authorities particularly concerned with risk exposure to banks, MMFs offer an effective way of minimising risk exposure while still getting much better rates of return than available through the DMADF. c. Ultra Short Dated Bond Funds . These funds are similar to MMFs, can still be AAA rated but have Variable Net Asset Values (VNAV) as opposed to a traditional MMF which has a Constant Net Asset Value (CNAV). They aim to achieve a higher yield and to do this either take more credit risk or invest out for longer periods of time, which means they are more volatile. These funds can have WAM’s and Weighted Average Life (WAL’s) of 90 – 365 days or even longer. Their primary objective is yield and capital preservation is second. They therefore are a higher risk than MMFs and correspondingly have the potential to earn higher returns than MMFs. d. Gilt funds. These are funds which invest only in U.K. Government gilts. They offer a lower rate of return than bond funds but are highly rated both as a fund and through investing only in highly rated government securities. They offer a higher rate of return than investing in the DMADF but they do have an exposure to movements in market prices of assets held. e. Bond funds. These can invest in both government and corporate bonds. This therefore entails a higher level of risk exposure than gilt funds and the aim is to achieve a higher rate of return than normally available from gilt funds by trading in non- government bonds. Page 213 of 304
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36 4. SECURITIES ISSUED OR GUARANTEED BY GOVERNMENTS The following types of investments are where an authority directly purchases a particular investment instrument, a security, i.e. it has a market price when purchased and that value can change during the period the instrument is held until it matures or is sold. The annual earnings on a security is called a yield i.e. it is normally the interest paid by the issuer divided by the price you paid to purchase the security unless a security is initially issued at a discount e.g. treasury bills.. a. Treasury bills. These are short term bills (up to 12 months, although none have ever been issued for this maturity) issued by the Government and so are backed by the sovereign rating of the UK. The yield is higher than the rate of interest paid by the DMADF and another advantage compared to a time deposit in the DMADF is that they can be sold if there is a need for access to cash at any point in time. However, there is a spread between purchase and sale prices so early sales could incur a net cost during the period of ownership. b. Gilts. These are longer term debt issuance by the UK Government and are backed by the sovereign rating of the UK. The yield is higher than the rate of interest paid by the DMADF and another advantage compared to a time deposit in the DMADF is that they can be sold if there is a need for access to cash at any point in time. However, there is a spread between purchase and sale prices so early sales may incur a net cost. Market movements that occur between purchase and sale may also have an adverse impact on proceeds. The advantage over Treasury bills is that they generally offer higher yields the longer it is to maturity (for most periods) if the yield curve is positive. c. Bond issuance issued by a financial institution which is explicitly guaranteed by the UK Government e.g. National Rail. This is similar to a gilt due to the explicit Government guarantee. d. Sovereign bond issues (other than the UK govt) denominated in Sterling. As for gilts but issued by other nations. Use limited to issues of nations with at least the same sovereign rating as for the UK. e. Bonds issued by Multi Lateral Development Banks (MLDBs). These are similar to c. and e. above but are issued by MLDBs which are typically guaranteed by a group of sovereign states e.g. European Bank for Reconstruction and Development. 5. SECURITIES ISSUED BY CORPORATE ORGANISATIONS The following types of investments are where an authority directly purchases a particular investment instrument, a security, i.e. it has a market price when purchased and that value can change during the period the instrument is held until it is sold. The annual earnings on a security is called a yield i.e. is the interest paid by the issuer divided by the price you paid to purchase the security. These are similar to the previous category but corporate organisations can have a wide variety of credit worthiness so it is essential for local authorities to only select the organisations with the highest levels of credit worthiness. Corporate securities are generally a higher risk than government debt issuance and so earn higher yields. a. Certificates of deposit (CDs). These are shorter term securities issued by deposit taking institutions (mainly financial institutions). They are negotiable instruments, so can be sold ahead of maturity and also purchased after they have been issued. However, that liquidity can come at a price, where the yield could be marginally less than placing a deposit with the same bank as the issuing bank. b. Commercial paper. This is similar to CDs but is issued by commercial organisations or other entities. Maturity periods are up to 365 days but commonly 90 days. Page 214 of 304
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37 c. Corporate bonds. These are (long term) bonds (usually bearing a fixed rate of interest) issued by a financial institution, company or other non-government issuer in order to raise capital for the institution as an alternative to issuing shares or borrowing from banks. They are generally seen to be of a lower creditworthiness than government issued debt and so usually offer higher rates of yield. d. Floating rate notes. These are bonds on which the rate of interest is established periodically with reference to short-term interest rates. 6. OTHER a. Local Authority Mortgage Scheme. Authorities who are participating in the Local Authority Mortgage Guarantee Scheme (LAMS) may be required to place a deposit with the mortgage provider(s) up to the full value of the guarantee. The deposit will be in place for the term of the guarantee i.e. 5 years (with the possibility of a further 2 year extension if the account is 90+ days in arrears at the end of the initial 5 years) - and may have conditions / structures attached. The mortgage provider will not hold a legal charge over the deposit. b. Loans to third parties – This would involve the Council borrowing from the PWLB/markets and onward lending to Registered Social Landlords to enable them to access lower cost loans and kickstart developments of affordable mid-market homes. The risk associated with such an investment would be mitigated by an assessment of the counterparty in advance of any loan being granted and through the application of a premium on the loan rate. Interest would be paid by the RSL over the term of the loan, with repayment of principal upon the earlier of 10/20 years or at the point of house sales. The Council will also request that a standard security is taken over the property which would allow the Council to require the sale of the homes to another landlord, providing greater risk mitigation. c. Subordinated Debt Subscription to the SPV set up to deliver the Newbattle Centre project – this involved the Council subscribing £332,806 of subordinated debt to the SPV that was set up to deliver the Newbattle Centre project (2 year construction and 25 year operational contract length). The length of the investment is 25 years with the subscription made at operation commencement of the contract. The repayment profile will comprise 81% of the principal remaining invested until the final two years of the contract. The risk associated with this type of investment will be mitigated through an annual assessment as a minimum to review the holding of such debt, and whether the exposure to risk arising from the investment has changed over the period. d. ESCO: Midlothian Energy Limited (MEL) Joint Venture between Midlothian Council and Vattenfall to deliver energy supply to Shawfair using heat supplied from the Millerhill Energy from Waste plant and related projects. Page 215 of 304
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38 Table 1: Permitted Investments 1.1 Deposits Investment Category Minimum Credit Criteria Liquidity risk Market risk Max %/£m of total investments Max. maturity period Max Transaction Value Debt Management Agency Deposit Facility UK Government Term No 100% 6 months n/a Term deposits – local authorities Quasi-UK Government Term No 100% 5 years £15m Call accounts – banks and building societies Green Instant No 100% 1 day £15m Term deposits / Notice Accounts – banks and building societies Yellow Purple Blue Orange Red Green No Colour Term No 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use £15m Fixed term deposits with variable rate and variable maturities: - Structured deposits Yellow Purple Blue Orange Red Green No Colour Term No 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use £15m 1.2 Deposits with counterparties currently in receipt of government support / ownership Investment Category Minimum Credit Criteria Liquidity risk Market risk Max %/£m of total investments Max. maturity period Max Transaction Value UK nationalised banks – Call accounts Blue Instant No 100% 1 day £30m UK nationalised banks – Term Deposits / Notice Accounts Blue Term No 100% 2 years £30m UK nationalised banks – Fixed term deposits with variable rate and variable maturities: - Structured deposits Blue Term No 100% 2 years £30m Non-UK (high sovereign rated country) nationalised banks – Call accounts Green Instant No 100% 1 day £15m Non-UK (high sovereign rated country) nationalised banks:- Term Deposits / Notice Accounts Yellow Purple Blue Orange Red Green No Colour Term No 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use £15m Non-UK (high sovereign rated country) nationalised banks:- Fixed term deposits with variable rate and variable maturities: - Structured deposits Yellow Purple Blue Orange Red Green No Colour Term No 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use £15m If forward deposits are made, the forward period plus the deal period equate to the maximum maturity period. Page 216 of 304
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39 1.3 Collective investment schemes structured as Open Ended Investment Companies (OEICs) Investment Category Minimum Credit Criteria Liquidity risk Market risk Max %/£m of total investments Max. maturity period Max Transaction Value Government Liquidity Funds AAA Instant No 100% 1 day £15m Money Market Funds CNAV AAA Instant No 100% 1 day £15m Money Market Funds LVNAV AAA Instant No 100% 1 day £15m Money Market Funds VNAV AAA Instant No 100% 1 day £15m Ultra Short Dated Bond Funds with a credit score of 1.25 AAA T+1 to T+5 Yes 100% 1 week £15m Ultra Short Dated Bond Funds with a credit score of 1.5 AAA T+1 to T+5 Yes 100% 1 week £15m Bond Funds AAA T+2 or longer Yes 50% 2 days £15m Gilt Funds AAA T+2 or longer Yes 50% 2 days £15m 1.4 Securities issued or guaranteed by governments Investment Category * Minimum Credit Criteria Liquidity risk Market risk Max %?£m of total investments Max. maturity period Treasury Bills UK sovereign rating Sale T+1 Yes 100% 6 months UK Government Gilts UK sovereign rating Sale T+1 Yes 100% 50 years Bond issuance issued by a financial institution which is explicitly guaranteed by the UK Government e.g. National Rail UK sovereign rating Sale T+3 Yes 100% 50 years Sovereign bond issues (other than the UK govt) AAA (or state your criteria if different) Sale T+1 Yes 100% 50 years Bonds issued by multilateral development banks AAA (or state your criteria if different) Sale T+1 Yes 100% 50 years Page 217 of 304
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40 1.5 Securities issued by corporate organisations Investment Category * Minimum Credit Criteria Liquidity risk Market risk Max % of total investments Max. maturity period Max Transaction Value Certificates of deposit issued by banks and building societies Yellow Purple Blue Orange Red Green No Colour Sale T+1 Yes 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use £15m Commercial paper other Yellow Purple Blue Orange Red Green No Colour Sale T+0 Yes 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use £15m Floating rate notes Yellow Purple Blue Orange Red Green No Colour Sale T+2 Yes 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use £15m Corporate Bonds other Yellow Purple Blue Orange Red Green No Colour Sale T+2 Yes 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use £15m 1.6 Other Investment Category Minimum Credit Criteria Liquidity risk Market risk Max %/£m of total investments Max. maturity period Local authority mortgage guarantee scheme. Blue Term No 50% 5 years Loans to Third Parties n/a Term No £25m 20 years Subordinated Debt Subscription to Newbattle Centre SPV n/a Term No £0.326m 22 years ESCO n/a Term No £10.2m n/a Page 218 of 304
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41 5.8 APPENDIX: Treasury Management Practice (TMP1) – Credit and Counterparty Risk Management Midlothian Council Permitted Investments, Associated Controls and Limits Type of Investment Treasury Risks Mitigating Controls Council Limits Cash type instruments a. Deposits with the Debt Management Account Facility (UK Government) (Very low risk) This is a deposit with the UK Government and as such counterparty and liquidity risk is very low, and there is no risk to value. Deposits can be between overnight and 6 months. Little mitigating controls required. As this is a UK Government investment the monetary limit is unlimited to allow for a safe haven for investments. As shown in Appendix 5.2. b. Deposits with other local authorities or public bodies (Very low risk) These are considered quasi UK Government debt and as such counterparty risk is very low, and there is no risk to value. Deposits can only be broken with the agreement of the counterparty, and penalties can apply. Deposits with other non-local authority bodies will be restricted to the overall credit rating criteria. Little mitigating controls required for local authority deposits, as this is a quasi UK Government investment. Non- local authority deposits will follow the approved credit rating criteria. As shown in Appendix 5.2. c. CNAV, LVNAV and VNAV Money Market Funds (MMFs) (Low to very low risk) Pooled cash investment vehicle which provides very low counterparty, liquidity and market risk. These will primarily be used as liquidity instruments. Funds will only be used where the MMF has a “AAA” rated status from either Fitch, Moody’s or Standard & Poors. As shown in Appendix 5.2. d. Ultra Short Dated Bond Funds (low risk) Pooled cash investment vehicle which provides very low counterparty, liquidity and market risk. These will primarily be used as liquidity instruments. Funds will only be used where the Ultra Short Dated Bond Fund has a “AAA” rated status from either Fitch, Moody’s or Standard and Poor’s. As shown in Appendix 5.2. Page 219 of 304
