2025/26 Revenue Budget - Update No.4
Perth and Kinross Council · 22 April 2026
Back to Finance and Resources Committee — 22 April 2026 and its agenda
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Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee: Finance and Resources Committee Date of Meeting: 22 April 2026 Report Title: 2025/26 Revenue Budget – Update No. 4 Report Number: 26/110 Report Author: Scott Walker, Chief Finance Officer Organisational Lead: Scott Walker, Chief Finance Officer ___________________________________________________________________ 1. Purpose 1.1 The purpose of this report is to provide an update on progress with the 2025/26 General Fund Revenue Budget based upon the January 2026 ledger, updated for any subsequent known material movements, and the projected financial position of the Housing Revenue Account. 1.2 The total net projected underspend on the 2025/26 General Fund Management Budget, is £2.501 million (or 0.5% of the 2025/26 Revised Management Budget) which represents a positive movement of £267,000 (see Appendix 1). 1.3 The report also seeks approval for several adjustments to the 2026/27 Revenue Budget approved by Council on 4 March 2026 (Report No. 26/54 refers) (see Appendix 9). 1.4 Sections 2. Recommendations 3. Background 4. 2025/26 Revenue Monitoring Service Budgets Corporate Budgets Funding Other Updates 5. 2025/26 Revenue Budget Adjustments Additional Funding Virements Movements in Reserves 6. 2026/27 Revenue Budget Adjustments
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7. Financial Risks 8. Workforce Management Updates 9. Conclusion 10.Impact and Value Assessment 11.Appendices 2. Recommendations It is recommended that the Committee: 2.1 Note the contents of the report, 2.2 Note the projected outturn for the General Fund set out in Section 4 and Appendix 1 and 2, 2.3 Approve the adjustments to 2025/26 General Fund budgets set out in Section 5 and Appendices 1,2,4,5,6 and 7, 2.4 Approve the adjustments to the 2026/27 General Fund budgets set out in Section 6 and Appendix 8. 2.5 Note the financial risks set out in Section 7 and Appendix 9. 2.6 Approve the workforce management measures set out in Section 8. 3. Background 3.1 This report updates the Committee on progress with the 2025/26 Revenue Budget. Appendix 1 to this report summarises the current projected year end (outturn) position for each Service based upon the January 2026 ledger, updated for any subsequent known material movements. 3.2 The budget reflected in Column 1 of Appendix 1 to this report is that approved by the Council in setting the final 2025/26 Revenue Budget on 26 February 2025 (Report No. 25/36 refers). In addition, adjustments approved by the Finance and Resources Committee on 30 April, 25 June, 1 October, 26 November 2025 and 4 February 2026 (Report No’s 25/99, 25/172, 25/248, 25/326 and 26/36 refer) are reflected in Appendix 1 (Column 2). In addition, approval to apply additional resources to Perth and Kinross Health and Social Care Partnership on 29 October 2025 is also reflected (Report No 25/278 refers). 4. 2025/26 Revenue Monitoring Service Budgets 4.1 The total net projected underspend on Service budgets, which is summarised in Section 1 of Appendix 1 to this report, is £2.539 million which represents 0.7% of total net Service expenditure (a positive movement of £279,000).