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42 Type of Investment Treasury Risks Mitigating Controls Council Limits e. Call account deposit accounts with financial institutions (banks and building societies) (Low risk depending on credit rating) These tend to be low risk investments, but will exhibit higher risks than categories (a), (b) and (c) above. Whilst there is no risk to value with these types of investments, liquidity is high and investments can be returned at short notice. The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poor’s, with the credit scoring methodology by MUFG Corporate Markets overlaid. On day to day investment dealing with this criteria will be further strengthened by the use of additional market intelligence. As shown in Appendix 5.2. f. Term deposits with financial institutions (banks and building societies) (Low to medium risk depending on period & credit rating) These tend to be low risk investments, but will exhibit higher risks than categories (a), (b), (c) and (d) above. Whilst there is no risk to value with these types of investments, liquidity is low and term deposits can only be broken with the agreement of the counterparty, and penalties may apply. The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poor’s, with the credit scoring methodology by MUFG Corporate Markets overlaid. On day to day investment dealing, this criteria will be further strengthened by the use of additional market intelligence. As shown in Appendix 5.2. Page 220 of 304
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43 Type of Investment Treasury Risks Mitigating Controls Council Limits g. Government Gilts and Treasury Bills (Very low risk) These are marketable securities issued by the UK Government and as such counterparty and liquidity risk is very low, although there is potential risk to value arising from an adverse movement in interest rates (no loss if these are held to maturity. Little counterparty mitigating controls are required, as this is a UK Government investment. The potential for capital loss will be reduced by limiting the maximum monetary and time exposures As shown in Appendix 5.2. h. Certificates of deposits with financial institutions (Low risk) These are short dated marketable securities issued by financial institutions and as such counterparty risk is low, but will exhibit higher risks than categories (a), (b) and (c) above. There is risk to value of capital loss arising from selling ahead of maturity if combined with an adverse movement in interest rates (no loss if these are held to maturity). Liquidity risk will normally be low. The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poor’s. The selection defaults to the lowest available colour band / credit rating to provide additional risk control measures. Day to day investment dealing with this criteria will be further strengthened by the use of additional market intelligence. As shown in Appendix 5.2. i. Structured deposit facilities with banks and building societies (escalating rates, de-escalating rates etc.) (Low to medium risk depending on period & credit rating) These tend to be medium to low risk investments, but will exhibit higher risks than categories (a), (b), (c) and (d) above. Whilst there is no risk to value with these types of investments, liquidity is very low and investments can only be broken with the agreement of the counterparty (penalties may apply). The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poor’s, with the credit scoring methodology by MUFG Corporate Markets overlaid. On day to day investment dealing, this criteria will be further strengthened by the use of additional market intelligence. As shown in Appendix 5.2. Page 221 of 304
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44 Type of Investment Treasury Risks Mitigating Controls Council Limits j. Corporate bonds (Medium to high risk depending on period & credit rating) These are marketable securities issued by financial and corporate institutions. Counterparty risk will vary and there is risk to value of capital loss arising from selling ahead of maturity if combined with an adverse movement in interest rates. Liquidity risk will be low. The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poor’s. The selection defaults to the lowest available colour band / credit rating to provide additional risk control measures. Corporate bonds will be restricted to those meeting the base criteria. Day to day investment dealing with this criteria will be further strengthened by the use of additional market intelligence. As shown in Appendix 5.2. Page 222 of 304
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45 Type of Investment Treasury Risks Mitigating Controls Council Limits Other types of investments k. Loans to third parties Using the example of a loan to a RSL, these would be medium risk investments, exhibiting higher risks than categories (a)-(f) above. They are also highly illiquid and are only repaid at the end of a defined period of time (up to 20 years) or on the sale of a property, whichever is the earlier. The risk associated with such an investment would be mitigated through the application of a premium on the loan rate. The Council will also request that a standard security is taken over the property which would allow the Council to require the sale of the homes to another landlord, providing greater risk mitigation. £25m l. Non-local authority shareholdings These are non-service investments which may exhibit market risk, be only considered for longer term investments and will be likely to be liquid. Any non-service equity investment will require separate Member approval and each application will be supported by the service rational behind the investment and the likelihood of loss. Per Existing m. Local Authority Mortgage Scheme (LAMS) These are service investments at market rates of interest plus a premium. As shown in Appendix 5.2. n. Subordinated Debt Subscription to Newbattle Centre SPV These are investments that are exposed to the success or failure of individual projects and are highly illiquid. The Council and Scottish Government (via the SFT) are participants in and party to the governance and controls within the project structure. As such they are well placed to influence and ensure the successful completion of the project’s term. As shown in Appendix 5.2. o. ESCO These are investments that are exposed to the success or failure of individual projects and are highly illiquid. The Council is in a joint venture partnership and therefore party to the governance and controls within the project structure. As such the Council is As shown in Appendix 5.2. Page 223 of 304
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46 well placed to influence and ensure the successful completion of the project’s term The Monitoring of Deposit Counterparties - The status of counterparties will be monitored regularly. The Council receives credit rating and market information from MUFG Corporate Markets, including when ratings change, and counterparties are checked promptly. On occasion ratings may be downgraded when an investment has already been made. The criteria used are such that a minor downgrading should not affect the full receipt of the principal and interest. Any counterparty failing to meet the criteria will be removed from the list immediately by the Chief Financial Officer & Section 95 Officer, and if required new counterparties which meet the criteria will be added to the list. Page 224 of 304
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5.9 APPENDIX: Approved countries for investments Based on the lowest available rating as at 30.01.2026 AAA • Australia • Denmark • Germany • Netherlands • Norway • Singapore • Sweden • Switzerland AA+ • Canada • U.S.A. AA • Abu Dhabi (UAE) • Finland AA- • U.K. A+ • Belgium • France Page 225 of 304
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48 5.10 APPENDIX: Treasury management scheme of delegation (i) Full Council • receiving and reviewing reports on treasury management policies, practices and activities; • approval of annual strategy. • approval of/amendments to the organisation’s adopted clauses, treasury management policy statement and treasury management practices; • budget consideration and approval; • approval of the division of responsibilities; • receiving and reviewing regular monitoring reports and acting on recommendations; • approving the selection of external service providers and agreeing terms of appointment. (iii) Audit Committee • reviewing treasury management reports, the treasury management policy and procedures, and making recommendations to the responsible body. Page 226 of 304
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49 5.11 APPENDIX: The treasury management role of the section 95 officer The S95 (responsible) officer • recommending clauses, treasury management policy/practices for approval, reviewing the same regularly, and monitoring compliance; • submitting regular treasury management policy reports; • submitting budgets and budget variations; • receiving and reviewing management information reports; • reviewing the performance of the treasury management function; • ensuring the adequacy of treasury management resources and skills, and the effective division of responsibilities within the treasury management function; • ensuring the adequacy of internal audit, and liaising with external audit; • recommending the appointment of external service providers; • preparation of a capital strategy to include capital expenditure, capital financing, non-financial investments and treasury management, with a long term timeframe; • ensuring that the capital strategy is prudent, sustainable, affordable and prudent in the long term and provides value for money; • ensuring that due diligence has been carried out on all treasury and non-financial investments and is in accordance with the risk appetite of the authority; • ensure that the authority has appropriate legal powers to undertake expenditure on non-financial assets and their financing; • ensuring the proportionality of all investments so that the authority does not undertake a level of investing which exposes the authority to an excessive level of risk compared to its financial resources; • ensuring that an adequate governance process is in place for the approval, monitoring and ongoing risk management of all non-financial investments and long term liabilities; • provision to members of a schedule of all non-treasury investments including material investments in subsidiaries, joint ventures, loans and financial guarantees ensuring that members are adequately informed and understand the risk exposures taken on by an authority; • ensuring that the authority has adequate expertise, either in house or externally provided, to carry out the above; • creation of Treasury Management Practices which specifically deal with how non- treasury investments will be carried out and managed, to include the following:- o Risk management (TMP1 and schedules), including investment and risk management criteria for any material non-treasury investment portfolios; o Performance measurement and management (TMP2 and schedules), including methodology and criteria for assessing the performance and success of non-treasury investments; o Decision making, governance and organisation (TMP5 and schedules), including a statement of the governance requirements for decision making in relation to non-treasury investments; and arrangements to ensure that appropriate professional due diligence is carried out to support decision making; o Reporting and management information (TMP6 and schedules), including where and how often monitoring reports are taken; Page 227 of 304
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50 o Training and qualifications (TMP10 and schedules), including how the relevant knowledge and skills in relation to non-treasury investments will be arranged. Page 228 of 304
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Midlothian Council Tuesday 24 February 2026 Item No 8.9 Transformation Blueprint - Theme 3 - Workplaces of the Future: Relocation of Gorebridge Library Report by Saty Kaur, Chief Officer Corporate Solutions Report for Decision 1 Recommendations Council is recommended to approve: • The Business Transformation Steering Group recommendation for the relocation of Gorebridge Library to the Gorebridge Leisure Centre to create the Gorebridge Hub. • The allocation in the General Services Capital Plan of £0.983 million (capital) and the associated loan charges and changes to premises costs in 4.1 table 2 in the Medium Term Financial Strategy. 2 Purpose of Report/Executive Summary To present the relocation of Gorebridge Library into the Gorebridge Leisure Centre to create a Gorebridge Hub for Council’s consideration and approval. Date Monday 2 February 2026 Report Contact: Saty Kaur, Chief Officer Corporate Solutions Saty.Kaur@midlothian.gov.uk Page 229 of 304
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3 Background 3.1 The Council’s Transformation Blueprint 2023 – 2028 (‘the Blueprint’) was approved in June 2023. The Blueprint is aligned to the delivery of the Council’s Medium Term Financial Strategy, containing a range of themes and actions that facilitate the Council to transform the way it works, providing services holistically and meeting the needs of Midlothian’s communities. 3.2 Theme 3 of the Blueprint – Workplaces of the Future – focuses on how the Council and partners can best use their asset base to maximise usage; reduce the ongoing costs of maintenance and provide community spaces that sustain service delivery for our citizens now and in the future within existing budgets. 3.3 Gorebridge Library and Gorebridge Leisure Centre are located within 0.37km of each other, within a vibrant area of Midlothian, where housebuilding is increasing at pace. The population of Gorebridge is 8,905 (as at the 2022 Census) and accounts for 7.6% of Midlothian’s population. The population includes a mix of age groups, with a notable proportion of families and older adults. 3.4 Midlothian has an indicative Local Housing Land Requirement of 8,851 homes to be delivered in the Midlothian Local Development Plan 2. As the fastest growing Local Authority in mainland Scotland, it is imperative that communities benefit from fit for purpose services that respond to the needs of the growing community population, working for the existing households in the area and being attractive for the incoming households. 3.5 Community facilities should support wellbeing, education, recreation and social inclusion. Evidence shows that facilities that provide these services are central to its development strategy and community vision. This is reflected in the Gorebridge and District Local Place Plan 2024. Current position 3.6 Over the course of the last 12-18 months, Gorebridge Library has seen a significant decline in the building condition; most notably in regard to the roof which is a flatted roof design. Interim repairs have been undertaken in previous years. The most recent building condition survey (February 2024) assessed that no more interim repairs could be undertaken as the roof has reached the end of its life cycle; which requires a complete replacement. The condition survey also identified a range of mechanical and electrical maintenance requirements. All of this work will require a capital investment of £889k. 3.7 The impact of the current repair requirements has compromised service provision in Gorebridge Library. Regular leaks from the roof condition means areas of the library have to be closed off; reducing the footprint of usable space for the community and poor working environment for staff. It also reduces confidence in the Council to provide fit for purpose at a time when communities are depending more on community facilities. Page 230 of 304
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3.8 In 2020, in response to the pandemic, Gorebridge Leisure Centre was utilised as a COVID vaccination centre. Post pandemic the Leisure Centre has not returned to pre-pandemic user numbers; and the hall used to host the vaccination centre remains underutilised which equates to one third of the Leisure Centre’s footprint. In 2024/25 a decision was taken to reduce the weekend opening hours in response to the decrease in usage. Investing in community facilities 3.9 The Council is facing significant financial challenges and needs to find ways to sustain services for communities, enhance existing provision and ensure that staff have fit for purpose workplaces. 3.10 Across Scotland, local authorities are reducing library and leisure provision in response to financial challenges. Midlothian Council recognises the significant value that library and leisure services provide to local communities and wants to invest in retaining these community assets and services. 3.11 Midlothian has demonstrated its commitment to sustaining community facilities. Recent examples are through the current phased programme of gym refurbishments which include enhancing the interiors, upgraded wifi and new/replacement gym equipment, with Phase 1 almost complete. In libraries, Gorebridge was the Council’s first Lend and Mend Hub with investment subsequently made to roll this flagship service out to other libraries across Midlothian. 3.12 It is imperative that these services continue to run and are enabled to grow and develop in response to local need in attractive, safe and warm spaces for communities to use. 3.13 An options appraisal in 2025 was prompted by the condition of the existing library building and the underutilisation of the existing leisure centre. Costs have been analysed for the ongoing running of both assets; backlog maintenance required for both assets and investment required to make the assets sustainable for the future. This work is aligned to the Council’s Capital Investment Strategy 2018-2028 and Asset Management Plan. 3.14 The options appraisal with full costs was presented to Business Transformation Steering Group (BTSG) where the BTSG recommendation is that the most beneficial option to sustain and future proof both services is to re-locate the library to the leisure centre. 3.15 The leisure centre roof was refitted in December 2022. The condition survey of March 2025 indicated that mechanical and electrical works are required in 2026/27 to replace the heating system and further investment in 2030/31 to replace wiring and water systems. All of these works would improve and extend the life span of the asset and reduce current running costs. The leisure centre can be redesigned with no structural changes to accommodate the library and leisure facilities with no negative impact on the current service provision. Page 231 of 304
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3.16 As part of the work to relocate the library, a range of gym equipment (cardiovascular and resistance equipment) will be replaced which will bring a significant improvement in the quality and offering. Library and leisure opening hours are different so self service will be introduced to the library in the evenings after 7pm (when the leisure centre is open and the library would normally be closed) and on Wednesday afternoon when the library is currently closed, to extend the current library offer. All existing groups, clubs and activities that are provided by both services will continue to run with the added benefit of being co-located which hopefully will bring an increase in the use of these services. Discussions are ongoing between services about whether extended opening hours, weekend opening and keyholder models could be adopted as part of a hub delivery model. This will be explored and presented for consideration in later 2026. 3.17 If Council approve the BTSG recommendation, the library relocation would commence in late May 2026 (the leisure centre is a polling place for the Scottish Parliamentary Elections) and is estimated to take 4 weeks to complete. All efforts will be made to minimise service disruption during this time. The library site will be marketed for sale following the relocation. 4 Report Implications (Resource, Digital and Risk) 4.1 Resource Capital Capital expenditure budgetary provision in the Council’s General Services Capital Plan of £0.983m is required for the mechanical and engineering works to the Leisure Centre and would be phased across 2026/27 to 2030/31 as noted in Table 1 below. This would be required to be fully funded by Prudential Borrowing. Table 1: Capital Expenditure Budget Financial Year 2026/27 £000’s 2027/28 £000’s 2028/29 £000’s 2029/30 £000’s 2030/31 £000’s Total £000’s Capital Expenditure Budget 485 101 0 0 397 983 Revenue The Revenue savings represent a reduction in premises costs as a result of the relocation Gorebridge library to Gorebridge Leisure Centre creating the Gorebridge Hub. Page 232 of 304
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Table 2: The revenue budget implications, including the direct revenue consequences of capital (Loan Charges) and revenue savings Financial Year 2026/27 £000’s 2027/28 £000’s 2028/29 £000’s 2029/30 £000’s 2030/31 £000’s 2031/32+ £000’s Loan charges 11 31 35 35 43 58 Revenue savings -43 -43 -43 -43 -43 -43 One-off Revenue decant cost 6 Net Revenue Budget Deficit/(Surplus) -26 -12 -8 -8 0 15 As can be noted from the table above, the impact of the project proposals is to deliver a net revenue budget saving of £0.026 million in 2026/27, £0.012m in 2027/28, £0.008m in 2028/29 and 2029/30, neutral in 2030/31, and an ongoing cost of £0.015m per annum to the revenue budget from 2031/32. 4.2 Digital No implications. 4.3 Risk There is financial and reputational risk to continue with the current position – notably due to the ongoing deterioration of the library building. 4.4 Ensuring Equalities (if required a separate IIA must be completed) There is no negative impact to service users through the relocation of the library into the leisure centre creating a hub service model. 4.5 Additional Report Implications (See Appendix A) See Appendix A Page 233 of 304
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APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan The Single Midlothian Plan identifies priorities to meet the needs of Midlothian’s citizens. This proposal to sustain community facilities aims to support key priorities in the plan including improving health and wellbeing outcomes, learning outcomes and reducing poverty. A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value Best Value is ensuring that there is good governance and effective management of resources, with a focus on improvement, to deliver the best possible outcomes for the public. By sustaining community services this demonstrates the Council’s commitment to secure Best Value for its communities. A.5 Involving Communities and Other Stakeholders Through previous budget engagement processes, communities have responded strongly that they value the leisure and library services and do not support a reduction in services. This proposal aims to sustain the long term future of these facilities. A.6 Impact on Performance and Outcomes N/A Page 234 of 304
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A.7 Adopting a Preventative Approach N/A A.8 Supporting Sustainable Development This proposal aims to sustain the long term future of these facilities. Page 235 of 304
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Midlothian Council Tuesday 24 February 2026 Item No 8.10 Additional Public Holiday for Scotland in Football World Cup 2026 Report by Kevin Anderson, Executive Director Place Report for Decision 1 Recommendation Council is requested to; i. consider the introduction of Monday, 15th June, 2026 as a public holiday in Midlothian, in light of the national bank holiday on that date announced by the First Minister to mark Scotland’s participation in the men's World Cup finals for the first time since 1998, and, if approved; ii. requires the Executive Director Children, Young People and Partnerships to progress the exceptional school closure request for the day from the Scottish Government. 2 Purpose of Report/Executive Summary With the Scottish Government confirming an additional bank holiday, consideration needs to be given to whether the additional day should be recognised locally. CoSLA has advised that it is unlikely to provide guidance on this, as leave is a matter for local determination by each Council. If guidance is provided it is likely to be flexible and retain local determination, in line with previous guidance. Bank holidays or local public holidays do not have to be given as paid leave as these can be included as part of a worker’s statutory annual leave and the approach to be taken is for each local authority to determine. Consequently options for members to consider are: ▪ offering an additional fixed day, or ▪ offering an additional public holiday onto annual leave entitlement, or ▪ making no adjustment to holidays for the event Page 237 of 304
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Date 2 February 2026 Report Contact Name: Kevin Anderson, Executive Director Place Tel: 0131 271 3102 Email: kevin.anderson@midlothian.gov.uk Page 238 of 304
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3 Background First Minister John Swinney has proposed Monday 15 June 2026 is designated a national bank holiday to mark Scotland’s participation in the men's World Cup finals for the first time since 1998. This will allow individuals, businesses and other organisations in Scotland to celebrate after the men’s team play their opening game against Haiti in Boston. Bank holidays are set under the Banking and Financial Dealings Act 1971. The relevant powers were devolved by the Scotland Act 1998. A day can be appointed as a bank holiday in Scotland by Royal Proclamation. The First Minister advises the Privy Council on proclamations for Scotland that are then designated by Royal Proclamation by His Majesty the King. A Royal Proclamation has subsequently been confirmed for the 15 June 2026. Midlothian Council has already published school term dates for 2026/27 and if this additional public holiday is agreed, the education service will be required to progress an exceptional school closure request from the Scottish Government. 4 Report Implications (Resource, Digital and Risk) 4.1 Resource An initial assessment of an additional fixed public holiday has been made of added paybill costs which would need to be provided for in the 2026/27 budget as an extra pressure amounting to £130,000. 4.2 Digital There are no digital implications arising from this report. 4.3 Risk Officers are aware of the costs of a public holiday and financial position of the Council, and the impact if additional monies are to be found. 4.4 Ensuring Equalities (if required a separate IIA must be completed) There is no significant impact arising from the proposal contained within this report. Page 239 of 304
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4.5 Additional Report Implications Appendices APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan Not applicable A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value Not applicable A.5 Involving Communities and Other Stakeholders Initial, informal engagement with local Trades Unions did not express a preference on local arrangements. An employee working on a public holiday will receive the appropriate overtime rate for all hours worked on the public holiday, regardless of the hours worked in the week. Page 240 of 304
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A.6 Impact on Performance and Outcomes Not applicable A.7 Adopting a Preventative Approach Not applicable A.8 Supporting Sustainable Development Not applicable. Page 241 of 304
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Midlothian Council Tuesday 24 February 2026 Item No 8.12 Midlothian School Admission Policy: Update Report by Derek Oliver, Executive Director Children, Young People & Partnerships (Acting) Report for Information 1 Recommendations Council is recommended to note: i. Positive engagement with East Lothian Council, and a notional financial contribution for pupils of Loretto RC Primary School attending St Davids RC High School in academic year 2026/27; with a commitment to work together to obtain a formalised agreement for future years admissions; ii. The statutory consultation on Midlothian Council’s Admission Policy for Primary and Secondary Schools will commence in April 2026. 2 Purpose of Report This report provides an update to Council on the engagement with East Lothian Council contributing towards pupils of Loretto RC Primary School attending St David’s RC High School in academic year 2026/27; and, with this, that the statutory consultation on Midlothian Council’s Admission Policy for Primary and Secondary Schools as presented to Council in December 2025 will commence April 2026. Date: 2nd February 2026 Report Contact: Derek Oliver, Acting Executive Director Children, Young People & Partnerships Derek.Oliver@midlothian.gov.uk Page 243 of 304
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3 Background 1. Between 2nd April 2025 and 2nd June 2025, a statutory consultation was carried out in relation to the Midlothian School Admission Policy. The report was published on 18th August 2025. 2. On 9th September 2025, the Executive Director Children, Young People and Partnerships presented the report at the full meeting of Midlothian Council. Elected members approved the following : i. Agree that the revised School Admissions Policy will take effect from September 2025. ii. Agree to maintain the current status quo as set out in paragraph 11 for the admission of pupils attending Loretto Roman Catholic (RC) Primary School to St David's RC High School for the August 2026 intake. iii. Agree that the revised School Admissions Policy will take effect from September 2025. iv. Agree to maintain the current status quo as set out in paragraph 11 for the admission of pupils attending Loretto Roman Catholic (RC) Primary School to St David's RC High School for the August 2026 intake. v. Instruct the Executive Director, Children, Young People and Partnerships to take steps to recover the costs of school education and any ancillary costs on an ongoing basis from East Lothian Council for former Loretto RC Primary School pupils attending St David’s RC High School from August 2025. vi. Instruct the Executive Director, Children, Young People and Partnerships to take forward a) or b) as set out below and any legally required steps, including carrying out any necessary statutory consultation (Ensuring that any statutory consultation provides clarity i) as to the catchment area of St David’s RC High School and ii) the basis of admission to St David’s RC High School) in order to either: a) set aside any existing agreements or arrangements, and enter into a new agreement with East Lothian Council setting out the basis of admission, including any priority given within the admission policy for pupils of Loretto RC Primary School who wish to attend St David's RC High School; with the instruction that any arrangement/agreement does not disadvantage Midlothian children and promotes the Roman Catholic ethos of St David’s RC High School; or b) bring any existing agreements or arrangements under which pupils from Loretto RC Primary School transfer to St David’s RC High School to an end from the August 2027 intake onwards. vii. Instruct the Executive Director, Children, Young People and Partnerships to report back to Council on the approved recommendations at the point a further decision is required Page 244 of 304