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4.2 Details of variances against individual Service budgets are shown in Appendix 2 to this report with the most significant variances summarised below. 4.3 The management of Service over and underspends are considered throughout the financial year and may also form part of the Revenue Budget strategy for future years. 4.4 There remains a risk that the Council continues to experience increases in costs over the short to medium term that are higher than budgeted. Going forward, this may continue to have an impact on projected outturns and future years’ budgets. Education and Learning 4.5 There is currently a projected underspend for Education and Learning excluding Devolved School Management (DSM) and the Pupil Equity Fund (PEF) of £1.126 million or 0.6% of the budget which represents a positive movement of £291,000. The individual elements contributing to this position are summarised in the following table with commentary on the significant variances below. Projected Outturn MovementFunction £’000 % £’000 Education and Learning Core Underspend (6) 0.5 (14) Nursery Sector Underspend (722) (2.6) (134) Primary Sector Overspend 797 1.5 (111) Secondary Sector Underspend (566) (10) 1 Special Sector Underspend (325) (1.8) (9) Home to School Transport Underspend (304) (2.7) (24) TOTAL Underspend (1,126) (0.6) (291) 4.6 In the Nursery Sector, there is an increase in the projected underspend of £134,000 due to updated staff cost projections. 4.7 In the Primary Sector, there is a reduction in the projected overspend of £111,000 due to updated staff cost projections. 4.8 In the Devolved School Management Scheme there is a projected underspend of £359,000 which represents less than 1% of the total budget. However, some schools are experiencing challenges in delivering approved staff slippage targets and facing inflationary pressures against budgets that have been reduced over previous years. The budgets for the Devolved School Management scheme are allocated by financial year (April – March), whereas expenditure is incurred by academic year (August – June). 4.9 At this stage of the academic year, expenditure met from the Pupil Equity Fund (PEF) is projected to be £100,000 less than budget. It is anticipated this this expenditure will be incurred prior to the conclusion of the 2025/26 academic year.
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Children, Families and Justice 4.10 There is currently a projected overspend for Children, Families and Justice of £50,000 or 0.2% of the budget, which represents an adverse movement of £205,000. The individual elements contributing to this position are summarised in the following table with narrative on the significant variances below. Projected Outturn MovementFunction £’000 % £’000 Children & Families Overspend 50 0.2 205 Justice Service On Target - - - TOTAL Overspend 50 0.2 205 4.11 In Children and Families, there is a net increase in the projected overspend of £205,000. This is primarily due to an increase in the costs of residential placements due to both an increase in the volume of placements and length of stays, and the non-achievement of slippage. Economy, Development and Planning 4.12 There is currently a projected underspend for Economy, Development and Planning of £315,000 or 2.0% of the approved budget which represents a positive movement of £55,000. The individual elements contributing to this position are summarised in the following table with narrative on the significant variances below. Projected Outturn MovementFunction £’000 % £’000 Service Wide Underspend (173) (2.8) (100) Tourism, Culture and Place Overspend 358 7.6 245 Development Management and Building Standards Underspend (500) - (200) TOTAL Underspend (315) (2.0) (55) 4.13 Service Wide there is an increase in the projected underspend of £100,000 based on the latest staff cost projections. 4.14 In Tourism, Culture and Place, there is an increase in the projected overspend due to reduced income from events and a delay in the delivery of approved savings. 4.15 In Development Management and Building Standards, there is an increase in the projected underspend of £200,000 due to additional income from planning applications. Environment and Infrastructure 4.16 There is currently a projected overspend for Environment and Infrastructure of £225,000 or 0.7%, which represents a positive movement of £50,000. The
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individual elements contributing to this position are summarised in the following table with narrative on the significant variances below. Projected Outturn MovementFunction £’000 % £’000 Service Wide Overspend 300 2.4 200 Traffic and Network Underspend (150) (12.0) - Waste Disposal Underspend (400) (4.5) (250) Refuse Collection Overspend 175 3.4 - Fleet Overspend 200 - - Roads Maintenance Partnership Overspend 100 4.1 - TOTAL Overspend 225 1.0 (50) 4.17 Service wide there is an increase in the projected overspend of £200,000 due to a reduction in income from capital recharges as staff were diverted to response to severe weather and emergency events. 4.18 In Waste Disposal, there is an increase in the projected underspend of £250,000 due to additional income from recyclates, reduced waste disposal costs and current projections on fuel costs. 4.19 Since the last update to the Finance and Resources Committee, there have been no severe weather events requiring a significant Council response. Therefore, it is now anticipated that there will not be an impact on unearmarked reserves from severe weather. Housing and Communities 4.20 The projected outturn for Housing and Communities is currently anticipated to be £369,000 or 1.9% more than budget, an adverse movement of £119,000. The individual elements contributing to this movement are summarised in the following table with commentary on the significant variances below. Projected Outturn MovementFunction £’000 % £’000 Service Wide Underspend (29) - (22) Bereavement Services Overspend 124 15.1 110 Public Transport Unit Overspend 95 2.4 20 Parking and Civil Contingencies Overspend 105 - 11 Specialist Services Overspend 74 1.2 - TOTAL Overspend 369 1.9 119 4.21 In Bereavement Services, there is an increase in the projected overspend of £110,000 due to an anticipated shortfall in the level of income.