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3. Also at September Council, it was agreed to remit Midlothian’s Education and Children’s Services Cross Party group to develop the detail of further consultation on the Admissions Policy and to return to Council in December 2025. 4. On 16th December 2025, the Executive Director Children, Young People and Partnerships (Acting) presented the revised admission to primary and secondary schools priority groups for denominational schools. This prioritisation was developed through discussions with Cross Party members, and the Council’s Religious Representative. 5. The revised prioritisation was agreed at full Council and permission was granted to carry out a statutory consultation in relation to this prioritisation in early 2026. 6. The proposed prioritisation was subject to the outcome of engagement with East Lothian Council with regards to the additional and quantifiable education costs associated with Loretto RC Primary School pupils accessing St David’s RC High School for secondary denominational education. 7. Throughout January 2026, discussions took place between East Lothian and Midlothian Councils. For 2026/27 only, a notional contribution was agreed in recognition of partnership working and to allow Midlothian Council to progress to statutory consultation, allowing time for a formal agreement to be established between both Councils for future years. 4. Report Implications (Resource, Digital and Risk) 4.1 Resource The notional contribution from East Lothian Council will mitigate additional costs arising directly from Loretto RC PS pupils accessing St David’s RC HS for denominational secondary education. 4.2 Digital None. 4.3 Risk The education authority has to comply with duties set out in Scottish legislation including the Education (Scotland) Act 1980 and The Education (School Placing Information) Regulations 2012 which set out the statutory duty on an education authority to publish its arrangements for the placing of all children in its schools, whether the child lives within Midlothian or outwith, and formulate guidelines to be followed with regard to placing in schools or if necessary in any particular school in the event of there being more placing requests made than there are places available. The proposed variation to priority groups for admission, subject to the outcome of statutory consultation will mitigate any risk to the local authority of not fulfilling its statutory duties. Page 245 of 304
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4.4 Ensuring Equalities (if required a separate IIA must be completed) An Integrated Impact Assessment will be undertaken and published. 4.5 Additional Report Implications See Appendix A. Page 246 of 304
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APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan Midlothian will get it right for every child. Services are designed to ensure the rights of every child and young person in Midlothian will be upheld, as UNCRC is fully embedded into daily practice and processes. A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value The implementation of the recommendation of this report will enhance best value in the delivery of Council services. A.5 Involving Communities and Other Stakeholders Communities and stakeholders will be invited to respond to any statutory consultation to be carried out subject to approval of recommendations set out in the report. A.6 Impact on Performance and Outcomes The report does not impact directly on Midlothian Council’s performance and outcomes. A.7 Adopting a Preventative Approach N/A A.8 Supporting Sustainable Development N/A Page 247 of 304
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Midlothian Council Tuesday 24 February 2026 Item No 8.13 Mount Esk Nursery Consultation Report by Executive Director Children, Young People & Partnerships (Acting) Report for Decision 1 Recommendations Council is recommended to approve: i.. The closure and redesignation of Mount Esk Nursery School to Hawthornden Primary School Nursery Class from August 2026 ii. The leadership of the new Hawthornden Primary School Nursery Class being under the Hawthornden Primary School Head Teacher. 2 Purpose of Report This report advises the outcome of the statutory consultation on the proposal to close Mount Esk Nursery School and establish a new nursery class at Hawthornden Primary School under the leadership of the Head Teacher and seeks approval for the recommendations outlined above. The statutory consultation on the proposal was undertaken in the period from Monday 20 November 2025 and ended on Sunday 21 December 2025. The statutory report on the outcome of the consultation was published on Sunday 25 January 2026 and provides full details of the process undertaken, representations made and His Majesty’s Inspectorate of Education in Scotland (HMIES) independent report on the proposal. Date: Friday 30 January 2026 Report Contact: Derek Oliver, Acting Executive Director Children, Young People & Partnerships Derek.Oliver@midlothian.gov.uk Page 249 of 304
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3 Background 1. The Education (Scotland) Act 1980 places a legislative duty on the Council to make adequate and efficient provision of school education across its area. This duty applies in respect of both the current school population and anticipated pattern of demand. 2. Section 3D of the Standards in Scotland’s Schools etc. Act 2000 (as inserted by Section 2 of the Education (Scotland) 2016 Act) introduces a requirement on education authorities to carry out their duty to ensure the delivery of improvement in the quality of school education which is provided in the schools they manage, with a view to achieving the strategic priorities of the National Improvement Framework. It is, therefore, the duty of the education authority to ensure that the education it provides is directed to the development of the personality, talents and the mental and physical abilities of the children to their fullest potential. 3. In addition, Councils have a statutory duty to secure best value in terms of the Local Government in Scotland Act 2003 by continuous improvement in performance of the local authority’s functions, while maintaining an appropriate balance between quality and cost and having regard to economy, efficiency, effectiveness, equal opportunities and the achievement of sustainable development. 4. Mount Esk Nursery School is registered with the Care Inspectorate for up to 64 preschool children. In January 2026 there are 44 children on the role, which will increase as children reach the age of 3 years. 5. The statutory consultation on the proposal was undertaken in the period from Monday 20 November 2025 and ended on Sunday 21 December 2025. The proposal can be viewed in Appendix E or on the Council’s Citizen Space Consultation page: Mount Esk Nursery School Consultation - Midlothian Council - Citizen Space 6. The statutory report on the outcome of the consultation was published on Sunday 25 January 2026 and provides full details of the process undertaken, representations made and His Majesty’s Inspectorate of Education in Scotland (HMIES) independent report on the proposal. The report is available on the Council’s Citizen Space Consultation page: Mount Esk Nursery School Consultation - Midlothian Council - Citizen Space 7. An Integrated Impact Assessment has been completed, this report can be viewed in Appendix D or on the Midlothian Council website - Equality and Diversity reports | Impact Assessment 2026 - Mount Esk Nursery School Consultation Page 250 of 304
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8. The Education Service held a Public Meeting at Lasswade High School on Wednesday 19 November 2025. 7 members of the public attended the public meeting. 9. A total of 29 responses to the consultation were received during the period of the statutory consultation. 10. 44.8% responses to the consultation were in favour of the proposal to close Mount Esk Nursery School, 48.3% were not in favour and 6.9% had no opinion. 11. 48.3% responses to the consultation were in favour of the proposal to establish Hawthornden Primary School Nursery Class, 41.4% were not in favour and 10.3% had no opinion. 12. 37.9% responses to the consultation were in favour of the proposal to re- designate Mount Esk Nursery School to Hawthornden Primary School Nursery Class as part of Hawthornden Primary School, 55.2% were not in favour and 6.9% had no opinion. 13. 37.9% of responses to the consultation were in favour of the proposal to place Mount Esk Nursery School under the Leadership of the Hawthornden Primary School Head Teacher, 55.2% were not in favour and 6.9% had no opinion. 14. His Majesty’s Inspectorate of Education in Scotland (HMIES) (HM Inspectors) prepare a report in accordance with the terms of the Schools (Consultation) (Scotland) Act 2010 (“the 2010 Act”). The purpose of the report is to provide an independent and impartial consideration of Midlothian Council’s proposal (Appendix C). 15. The His Majesty’s Inspectorate of Education in Scotland (HMIES) report summary states: HM Inspectors agree that there are potential educational benefits to closing Mount Esk Nursery School and re-designating it to Hawthornden Primary School. There is scope to strengthen transition arrangements from nursery to primary one and develop joint approaches to learning and teaching and inclusion. Whilst the proposal is broadly welcomed by most stakeholders, there are concerns amongst a few staff and parents about the additional demands that may be placed on the senior management team at Hawthornden Primary School. Should the proposal be approved, the council needs now to produce a clear plan for implementation, both in the short and longer term. The council should also ensure that progress with the implementation is communicated to all stakeholders. 16. The consultation report was published on 25 January 2026 leaving the required period of at least three weeks for further representations to be made prior to Council’s consideration of the report and its decision regarding the recommendations: Page 251 of 304
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• Mount Esk Nursery School will close from August 2026 • Hawthornden Primary School Nursery class will be established from August 2026 • Mount Esk Nursery School will be closed and re-designated to Hawthornden Primary School Nursery Class. • The re-designation of Mount Esk Nursery School to Hawthornden Primary School Nursery class will take effect from August 2026; • The new Hawthornden Primary School Nursery Class will be under the leadership of the Hawthornden Primary School headteacher. 17. The recommendation of the consultation report is for Council to approve the closure of Mount Esk Nursery School and the establishment of a new Hawthornden Primary School Nursery class under the leadership of the Head Teacher at Hawthornden Primary School. 4. Report Implications (Resource, Digital and Risk) 4.1 Resource 1. The proposed nursery class will be led and managed overall by the Head Teacher at Hawthornden Primary School. 2. The staffing levels will principally be determined by the number of children in the nursery class. 3. If this proposal is implemented, the Council does not envisage any adverse effects from the proposal in respect of staffing. Should issues arise however, these will be mitigated through the Council’s Education Leadership Team support structure and HR policies. 4.2 Digital None 4.3 Risk None 4.4 Ensuring Equalities (if required a separate IIA must be completed) An Integrated Impact Assessment has been carried out and published, Appendix D. 4.5 Additional Report Implications See Appendix A. 5. Appendices Appendix A – Additional Report Implications Appendix B – His Majesty’s Inspectorate of Education in Scotland (HMIES) Report Page 252 of 304
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Background links Appendix C - Consultation Report, January 2026 – Mount Esk Nursery School Consultation - Midlothian Council - Citizen Space Appendix D – Integrated Impact Assessment - Mount Esk Nursery School Consultation - Equality and Diversity reports | Impact Assessment 2026 - Mount Esk Nursery School Consultation Appendix E – Mount Esk Nursery School Consultation Proposal Document - Mount Esk Nursery School Consultation - Midlothian Council - Citizen Space Page 253 of 304
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APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan Not applicable A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value The implementation of the recommendation of this report will enhance best value in the delivery of Council services. A.5 Involving Communities and Other Stakeholders This report provides details of the statutory consultation undertaken with communities and all stakeholders regarding the proposal to closure of Mount Esk Nursery School and the establishment of a new Hawthornden Primary School Nursery class which will be led and managed overall by the Head Teacher. A.6 Impact on Performance and Outcomes The report does not directly impact on Midlothian Council’s performance and outcomes. A.7 Adopting a Preventative Approach Not applicable A.8 Supporting Sustainable Development Not applicable Page 254 of 304
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Schools (Consultation) (Scotland) Act 2010 Report by HMIE addressing educational aspects of the proposal by Midlothian Council to close Mount Esk Nursery School and re-designate the early learning and childcare setting to Hawthornden Primary School Nursery Class. January 2026 Page 255 of 304
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1 | Schools (Consultation) (Scotland) Act 2010 Midlothian Council © Crown Copyright 1. Introduction 1.1 This report from HMIE has been prepared by His Majesty’s Inspectors of Education (HM Inspectors) in accordance with the terms of the Schools (Consultation) (Scotland) Act 2010 (“the 2010 Act”). The purpose of the report is to provide an independent and impartial consideration of a proposal by Midlothian Council to close Mount Esk Nursery School and re-designate the early learning and childcare (ELC) setting to Hawthornden Primary School Nursery Class. Section 2 of the report sets out brief details of the consultation process. Section 3 of the report sets out HM Inspectors’ consideration of the educational aspects of the proposal, including significant views expressed by consultees. Section 4 summarises HM Inspectors’ view. Upon receipt of this report, the Act requires the council to consider it alongside any relevant considerations the council received and then prepare its consultation report. The council’s consultation report should include this report and must contain an explanation of how, in finalising the proposal, it has reviewed the initial proposal, including a summary of points raised during the consultation process and the council’s response to them. The council has to publish its consultation report at least three weeks before it takes its final decision. With all proposals the council needs to follow all statutory obligations set out in the 2010 Act. Where a council is proposing to close a school, there are specific additional obligations. These include notifying Ministers within six working days of making its final decision and explaining to consultees the opportunity they have to make representations to Ministers. 1.2 HM Inspectors considered: • the likely effects of the proposal for children of the nursery and the school; any other users; children likely to become pupils within two years of the date of publication of the proposal paper; and other children in the council area; • any other likely effects of the proposal; • how the council intends to minimise or avoid any adverse effects that may arise from the proposal; and • the educational benefits the council believes will result from implementation of the proposal, and the council’s reasons for coming to these beliefs. 1.3 In preparing this report, HM Inspectors undertook the following activities: • attendance at the public meeting held on 19 November 2025 in connection with the council’s proposals; • consideration of all relevant documentation provided by the council in relation to the proposal, specifically the educational benefits statement and related consultation documents, written and oral submissions from parents and others; and • visits to the site of Mount Esk Nursery School and Hawthornden Primary School, including discussion with relevant consultees. 2. Consultation process 2.1 Midlothian Council undertook the consultation on its proposal(s) with reference to the Schools (Consultation) (Scotland) Act 2010. Page 256 of 304
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2 | Schools (Consultation) (Scotland) Act 2010 Midlothian Council © Crown Copyright 2.2 The consultation ran from 10 November to 21 December 2025. A public meeting took place on 19 November 2025 and was attended by seven stakeholders including parents and representatives from local childcare providers. The council received 29 responses to the public consultation with around half being in favour of the proposal going ahead. A few respondents expressed concern about the removal of the nursery manager post should the provision move to Hawthornden Primary School. A few respondents think that the transition between nursery and primary one will be improved if the proposal goes ahead. However, a minority of staff and parents also felt that this could lead to an unacceptable burden on the existing senior management team at Hawthornden Primary School in the longer term. A few others expressed concerns about increased traffic in the area surrounding Hawthornden Primary School should the proposal be implemented. 3. Educational aspects of proposal 3.1 The council believes that an ELC provision at Hawthornden Primary School will result in a range of educational benefits. They outline benefits in terms of inclusion, learning, teaching, achievement and attainment including transitions. They further believe that there could be improvements to the health and wellbeing of children based on previous experiences of including nursery schools as part of a wider school community in Midlothian. The council also considers that the approach is in line with current national guidance highlighting the importance of creating nurturing environments to inspire and motivate learners in the early years. HM Inspectors agree that there are potential educational benefits should the proposal go ahead. That the proposal has the potential to further develop shared approaches to inclusion and learning and teaching. 3.2 Almost all stakeholders who met with HM Inspectors agree with the proposal. Parents, staff and children can see the potential benefits of being located on one site. Almost all stakeholders are positive about the potential educational benefits of a smoother transition from nursery to primary one. Although stakeholders think the current arrangements work well, the joint location should help embed this. Stakeholders also think that collaborative working at early level will further support children’s continuity of learning and shared standards. The proposed move should make it easier for parents who already have children in Hawthornden Primary School to manage the drop off and collection of children. HM Inspectors agree that being located in one building has potential benefits, including allowing for children’s smoother transition from nursery to primary one. 3.3 A few stakeholders at Hawthornden Primary School expressed some concern about the increased workload on the senior management team at Hawthornden Primary School should the proposal go ahead. They feel that there needs to be a clearer plan provided by the council for how the process of managing the two sites in the short term until the physical move of Mount Esk Nursery School takes place. A few staff at Mount Esk Nursery School, although positive overall, are worried about the loss of outdoor space at the current location. HM Inspectors recognise that there will be an increased workload for senior managers at Hawthornden Primary School and that the council will need to manage this carefully. Page 257 of 304
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3 | Schools (Consultation) (Scotland) Act 2010 Midlothian Council © Crown Copyright 4. Summary HM Inspectors agree that there are potential educational benefits to closing Mount Esk Nursery School and re-designate the ELC setting to Hawthornden Primary School Nursery Class. There is scope to strengthen transition arrangements from nursery to primary one and develop joint approaches to learning and teaching and inclusion. Whilst the proposal is broadly welcomed by most stakeholders, there are concerns amongst a few staff and parents about the additional demands that may be placed on the senior management team at Hawthornden Primary School. Should the proposal be approved, the council needs now to produce a clear plan for implementation, both in the short and longer term. The council should also ensure that progress with the implementation is communicated to all stakeholders. HM Inspectors January 2026 Page 258 of 304
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Midlothian Council Tuesday 24 February 2026 Item No 8.14 Local Review Body – Nomination of Member Report by Saty Kaur, Chief Officer Corporate Solutions Report for Decision 1 Recommendations Council is recommended to nominate an Elected Member to the Local Review Body. 2 Purpose of Report/Executive Summary To update Council on a resignation from Local Review Body and seek nominations for a replacement. Date Monday 17 November 2025 Report Contact: Saty Kaur, Chief Officer Corporate Solutions Saty.Kaur@midlothian.gov.uk Page 259 of 304
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3 Background/Main Body of Report 3.1 The Local Review Body (LRB) comprises 10 Elected Members on the following basis: • 4 SNP • 4 Labour • 2 Conservative 3.2 The current membership is: • Councillor Russell Imrie (Chair) • Councillor Dianne Alexander • Councillor Douglas Bowen • Councillor Colin Cassidy • Councillor Kelly Drummond • Councillor Willie McEwan • Councillor Connor McManus • Councillor Derek Milligan • Councillor Peter Smaill • Councillor David Virgo 3.3 The LRB remit is as follows: The LRB will conduct reviews in accordance with Section 43A(8) of the Planning etc (Scotland) Act 2006, where the appointed person:- a) Refuses an application for planning permission or for consent., agreement or approval; b) Grants it subject to conditions; or c) Has not determined it within such period as may be prescribed by regulations or a development order. 3.4 Following the resignation of Councillor David Virgo from the LRB, Council is asked to nominate a replacement member. 4 Report Implications (Resource, Digital and Risk) 4.1 Resource No implications 4.2 Digital No implications 4.3 Risk Failure to nominate a member means the Council is not following its Standing Orders and Scheme of Administration. 4.4 Ensuring Equalities (if required a separate IIA must be completed) No implications 4.5 Additional Report Implications (See Appendix A) See Appendix A Page 260 of 304
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APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan N/A A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value N/A A.5 Involving Communities and Other Stakeholders N/A A.6 Impact on Performance and Outcomes N/A A.7 Adopting a Preventative Approach N/A A.8 Supporting Sustainable Development N/A Page 261 of 304
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Midlothian Council Tuesday 24 February 2026 Item No 8.15 Local Growth Fund Report by Kevin Anderson, Executive Director Place Report for Information 1 Recommendation Council is requested to note; 1.1 The New Local Growth Fund allocation for Edinburgh and South East Scotland, and 1.2 The focus of the New Local Growth Fund being on: Infrastructure Investment; Business Support; and Skills Development; and 1.3 That further details on delivery, including specific investment themes and intervention frameworks, are expected to be published later in Quarter 1 2026 as officers have been engaging with the UKG Scotland Office to establish further detail on the delivery and governance issues described. 2 Purpose of Report/Executive Summary This report provides an update on the recent UK Government UK Shared Prosperity Fund (UKSPF) and the Local Growth Fund (LGF) budget announcement and the financial implications for Midlothian and the Edinburgh and South East Scotland City Region. The UK Shared Prosperity Fund has now ended. Individual local authorities had used UKSPF to support local core employability, business support, skills, innovation and the third sector. The New Local Growth Fund has a 70/30 capital/revenue split whilst UKSPF had a 30/70 capital/revenue split. The Local Growth Fund is a new fund and allocations have been determined at a Regional Economic Partnership (REP) level rather than individual Local Authority. £37.8 million is being allocated to the Edinburgh and South East Scotland City Region. Date 02 February 2026 Report Contact: Kevin Anderson, Executive Director Place Email: kevin.anderson@midlothian.gov.uk Page 263 of 304
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3 Background The UK Shared Prosperity Fund (UKSPF) was introduced by the UK Government (UKG) in 2022 as the successor programme to EU Structural Funds; European Regional Development Fund (ERDF) and European Social Fund (ESF), with a commitment to match the level of funding received from Europe. With the change in UKG in October 2024 an extension year to UKSPF was agreed, however with a significantly reduced allocation. At the UK Government Spending Review on 11 June 2025, the UK Government made a commitment to ‘regional growth and devolution’ and advised funding in Scotland, Wales and Northern Ireland would receive the same overall level in cash terms for 2026/2027 to 2028/2029 as they did for the UK SPF 2025/2026. UK Government confirmed that from 2026/2027, they will provide targeted, long-term funding to support local growth across the UK, completing the transition from the UK SPF. For the next three years, this funding across the four new programmes will be at the same overall level in cash terms as under the UKSPF in the current year. For Scotland this is approximately £76 million per annum, and approximately £238 million over the Spending Review period (up to 2028-29). There are four funding steams that make up the Local Growth Fund: Pride in Place Programme (PIPP) Phase 2: A £280 million fund with 14 awards of up to £20m. Midlothian did not receive an award; Pride in Place Impact Fund (PIPIF): A fund through which eight Scottish local authorities share £12 million to fund the types of changes people have said they want to see. The eight local authorities in Scotland were selected based on a combined index of deprivation and community need. Midlothian did not receive an award; Growth Mission Fund: Announced at the UK Government Autumn Budget and through business case approval £20 million awards. Midlothian did not receive an award; Page 264 of 304
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4 New Local Growth Fund (NLGF): The New Local Growth Fund programme is scheduled to commence on 1 April 2026. In terms of confirmed investment focus, the Local Growth Fund is designed as a strategic, flexible fund to drive economic growth. Initial documentation highlights three core themes: • Infrastructure Investment: Focused on projects that enhance regional connectivity and physical assets. • Business Support: Initiatives to help firms scale and innovate. • Skills Development: Programmes aimed at improving access to high-quality, better-paid work. On 8 January 2026, the UK Government announced the New Local Growth Fund allocations. While the fund was officially launched on that date, several critical components are still being finalised. Further details on delivery, including specific investment themes and intervention frameworks, are expected to be published later in Q1 2026. Local Growth Fund allocations have now been determined at a Regional Economic Partnership (REP) level, rather than individual Local Authority level. Table 1 provides a summary of both the allocations for Scotland as a whole including the Edinburgh and South East Scotland City Region: Table 1: New Local Growth Fund: Allocations for Scotland Regional Economic Partnership Total (3 Year) NLGF Allocation Ayrshire £11.8 million Edinburgh and South East Scotland £37.8 million Forth Valley £9.8 million Glasgow City Region £60.9 million Tay Cities £19.5 million TOTAL £140 million The capital/revenue split of this funding over the three years is shown in Table 2: Table 2: Capital/Revenue Funding of NLGF Allocation: ESES 2026/27 ESES 2026/27 2027/28 2028/29 Revenue £4.3 million £4.2 million £3.0 million Capital £9.8 million £9.2 million £7.4 million TOTAL £14.1 million £13.4 million £10.4 million Page 265 of 304
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5 Report Implications (Resource, Digital and Risk) 5.1 Resource UK Government have determined the NLGF allocation methodology based on the regions of Scotland that have the lowest Real Disposable Household Income (RDHI) per capita. UK Government have also indicated the allocation methodology is guided by the following set of core principles: Strategic Objectives: The Local Growth Fund supports the UK Government’s Growth Mission to improve living standards for working people by investing in the regions that contain the areas with the lowest Real Disposable Household Income (RDHI) per capita. It will provide strategic flexible funding for investment to drive economic growth, with details on investment themes and interventions to be set out in due course. Geographic levels and institutions: Funding is delivered through the highest level of local governance to enable strategic decision-making across interconnected ecosystems of firms, institutions, supply chains, and labour markets. Regional Economic Partnerships (REPs) are collaborations between local government, the private sector, education and skills providers, enterprise and skills agencies and the third sector to deliver economic prosperity across Scotland’s regions. REPs are used to reflect functional economic areas (FEAs) with sufficient scale to support agglomeration benefits. Targeting: Targeting 5 REPs which contain the areas with the lowest living standards (RDHI per capita) is essential to achieving the intensity of funding required for the intended policy objective of improving living standards for working people within the constraint of the overall funding envelope. RDHI per capita varies more significantly between local authorities than REPs and so is most suited to identifying the places most in need of investment to improve living standards. Each of the 32 Scottish Local Authorities are ranked according to RDHI per capita, averaged over the latest three years of available data (2021, 2022, 2023). RDHI per capita is calculated by applying final consumption expenditure deflators to Gross Disposable Household Income per capita. Each Local Authority is matched to their corresponding REP(s) and the first five unique REPs for the Local Authorities with the lowest RDHI per capita are categorised as eligible. This funding is allocated across the five eligible REPs in proportion to their population. The latest mid-2024 population estimates for each Local Authority is downloaded from NRS and aggregated to give a total for the 5 REPs. Each REP’s percentage of the total is then calculated and the funding for each year allocated in proportion to the calculated percentage. 5.2 Digital There are no digital implications arising from this report. Page 266 of 304