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Property Services 4.22 The projected outturn for Property Services is currently anticipated to be £212,000 or 0.3% less than budget. The individual movements are summarised in the following table with commentary on the significant variances below. Projected Outturn MovementFunction £’000 % £’000 Service Wide Overspend 619 1.5 26 Energy Underspend (1,049) (13.5) (53) Facilities Management Overspend 507 6.5 61 Catering Underspend (289) (3.5) (34) TOTAL Underspend (212) (0.3) (0) 4.23 On Energy, there is an increase in the projected underspend of £53,000 based on the latest consumption information. 4.24 On Facilities Management, there was an increase in the projected overspend of £61,000 in part due to additional employment costs following the agreed reduction in cleaning hours. Legal and Governance 4.25 Within Legal and Governance there is a projected underspend of £111,000 or 2.7%, which represents an adverse movement of £15,000. 4.26 Management of A K Bell Library Archives has transferred from Culture Perth & Kinross to the Council. Access to the Archive is free but there are fees and charges in place for making copies of records and staff-facilitated research, etc. These fees will be added to the Council’s 26/27 Scheme of Charges, with the rates to be consistent with corresponding CPK charges which will maintain consistency and prevent confusion service users – there is no change to existing archive charges. Customer and Digital Services 4.27 The projected outturn for Customer and Digital Services is currently anticipated to be £662,000 or 4.9% less than budget, which represents a favourable movement of £81,000. The individual elements contributing to this movement are summarised in the following table with commentary on the significant variances below. Projected Outturn MovementFunction £’000 % £’000 IT and Customer Services Underspend (569) (7.2) 92 Revenues and Benefits Underspend (93) 1.4 (173) TOTAL Underspend (662) (4.3) (81) 4.28 In IT and Customer Services there is a reduction in the projected underspend of £92,000 due to updated staff costs projections.
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4.29 In Revenues and Benefits there is an increase in the projected underspend of £173,000 due to additional statutory income and updated staff costs projections. Strategic Planning, People and Performance 4.30 The projected outturn for Strategic Planning and Performance is £511,000 or 8.5% less than budget which represents a favourable movement of £35,000. Finance and Business Support 4.31 The projected outturn for Finance and Business Support is currently anticipated to be £246,000 or 2.3% less than budget which represents a favourable movement of £106,000 due to updated staff cost projections. Scott Street Fire 4.32 To 31 March 2026, the Council incurred approximately £2.3 million responding to the fire that took place at Scott Street fire. It is anticipated a further £300,000 will be incurred post 1 April 2026. 4.33 Interim invoices have been issued to insurance companies, which along with the funding from the Scottish Government and the Council’s previous commitment indicate that there will be no financial impact on the level of Council reserves in 2025/26. 4.34 As the works complete over the coming weeks, and the final invoices are issued to and paid by insurance companies, a more complete picture of the financial impact will emerge. 4.35 It is anticipated the final financial implications of the Scott Street Fire will be included in revenue monitoring report number five that will be considered by the Finance and Resources Committee in June 2026. Corporate Budgets 4.36 Included within Section 2 of Appendix 1 is an update on the Council’s Corporate budgets. More information on variances against individual budget headings is set out below. Health and Social care 4.37 On 18 March 2025, Perth and Kinross Integration Joint Board (IJB) considered a report on the 2025/26 Financial Position, based on financial information to 31 December 2025 (Report No. G/26/27 refers). 4.38 This latest update to the IJB included an updated projected net overspend across the Health and Social Care Partnership of £4.273 million (a reduction of £141,000 from the last update) which is summarised in the following table
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and in detail in Appendix 3. This position remains consistent with the financial challenges facing health and social care across Scotland. 4.39 The projected overspend on social care is now £3.899 million which is a reduction of £268,000 since the last update. This is result of reduction in the projected Social Care £m Health £m Health and Social Care Partnership £m Gross Projected Overspend 4.313 1.074 5.387 Application of Remaining General Reserves (0.164) - (0.164) Financial Recovery Actions - (Part A) (0.250) (0.700) (0.950) Net Projected Overspend 3.899 0.374 4.273 4.40 On 29 October 2025, the Council agreed to provide up to £4.180 million of additional financial support in 2025/26 (Report No. 25/278 refers). This funding will meet the costs associated with high service demand and provide time to complete the work outlined in part A and B of the Financial Recovery Plan. 4.41 The latest information considered by the Integration Joint Board, reduces the level of additional funding required from the Council by £281,000 and this has been included in the General Fund Reserves position set out in Appendix 7. Funding 4.42 Further information on the Council’s funding is set out within Section 3 of Appendix 1. More information on variances against individual budget headings are set out below. Council Tax Income 4.43 The amount of income the Council will generate from Council Tax is dependent on two main factors, firstly the collection levels and secondly, the number of Band D properties on the Valuation Roll. 4.44 Monitoring of Council Tax collection levels is carried out monthly. The following graph sets out collection performance to 31 March 2026 together with prior year comparative figures for the previous five financial years.