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5.3 Risk The value of UKSPF to ESES over the 2022/23 to 2024/25 years of the previous programme was £45.5 million. The New Local Growth Fund allocation for the next three years is £37.8 million. £80 million from the Pride in Place Programme and £20 million from the Growth Mission Fund have been allocated to defined areas within the ESES region. Fife Council is also part of the Tay Cities REP which has received a £19.5 million New Local Growth Fund award. Revenue funding in the previous UKSPF programme was 73%; it is 30% for the next three years funded programme. The UKSPF funding was time limited. This significant reduction in revenue funding will, however, mean significant cuts in core employability, business support, skills, innovation and third sector support that had been supported by UKSPF funding. Further details are awaited further details from UK Government on the rules of the programme, with the 8 January announcement stating: The LGF programme is subject to full business case clearance by MHCLG and HMT, and further details on the delivery of the LGF, including investment themes will be set out later in Q1 of 2026. In particular, regional partners need to understand how UK Government expect that the funding will flow and whether the capital funding will be available to spend over multiple financial years, as a challenge of UKSPF has been the deployment of annualised capital funding. It is not yet known whether a list of interventions will be published and how places are expected to bring forward proposals to start funding from 1 April 2026. 5.4 Ensuring Equalities (if required a separate IIA must be completed) Each of the 32 Scottish Local Authorities are ranked according to RDHI per capita, averaged over the latest three years of available data (2021, 2022, 2023). RDHI per capita is calculated by applying final consumption expenditure deflators to Gross Disposable Household Income per capita. Each Local Authority is matched to their corresponding REP(s) and the first five unique REPs for the Local Authorities with the lowest RDHI per capita are categorised as eligible. This funding is allocated across the five eligible REPs in proportion to their population. The latest mid-2024 population estimates for each Local Authority is downloaded from NRS and aggregated to give a total for the 5 REPs. Each REP’s percentage of the total is then calculated and the funding for each year allocated in proportion to the calculated percentage. 5.5 Additional Report Implications Appendix A Page 267 of 304
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Appendices APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan Midlothian has received no direct funding from the new Local Growth Programme as, although it is part of the ESES regional allocation of Local Growth Fund, it did not receive anything from the Pride in Place funds which will have a significant impact due to the end of UKSPF. This has caused concerns to see tangible benefits for Midlothian from the new Local Growth Fund allocations and continuation of existing projects where possible. Midlothian is 3rd lowest of ESESR local authorities in the Gross Disposable Household Income per head index with 93.6. The cost of housing in Midlothian has an impact on child poverty with 2,461 under 16’s living in poverty prior to taking housing costs into account, rising to 4,984 after housing costs. Improving opportunities for young people to move into better paid, skilled employment will have a positive impact on child poverty. A locally focussed transition year in 2026/27 for employability projects would mitigate the end of UKSPF and time to plan how local delivery needs can be integrated into a regional approach. Impact of loss of Skills UKSP funding Midlothian has lost in the region of £250,000 of skills funding which is likely to lead to at least 7 redundancies, mainly in the 3rd sector. Approximately 300 participants will no longer have support through these projects set up under UKSPF to address the needs of some of the most vulnerable residents in Midlothian. These mainly offered intensive 1 – 1 supports / small group work and accredited qualifications with progressions along stages 1 to 3 of the employability pipeline. The loss of these projects targeted at young people is likely to have a further impact on positive destinations as Midlothian already sits below the Scottish average. There is an impact on third sector organisations and community groups with the loss of a variety of funding streams which mean services overall are being reduced to those who are most vulnerable. Local charities are struggling to survive with two announcing they are closing within the last month. Interventions At least 4 of the 6 Midlothian UKSPF employability projects support young people transitioning from school. 3 of the organisations delivering these projects also operate across other local authorities within the ESESR so this type of targeted activity could have regional significance. The types of interventions required to support continuation of these projects and to feed into future regional delivery would be: Page 268 of 304
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• Support for education and skills targeting vulnerable young people leaving school • Courses for essential skills (including numeracy, literacy, ESOL and digital) and employment related skills A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value Not applicable A.5 Involving Communities and Other Stakeholders Not applicable A.6 Impact on Performance and Outcomes Not applicable A.7 Adopting a Preventative Approach Not applicable Page 269 of 304
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A.8 Supporting Sustainable Development The New Local Growth Fund is intended to focus on: Infrastructure Investment; Business Support; and Skills Development. This provides an opportunity to ensure that funding supports improving access to high-quality, better-paid work. Regional partners have previously sought to utilise external funding when available, for example, elements of UK Shared Prosperity Funding, to support projects identified in the RPF Delivery Plan. These include: Climate Ready South East Scotland; Net Zero Skills Accelerator Hub; Regional Energy Master Plan; Regional Delivery Alliance; Regional Transport Strategy Delivery Plan; and Strategic Sites Programme. The RPF has an ambition and vision to protect the environment and make best use of our extraordinary built and natural assets in order to ensure that our Region delivers a just transition to a net zero economy. There are three main goals of the RPF Delivery Plan are: to reduce economic exclusion; sustained and increased competitiveness; and accelerate a fair transition to a Net Zero economy. APPENDIX B £140m Scottish Local Growth Fund to drive economic growth - GOV.UK Page 270 of 304
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Midlothian Council Tuesday 24 February 2026 Item No 8.16 Edinburgh, the Lothians and Scottish Borders MAPPA Annual Report for 2024/2025 Report by Nick Clater - Head of Adult Services and Chief Social Work Officer Report for Information 1 Recommendations Council is requested to note the information in the Edinburgh, the Lothians and Scottish Borders MAPPA Annual Report for 2024/2025. 2 Purpose of Report/Executive Summary The report advises of: 1: the activities undertaken by the agencies across Edinburgh, the Lothians and Scottish Borders who work in partnership as part of Multi- Agency Public Protection Arrangements. 2: Statistical Information. Date: 18th December 2025 Report Contact Nick Clater Page 271 of 304
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3 Background/Main Body of Report 3.1 Multi-Agency Public Protection Arrangements, more commonly referred to as MAPPA, are a set of partnership working arrangements put in place for the fundamental purpose of public protection and managing the risk of serious harm. MAPPA is not a statutory body, but a statutory framework through which the Responsible Authorities discharge their responsibilities to protect the public in a co-ordinated manner. MAPPA was introduced in Scotland in 2007 by The Management of Offenders etc. (Scotland) Act 2005. This Act also outlines the responsibility of the Strategic Oversight Group (SOG) to provide local leadership across the MAPPA area, to be responsible for performance monitoring and quality assurance and for the submission of the Annual Report. The following categories of individuals are subject to management under MAPPA: • Registered Sex Offenders (RSOs) – those individuals required to comply with the Sex Offender Notification Requirements (SONR) • Restricted Patients.- patients subject to a compulsion order with restriction order, a hospital direction or a transfer for treatment direction; that is patients who are subject to special restrictions under the Mental Health (Care and Treatment) (Scotland) Act 2003. In 2016 the Scottish Government updated the MAPPA Guidance to include a 3rd category: • Other Risk of Serious Harm Individuals - these are individuals who are not required to comply with the SONR or who are not Restricted Patients; but who by reason of their conviction; are considered by the Responsible Authorities to be persons who may cause serious harm to the public at large. There are three MAPPA management levels to ensure that resources are focused where they are needed most to reduce the risk of harm. These are: • Level 1 - routine risk management by the Responsible Authority • Level 2 - Multi agency risk management • Level 3 - Multi-agency Public Protection Panels. Partnership working is key to MAPPA and brings together representatives from the Responsible Authorities: Police Scotland, Social Work, Housing, Health and Scottish Prison Service to oversee the practical management of those who have committed a sexual Page 272 of 304
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offence, or who are assessed to pose a significant risk of harm to the public. The 2024/25 report includes a forward completed by Lindsey Byrne, Chair of the Edinburgh, Lothians and Scottish Borders Strategic Oversight Group which highlights the work undertaken by all agencies to manage individuals who present the highest risk of harm to our communities. The danger posed to children and adults, from someone who is a stranger is low and only a small proportion of people are managed under MAPPA. The complexity of the work is acknowledged and managing the risk cuts across organisational boundaries of local authorities, housing, police prisons and health services. Working together and effective collaboration prove key protective factors. 3.2 Roles and Responsibilities • Police Scotland: responsible for enforcement of the notification and compliance of Sexual Offences Act 2003 and for police activities • Local Authority: Social Work- Responsible for RSOs subject to statutory supervision and the Justice Social Work Service are responsible for the supervision of the individuals. A Sexual and Violent Offender Liaison Officer acts as single point of contact for information of those managed under MAPPA. Adult Social Care and Children Services also paly a key role in the management of those under MAPPA • Local Authority: Housing – Sexual Offending Liaison Officers are responsible for offenders accessing suitable accommodation. Registered social landlords have a ‘duty to co-operate’ and collaborate with the Housing SOLO to identify positive housing solutions. • NHS Lothian: Responsible authority for mentally disordered restricted patients and a wider duty to cooperate in the management of individuals under MAPPA., this includes a MAPPA Health Liaison Officer within their public protection structure. • NHS Lothian Serious Offender Liaison Service (SOLS): provides specialist clinical consultation and training to support the management of serious violent and sexual offenders managed in the community. 3.3 Achievements in Developing Practice Case File audits: These are undertaken on a quarterly basis to identify learning and share good practice. Over the reporting year, across Lothian and Borders, 16 Level 2 cases and 32 Level 1 cases were subject to review. These audits identified several areas of strength around inter agency working, information sharing, risk assessment and risk management planning. The reviews also identified recurring themes in terms of good practice and areas for improvement were Page 273 of 304
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highlighted to frontline staff and team leaders. On the conclusion of each audit, a report was presented to senior managers to consider the actions raised as a result of any identified learning. In addition, in early 2025, Midlothian Justice Services undertook a review of risk assessment practice through undertaking an audit of SA07 (a Nationally accredited risk assessment). The review was undertaken in collaboration with staff from the Community Intervention Service for Sex Offender (CISSO) based in Edinburgh. The audit identified the following areas of good practice: • assessments completed timeously and in collaboration with colleagues in the Lothian and Borders SOPU, • effective multi-agency working and information gathered from a robust range of resources. • The audit confirmed staff competence and confidence in the use of the assessment tools with high interrater reliability. The learning review was then fed back to the team. Staff in the Justice service continue to work alongside staff in CISSO, where appropriate to ensure that robust resources and supports are in place for the management of men and women convicted of sexual offending. Training: A number of workshops were provided across the MAPPA area for staff from each of the key agencies to discuss roles and responsibilities in the completion of Risk Management Plans and to consider the learning and recurring themes form Significant case Reviews on a local case file audits. Electronic Monitoring Equipment: eSafe is a managed monitoring service that tracks an individual’s use of their IT devices to detect signs of inappropriate online behaviour. eSafe is only used in cases where there is an agreed monitoring strategy as part of the overall risk management plan. The individual has knowledge of the installation and use of the equipment. 3.4 Statistical Information The number of individuals managed under MAPPA is impacted by a number of factors, including the reporting and detection of crime and Court sentencing. The data within the Annual Report shows that there were 876 Registered Sex Offenders (RSO) managed under MAPPA as of 31st March 2025; this is a 5.79 % increase on the number on 31st March 2024. The table below shows the figures since 2019/2020. Page 274 of 304