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2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% In Year Collection to 31 March 4.45 Between 2020/21 and 2024/25, the average collection figure to 31 March was 97.21%. The actual collection figure to 31 March 2026 was 97.21% which is 0.27% more than the five-year average and 0.14% more than the comparable position in 2025. April May June July Aug Sept Oct Nov Dec Jan Feb Mar 0.3% 0.2% 0.1% 0.0% -0.1% -0.2% -0.3% -0.4% Movement in Council Tax Collection Average v24/25 4.46 Secondly, in setting the Council’s Revenue Budget, assumptions are made on increases in the number of Band D equivalent properties. The graph set out below suggests that actual growth levels are in line with budget assumptions.
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4/1/2020 7/1/2020 10/1/2020 1/1/2021 4/1/2021 7/1/2021 10/1/2021 1/1/2022 4/1/2022 7/1/2022 10/1/2022 1/1/2023 4/1/2023 7/1/2023 10/1/2023 1/1/2024 4/1/2024 7/1/2024 10/1/2024 1/1/2025 4/1/2025 7/1/2025 10/1/2025 1/1/2026 4/1/2026 78,000 77,000 76,000 75,000 74,000 73,000 72,000 71,000 Council Tax - Number of Band D Equivalent Properties budget Band D Equivalents 4.47 Currently, the level of Council Tax income is projected to be on target against the budget assumptions which is reflected in Appendix 1. Non-Domestic Rates 4.48 The actual collection rate to 31 March 2026 was 96.99%, compared to 97.10% for the same period in 2024/25. Other Updates Housing Revenue Account 4.49 In terms of recurring activity across the Housing Revenue Account, there is an increase in the projected underspend of £217,000 for the current financial year. The main elements of the movements are summarised below and set out in Appendix 4. 4.50 The significant factors contributing to this positive movement are as follows. An increase in the net projected underspend in Repairs and Trades (£107,000) due primarily to projected underspends on planned maintenance; an increase in the projected underspend in Improvements (£56,000); and an increase in the projected underspend in Localities (£157,000) due, in the main, to underspends within sheltered housing. This is partially offset by an increase in the projected overspend on General Administration (£103,000) due to additional loan charges following an acceleration of the council house buy back programme.