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Number of Registered Sex Offenders managed: 31st March 2025 859 31st March 2024 812 31st March 2023 780 31st March 2022 912 31st March 2021 899 31st March 2020 916 The majority of cases continue to be managed at Level 1: 842 (98.02%) with the remaining 17 individuals (1.98%) being managed at Level 2. There were no cases managed under Level 3 in the reporting year. Over the course of this annual reporting year, there were 3 cases managed under Category 3 (Other Risk of Harm Offender) and all were managed at MAPPA Level 2. Reconviction rates: Across the Edinburgh, Lothians and Scottish Borders the reconviction rates for RSOs remains relatively low. In the reporting year 51 individuals were convicted of a further Group 1 (non- sexual violent) crime or Group 2 (Sexual) crime in the reporting year (5.94%). Although the data is not broken down for each local authority area in the Annual Report, the following is provided to give a local context. Midlothian 2024 2025 RSOs managed in the community on 31 March 62 73 RSO’s subject to statutory supervision 20 22 RSOs managed at Level 1 in the community on 31 March 59 71 RSOs managed at Level 2 in the community on 31 March 3 2 RSOs managed at Level 3 in the community on 0 0 Page 275 of 304
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31 March RSOs convicted of a further group 1 or group 2 crime (1 relates to non- sexual crimes of violence and group 2 relates to sexual crimes.) 2 (both Group 1) 3 (Group 2) 5 (Group 1) 4 Report Implications (Resource, Digital and Risk) 4.1 Resource There are no direct resource requirements arising from this report. 4.2 Digital There are no digital implications related to this paper 4.3 Risk The MAPPA process makes a significant contribution to the management of risk and the protection of the public in Midlothian. There are risks associated with the potential for negative media coverage of individuals managed under MAPPA within Midlothian. To mitigate against this there are robust communication and contingency plans out in place in advance of the release of any individual whose case may attract media attention. 4.4 Ensuring Equalities (if required a separate IIA must be completed) There are no equalities issues arising from this report. 4.4 Additional Report Implications (See Appendix A) See Appendix A Appendices: Appendix A – Additional Report Implications Appendix B – Edinburgh, the Lothians and Scottish Borders MAPPA Annual Report 2024-25 Page 276 of 304
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APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan Midlothian will be Safer A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value The report does not directly impact on Delivering Best Value A.5 Involving Communities and Other Stakeholders The MAPPA Annual Report is accessible to the public. As part of performance management collaborative feedback is sought from service users to ensure effective service provision and information provided is appropriate and relevant. All service users subject to supervision, as part of a licence or order imposed by the Court, complete an entry and exit questionnaire to support service improvement. A.6 Impact on Performance and Outcomes To ensure that the statutory duties of MAPPA are discharged effectively there are two Groups that provide oversight and governance across Edinburgh, the Lothians and Scottish Borders: Strategic Oversight Group and MAPPA Operational Group. Together they have Page 277 of 304
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oversight and co-ordination of MAPPA and have a responsibility to share learning, develop best practice and promote consistency. The East and Midlothian MAPPA Group (EMMG) is a local partnership approach to the management of high-risk offenders in East Lothian and Midlothian and provides strategic direction to local agencies. The EMMG reports to the Public Protection Committee and the Critical Services Oversight Group. While this is a challenging area of work there is no evidence of concern relating the delivery of MAPPA in Midlothian. Justice Social Workers are highly skilled and trained in the use of accredited risk assessment tools. In collaboration with other agencies, they formulate risk and from this develop risk management plans to manage and supervise individuals convicted of sexual offences or who have caused significant harm to others. A.7 Adopting a Preventative Approach The fundamental purpose of MAPPA is public protection. As one of the key partners, the Justice Service focus on early prevention and intervention strategies to reduce the risk of offending behaviour and to ensure that Midlothian is safer. Within legislation there are a number of monitoring interventions and strategies which agencies can use as part of preventative measures. This includes the use of remote electronic monitoring equipment and Sexual Offences Prevention Orders. A.8 Supporting Sustainable Development Not applicable Page 278 of 304
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APPENDIX B Background Papers/Resource Links MAPPA Annual Report 2024/2025 – The City of Edinburgh Council APPENDIX C Multi-Agency Public Protection Arrangements (MAPPA) in Scotland: national overview report 2022-2023 - gov.scot Page 279 of 304
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Midlothian Council Tuesday 24 February 2026 Item No 8.17 Annual Procurement Report 2024/25 Report by Saty Kaur, Chief Officer Corporate Solutions Report for Information 1 Recommendations Council is asked to note the Annual Procurement Report which details regulated procurement activity for the financial year 2024/25, and the ongoing improvement activity within the Procurement Service. 2 Purpose of Report/Executive Summary The report outlines regulated procurement activity for the 2024/25 financial year and ongoing activity within the Procurement Team. Date Thursday 29 January 2026 Report Contact: Saty Kaur, Chief Officer Corporate Solutions Saty.Kaur@midlothian.gov.uk Page 281 of 304
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3 Background 3.1 Section 18 of the Procurement Reform (Scotland) Act 2014 requires Local Authorities to publish an annual report detailing its regulated procurement activity. Regulated procurement refers to goods/services over £50k and works over £2m. 3.2 The report must include regulated procurements completed in the financial year, statement of compliance, alignment to existing Procurement Strategy, community benefits, supported business engagement and future plans for the next two years. Reports are required as soon as ‘reasonably practicable’ after the financial year- end. Main Report 3.3 The Annual Procurement Report 2024/25 is attached as Appendix B. Focus areas for 2024/25 have been on supporting local procurement and SMEs as shown in the profile of suppliers; widening the delivery of community benefits by including community benefit clauses in all procurements and maintaining compliance with the Procurement Reform (Scotland) Act 2014 and the Council’s Procurement Manual and Procedures. 3.4 In terms of service improvements, focused work continues on developing a contract management framework and upskilling contract managers; rollout of a comprehensive training plan for all officers undertaking procurement activity; completion of the Procurement Strategy for Council approval in 2026 and redesign of the Procurement Service operational model. Progress on this will be included in the 2025/26 Annual Procurement Report. 4 Report Implications (Resource, Digital and Risk) 4.1 Resource No implications 4.2 Digital No implications 4.3 Risk No implications 4.4 Ensuring Equalities (if required a separate IIA must be completed) No implications 4.4 Additional Report Implications (See Appendix A) See Appendix A Appendices Appendix A – Additional Report Implications Appendix B – Annual Procurement Report 2024/25 Page 282 of 304
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APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan N/A A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value N/A A.5 Involving Communities and Other Stakeholders N/A A.6 Impact on Performance and Outcomes N/A A.7 Adopting a Preventative Approach N/A A.8 Supporting Sustainable Development N/A Page 283 of 304
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Appendix 1 Regulated Procurements Overview between 1st April 2024 to 31st March 2025 Ref Project Name Supplier Contract Value Contract Start Date Contract End date Living wage Y/N Supported Business Y/N Local Y/N SME Y/N PCS Award Date MID-24-43 Purchase of 32 ton 8x4 Hook Hiab Ltd £186,979 10-May-24 11-May-24 N N N Y May 2024 MID-24-48 Sweepers Purchase Bucher Municipal Ltd £166,000 N N N Y MID-24-26 Purchase of Small Vans Western Toyota £52,644.00 10-May-24 11-May-24 N N N Y May 2024 MID-24-32 Consultant for Housing Stock Analysis Changeworks Resources for Life £100,000 01-Apr-24 01-Oct-24 N N N Y April 2024 MID-24-74 School Counselling Services MYPAS (Midlothian Young People's Advice Service) £1,168,000 17-Sep-25 16-Sep-27 Y N Y Y MID-24-37 Purchase of Accessible Minibuses EVM Direct UK £570,000 03-Jun-24 03-Jun-24 N N N N June 2024 MID-25-72 CH-12-001 - National Care Home Contract (Aaron House) Aurem Care (Aaron House) Limited £1,753,793 07-Apr-25 06-Apr-26 N N Y Y April 2025 MID-25-75 CH-12-004 - National Care Home Contract (Nazareth House) Nazareth Care Charitable Trust £943,006 07-Apr-25 06-Apr-26 N N N N April 2025 MID-24-39 Parkhead Delivery Changeworks £202,296 01-Sep-24 31-Mar-25 N N N N Sept 2024 MID-24-40 Purchase of Chassis and Gritter Body DAF Trucks Ltd £110,694 15-May-24 15-May-24 N N N N May 2024 Page 285 of 304
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Appendix 1 Regulated Procurements Overview between 1st April 2024 to 31st March 2025 MID-25-76 CH-12-005 - National Care Home Contract (Pine Villa Nursing Home) Mansfield Care Group £375,873 07-Apr-25 06-Apr-26 N N N N April 2025 MID-25-77 CH-12-006 - National Care Home Contract (Pittendreich Care Home) St Philip's Care Caledonia Ltd £370,672 07-Apr-25 06-Apr-26 N N N N April 2025 MID-24-47 Provision of Banking Services by Royal Bank of Scotland Royal bank of Scotland £25,000 24-Nov-24 23-Nov-27 Y N N N Nov 2024 MID/24/50 Bus Purchase EVM Direct UK £149,675 12-Aug-24 12-Aug-24 Y N N N MID-24-51 EESSH2 Dashboard Chameleon £53,501 09-Sep-24 09-Oct-24 N N N N Sept 2024 MID-24-42 Purchase of Refuse Collection Vehicles (RCV) Dennis Eagle Ltd £624,514 31-Jul-24 31-Jul-24 N N Y Y Jul 2024 MID-24-56 Managed Print Service Xerox Uk Ltd £2,000,000 01-Apr-25 31-Mar-28 N N N N April 2025 MID-24-43 Purchase of 32 ton 8x4 Hook Hiab Ltd £186,979 29-Jul-24 29-Jul-24 N N N N Jul 2024 MID-24-48 Sweepers Purchase Bucher Municipal Ltd £166,000 22-Jul-24 22-Jul-24 N N N N Jul 2024 MID-24-79 Egress secure email and Large files Transfer Softcat £51,000 24-Dec-24 23-Jan-28 N N N Y MID-24-78 C375.142 Stewart Milne (in administration) Doig & Smith £65,250 01-Feb-25 31-Jul-25 N N N Y Feb 2025 Page 286 of 304
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Appendix 1 Regulated Procurements Overview between 1st April 2024 to 31st March 2025 Shawfair; Quantity Surveying Services MID-24-68 Catering payment service CRB Cunninghams Limited £280,000 01-Nov-24 31-Oct-27 N N N Y Nov 2024 MID-25-39 Electric Signing Platform (Docu Sign) SCG CORPORATE LIMITED £10,000.00 25-Feb-25 13-Aug-26 N N N Y Aug 2025 MID-25-08 EESSH2 Penicuik Phase 1 Changeworks £250,000 04-Feb-25 04-Feb-26 N N N Y Feb 2025 MID-25-09 Midlothian Council – Roslin PS Modular Unit Contractor - Direct Award SKW Group £503,500 14-Mar-25 31-Aug-25 N N N Y Mar 2025 MID-25-13 Forcepoint Computacenter £300,000 20-Feb-25 19-Jan-28 N N N Y Feb 2025 MID-25-16 Mfour Currie and Brown £88,466 13-Mar-25 01-Jul-26 N N N Y MID/25/40 Education Telephony System Wavenet (Daisy) £190,000 17-Feb-25 18-Jan-27 N N N Y Feb 2025 MID-25-22 Beeslack HS_Replacement Professional Services Consultant Turner & Townsend £816,997 21-Mar-25 30-Apr-28 N N N Y Mar 2025 MID-22-103 Youth Homeless Support and Prevention Service The Rock Trust £200,000 01-Feb-24 31-Jan-26 N N N Y Feb 2024 Page 287 of 304
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Appendix 1 Regulated Procurements Overview between 1st April 2024 to 31st March 2025 MID-24-45 Speech & Language Therapy Services NHS Lothian / Lothian Health Board £112,500 13-Jun-24 31-Mar-26 N N N Y June 2024 Page 288 of 304
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Appendix 2 Future Procurement Pipeline Page 289 of 304
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S/N Project Title Estimated Value (£) Planned Timeframe 1 Shawfair Plot P – 38 new homes £10-12m Start 26/27 – Completion 26/27 2 Lingerwood – 113 new homes £30-35m Start 26/27 – Completion 30/31 3 Auchendinny, Phase 1 – 25 new homes £7-10m Start 26/27 – Completion 27/28 4 Auchendinny, Phase 2 – 23 new homes £7-10m Start 26/27 – Completion 27/28 5 Auchendinny, Phase 3 – 27 new homes £7-10m Start 26/27 – Completion 28/29 6 Cauldcoats – 50 new homes £13-15m Start 27/28 – Completion 28/29 7 Supported Accommodation for Women and children Impacted by Violence Against Women and Girls. £316,000 The current contract ref is Mid16-29 and has been extended to June 2026. Partners are meeting to review the contract to prepare for re- tender. It is anticipated that the this will 6-9 month and commenced in November 2025. 8 Mauricewood PS Extension £5 - £7m Est completion 2027 9 Hawthornden Early Years £5 TBC 10 Holiday Provision for Children and YP with a disability £127,000 4 years beginning 2026 11 Residential units – Castlelaw/ Pentland Way For 3 years – over £1M per year Sept 2026 – August 2029 12 Activities for children and young people with a disability TBC 2026 13 The Rock Trust £200,000 Aug 2026 14 Paper/Card/Cardboard recycling and processing Between £300k cost to +£300k income based on 6,000 tonnes pa Q2 2026/27 (or earlier if required) 15 Mixed cans and plastics recycling and processing Up to c£300k pa based on Q2 2026/27 (or earlier if required) Page 290 of 304
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1,600 tonnes pa 16 Various bin and recycling container purchasing through Scotland Excel Framework c.£200-£300k Q4 2025/26 17 AllStar Fuel Cards £150k Jan 2026 18 UK Telematics – Vehicle Tracking £150k Jan-Feb 2026 19 Vodafone – Corporate Mobile £150k Jan-Feb 2026 20 Committee Management System £60k Feb – Apr 2026 21 Mosaic £1.48M Jan – Mar 2026 22 CM2000 £300k Jul – Sept 2026 23 Citizen Space £50k Jul – Sept 2026 24 CivicaPay £500k Sep – Nov 2026 25 Space Connect £50k Oct - Dec 2026 26 Blue Badge Case Management System £15k June – Aug 2027 27 Civica Automation TBC TBC – as part of migration to hosted service (not yet planned) 28 Civica D360 TBC TBC – as part of migration to hosted service (not yet planned) 29 Open Revenues TBC TBC – as part of migration to hosted service (not yet planned) 30 Holiday Provision for Children and YP with a disability 127k – NCA – 1 year (2026) 127K X 4 years – (2027- 2031) 31 Residential units – Castlelaw/ Pentland Way For 3 years – over £1M per year Sept 2026 – August 2029 32 Activities for children and yp with a disability PIN completed August 2025 2026 33 Community Mental Health Framework: Play Therapy for Children and Young People up to 14 years. £94,000 for the first 2 years, plus up A above Page 291 of 304
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to another £141,000 for further 1 year, + 1year + 1year = total of up to £235,000. 34 Community Mental Health Framework: Art Therapy for Children under 12 years £300,000 4 years 35 Community Mental Health Framework: Art Therapy for Young People aged 12 – 18 years. $240,000 2 + 2 years 36 Community Mental Health Framework: Play Therapy for Children and Young People up to 14 years. £235,000 2 + 2 years Page 292 of 304
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Annual Procurement Report (1 April 2024 – 31 March 2025) Page 293 of 304
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Contents 1. Introduction 2. Summary of Regulated Procurement 3. Review of Regulated Procurement Compliance 4. Community Benefit Summary 5. Supported Business Summary 6. Future Regulated Procurements Summary 7. Review of Midlothian’s Procurement Strategy 2018 – 2023 8. Appendix 1: Regulated Procurements Completed (1st April 2024 – 31st March 2025) 9. Appendix 2: Regulated Procurement Forward Plan (1st April 2025 – 31st March 2027) Page 294 of 304
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1. Introduction Midlothian Council covers an area 10 miles south of Edinburgh city centre and is projected to have the largest population increase at 14.7% in Scotland, according to the National Records of Scotland published 30 September 2025. This Annual Procurement Report provides an overview of procurement activity undertaken by Midlothian Council during the reporting period of FY 2024/25. It contains information on the Council’s performance in delivering compliant, transparent and value driven procurement outcomes that support the delivery of essential public services. Proper procurement plays a key role in maintaining service continuity, supporting strategic transformation objectives and contributing to social, economic and environmental improvements across the Council. The report summarises regulated procurement activity, compliance with statutory requirements, delivery of community benefits and engagement with supported businesses. It outlines future regulated procurement plans and provides an assessment of progress made against the Midlothian Council Procurement Strategy. Procurement is guided by principles of fairness, equality of treatment, sustainability and value for money. These principles ensure that public funds are used effectively. Procurement Governance Overview • Procurement Reform (Scotland) Act 2014 • Public Contracts (Scotland) Regulations 2015 • Council Standing Orders • Internal Control measures Page 295 of 304
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2. Summary of Regulated Procurement Section 18(2) of the Procurement Reform (Scotland) Act 2014 stipulates that annual procurement reports should include a summary of the regulated procurements that have been undertaken during the year. All contract awards with a value above £50k for goods and services and £2m or more for works are covered under Regulated Procurement. From 1 April 2024 – 31 Mar 2025, Midlothian Council delivered a broad range of regulated procurements aligned to operational and strategic requirements. 2.1 Overview of Regulated Procurements Activity Appendix 1 provides a high level summary of regulated procurement carried out and includes: - Procurement activity - Supplier - Contract value - Contract award date, start and end date - Living Wage supplier - Supported business / Local supplier / SME - 2.2 Procurement Routes Utilised Route to Market No of Contracts Awarded Percentage 1 Tender 16 12% 2 Mini Competition 17 13% 3 Direct Awards 44 33% 4 Light -Touch 34 26% 5 Non-Competitive Action (NCA) 19 16% The continued use of national and sector frameworks supported compliant and efficient route to market options where standardised requirements existed. Page 296 of 304
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2.3 Profile of Suppliers Supplier Type Percentage of Awards Spend Value 1 Small and Medium Enterprise (SMEs)* 42% £23.9 million 2 Large Enterprises 28% £80.9 million 3 Local Midlothian Suppliers** 25% £11.7 million 4 Scottish Enterprise 5% £510k *The Procurement Act 2023 defines an SME as an enterprise with fewer than 250 employees and an annual turnover of less than or equal to £44 million or a balance sheet total of less than or equal to £38 million, this report has adopted that definition. **A local supplier is one operating within a specific geographic area defined by the local authority itself (e.g. within the council’s boundaries, a specific postcode range, or a certain radius). Midlothian Council remains committed to encouraging participation from SMEs and local suppliers, in line with the Midlothian Strategy for Inclusive Economic Growth 2025 – 2030. The Procurement Team and Economic Development work closely together to deliver the Council’s ambitions. Market engagement sessions, like Meet the Buyer events both regional and national, and supplier development programmes such as training of local suppliers on how to complete procurement documentation are ways to support and increase local procurement. 2.4 Review of regulated procurement compliance Section 17 of the Act requires all regulated procurements to be carried out in line with the organisation’s Procurement Strategy. Section 18(2) states that an annual procurement report must include a review of whether those procurements complied with the authority’s procurement strategy and the extent to which any regulated procurements did not comply, and a statement detailing how the organisation will ensure that future regulated procurements do comply. Page 297 of 304
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Prior to the commencement of any regulated procurement exercise a commodity strategy is developed. Commodity strategies are reviewed as part of the governance procedures. This involves a review by the project team, Senior Managers and Senior Officers (where required) to ensure commodity strategies reflect and adhere to the values and principles set out in the overall procurement strategy. Commodity strategies reflect Midlothian Council’s Procurement Strategy and ensure that the procurement exercise follow a journey that embeds our organisations principles, values and objectives. This methodology aims to ensure that all regulated procurements align with the Procurement Strategy. Furthermore, our approach to strategic procurement in this way maximises the added value potential in each and every procurement exercise. We continually strive to strengthen and develop our internal governance and recognise that strategy development is crucial in the creation of our contracts and frameworks. To ensure suppliers (locally and nationally) are paid timeously the Council is committed to paying all suppliers within 30 days. Prompt payment clauses requiring a 30 day payment term are embedded within our contractual terms and conditions. Suppliers are required to apply the same terms and conditions with their subcontractors who are supporting and delivering the council contract. During the reporting period 2024/25 the Council paid 92.5% of invoices within agreed timescales. The Council has also instigated an increased programme of e-invoicing which will assist in ensuring the timeous payment of contractors. The combined strategy development and procurement processes in place ensured that all regulated procurements were undertaken in compliance with the legal and procedural framework, and as a result in compliance with our overarching Procurement Strategy. Page 298 of 304
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3. Community Benefit Summary Section 25 of the Procurement Reform (Scotland) Act 2014 mandates that all contracting authorities must consider whether to impose community benefit requirements as part of the procurement when the estimated contract value is greater than or equal to £4,000,000. Midlothian Council seek to gain community benefits from all procurement. A working group meets to discuss how to promote community benefits and link in with communities to match benefits with needs. Community benefits is a key focus of the progressive procurement activity within the Council’s Community Wealth Building Action Plan. There has been a renewed focus in 2024/25 on promoting community benefits to businesses and communities: Community Benefits in Midlothian and How Local Businesses Can Get Involved - Locate in Midlothian Community benefit clauses were included in all relevant procurements and generated measurable outcomes that contributed to economic, social and environmental objectives. 3.1 Summary of Delivered Community Benefits Community Benefit No delivered Apprenticeships and Training Opportunities 20 Work Placements 24 Early Supplier Engagement Sessions 19 Local Supply Chain Commitments 17 Environmental Contributions 9 Page 299 of 304
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Examples of community benefits delivered: A hands-on construction skills workshop was delivered to several schools in Midlothian to raise awareness of careers in the construction industry while developing practical skills, confidence, and understanding of workplace expectations. Pupils participated in interactive sessions covering basic construction techniques, health and safety awareness, and an introduction to common tools and materials used in construction. The initiative achieved strong engagement and improved pupils understanding of construction as a viable career option. A construction company funded a workshop to local businesses designed to help them successfully bid for tender opportunities as part of their Community Benefit provision on 3rd June 2024. The session was delivered by bidding experts with 6 local businesses attending. An informal community benefits request advertised by Economic Development lead to a local multi trades company repairing and undertaking works to the LASC Childcare Services premises: Local contractor Peter Joyce & Sons support LASC Childcare Services - Locate in Midlothian 5 local Midlothian people were employed by an organisation that provides care and support services, as part of the community benefits agreement for the tender of a care support service for the Council. Page 300 of 304
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4. Supported Businesses Summary Section 21 of the Public Contracts (Scotland) Regulations 2015 defines a supported business as one that promotes the social and professional integration of disabled or disadvantaged persons while employing at least 30% of its workers from these groups. Midlothian Council recognises the role that supported businesses play in the development of social value and the promotion of inclusive employment for all. The Council’s Procurement Manual instructs that consideration be given to inclusion of supported businesses in all regulated procurements. During 2024/25 the Council reviewed relevant procurements to determine whether supported businesses could deliver the required goods and services. There were no awards made to supported businesses as the goods, services and works required were not provided by supported businesses. The Council will continue to identify opportunities for supported businesses. Page 301 of 304
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5. Future Regulated Procurement Summary Section 18(2) of the Procurement Reform (Scotland) Act 2014 states that annual procurement reports must include a summary of the future regulated procurements a local authority expects to undertake in the next two financial years following the end of the reporting period. Acting in a transparent and proportionate manner is an effective way by which an organisation can encourage competition and achieve better value for money in its procurements. It promotes wider participation in the public procurement process and this information will give notice to suppliers of future opportunities. Future regulated procurements have been identified via the following means. a). New procurements identified via future work plans provided by Council service teams b). Current contracts on the council’s contract register that will expire and need to be extended or re-let over the next two years. The complete list of all anticipated procurements in the next two years is listed in Appendix 2. Page 302 of 304
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6. Review of Midlothian Council’s Procurement Strategy 2018 - 2023 The Midlothian Procurement Strategy 2018 – 2023 sets out the Council approach to achieving value for money, sustainability and social responsibility through procurement. Although the strategy period has formally concluded, it’s principles and objectives continued to influence procurement practice during the 2024/25 reporting year. A revised Procurement Strategy is in development and will be presented to Council for approval in 2026. The three main themes in the strategy are: 1. Economic – supporting the local economy 2. Social – delivering safe, quality and innovative services that meet the needs of citizens 3. Commercial efficiency and contract & supplier management – securing best value for money 6.1 Supporting Local Economic Growth and SMEs Supporting the local economy and encouraging participation from small and medium sized enterprises is a key priority of the strategy. This has continued to shape all procurement activities during the reporting period. The Procurement Team works closely with Economic Development to promote procurement opportunities to local suppliers and SMEs. Joint Meet the Buyers events take place to encourage local engagement and support provided to local businesses to participate in procurement exercises. Tender documentation is reviewed to ensure that it is proportionate to contract value and complexity, helping to reduce barriers to entry. Contracts are structured to encourage local supply chain involvement, where appropriate. Page 303 of 304
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6.2 Community Benefits and Social Responsibility The strategy recognises procurement as a mechanism for delivering wider social outcomes. Community Benefits requirements are embedded in all procurements and monitored through contract management arrangements. During the reporting year, community benefits delivered included employment and training opportunities, engagement with schools and community groups and local supply chain commitments. 6.3 Commercial efficiency and contract & supplier management The strategy places strong emphasis on governance, compliance and transparency. Governance arrangements ensure that procurement decisions are subject to appropriate scrutiny and approval. For instance, contract award notices are published in accordance with statutory requirements and records are maintained to evidence compliance with procurement regulations and internal Standing Orders. A core objective is to ensure that procurement practices delivered best value for the council and its communities. The strategy defines best value as a balance between cost, quality, risk and sustainability over the contract’s lifecycle. This approach is used in all procurement activities, for example, tender evaluations continue to apply quality and price weightings that reflect service priorities and risk profiles. Page 304 of 304