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4.51 This net increase in the projected underspend allows for a £217,000 will be applied to the CFCR budget to increase the support to the HRA Capital Programme from the Revenue Budget by that amount. 4.52 There is also a reduction in the funding required from earmarked HRA Reserves of £11,000 due to projected underspends in Localities. 4.53 The net result of this latest monitoring on Housing Revenue Account Balances is as follows – HRA unearmarked Reserves - £1.2 million HRA earmarked Reserves - £979,000 5. 2025/26 Revenue Budget Adjustments Additional Funding 5.1 Since elected members approved the 2025/26 Revenue Budget update on 4 February 2026 (Report No. 26/36 refers), notification has been received of additional resources in the current financial year from several sources as set out below. To ensure that the 2025/26 Management Budget continues to reflect the operational requirements of the Council, several adjustments are required, which are summarised below and included either in Appendix 1 or Appendix 5. Scottish Government – Revenue Support Grant: Additional Children’s Social Care pay funding - £146,000 (Reserves) 5.2 The Scottish Government has advised that the increase in Revenue Support Grant identified above of £146,000 will be made through a redetermination of the Council’s funding. It is therefore necessary to adjust budgets for reserves and Revenue Support Grant. Other Funding 5.3 Other funding amounting to £150,000 has been paid outside the Revenue Support Grant mechanism as Other Grant income and is, therefore, cost neutral in terms of the budget summary. Details of this funding is set out in Appendix 5. 5.4 ACTION: The Committee is asked to note the receipt of £150,000 of additional resources, with this funding being reflected within Children, Families and Justice as additional grant income. The current projected outturn assumes that all these additional resources will be fully expended in 2025/26 or will be carried forward under the terms of the grant award. Contribution to/from Capital Fund 5.5 In line with the strategy for managing the Council’s Capital Programme over the medium term, it is recommended that the eventual over or underspend on
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Capital Financing Costs and Interest on Revenue Balances be transferred from or to the Capital Fund. 5.6 The latest monitoring indicates a projected reduction in capital financing costs (loan charges) of £178,000 based on the latest treasury management activity and an increase of £175,000 in income from interest on revenue balances due to updated cashflow projections. This will result in an increased Contribution to the Capital Fund of £353,000 in the current financial year. This is consistent with the planned use of the Capital Fund to manage the revenue cost of supporting the Capital budget over the short term. 5.7 ACTION: The Committee is requested to approve the virement of £178,000 from the Capital Financing Costs (Loan Charges) Budget and £175,000 to Interest on Revenue Balances with a corresponding increase in the projected Contribution to the Capital Fund. These adjustments have been reflected in Appendix 1 (Column 4) to this report. Service Virements 5.8 To ensure that the 2025/26 Management Revenue Budget continues to reflect current Service needs and operational requirements there are several adjustments that have been line with the Scheme of Administration. Movements In Reserves 5.9 Included at Appendix 7 is an update on the Council’s General Fund Reserves which includes the following: Earmarked and unearmarked Reserves at 31 March 2025 (per audited Annual Accounts). previously approved contributions to and from earmarked Reserves in 2025/26, 2026/27 and 2027/28. The impact of proposals within this report on earmarked Reserves. The impact of the latest revenue monitoring on the level of unearmarked Reserves. 5.10 The earmarked Reserves are presented under three headings as follows: i. Balances held under statute / regulation – these earmarked Reserves are prescribed under legislation, and the Council has limited discretion in how they are applied. ii. Balances held for specific (previously approved) purposes – the purpose of these earmarked Reserves has been previously approved by Council in either the Reserves Strategy or Annual Accounts iii. Balances held for other purposes – the creation of these earmarked Reserves has been approved by Council, but not specific proposals. 5.11 Going forward proposals involving earmarked Reserves under i. and ii. above will be advised to Committee in summary as Council either has limited discretion or previously approved their application. Proposals to apply
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earmarked Reserves under iii. above will include more detail for elected member consideration. Balances Held Under Statute / Regulation 5.12 The following are adjustments to the earmarked Reserves held under statute or regulation. £170,000 from Revenue Grants to support eligible expenditure from the No One Left Behind project £642,000 from Council Tax Income for Affordable Housing as a contribution towards the HRAs new build programme. £279,000 to the Car Park Trading Account based on the projected underspend included in Appendix 2. £380,000 from the Car Park Trading Account to fund key local bus services in 2026/27 and 2027/28. Balances Held for Specific (Previously Approved) Purposes 5.13 These earmarked Reserves have previously been approved by elected members in their consideration of the Reserves Strategy or Annual Accounts. 5.14 Specifically, authority is sought to adjust the following earmarked Reserves identified below: £618,000 to Council Approved Revenue Budget Flexibility to reflect the timing of expenditure towards approved projects as set out in Appendix 6. £40,000 from the Council Approved Revenue Budget Flexibility for 2025/26 resilience projects. £20,000 returned to the Works Maintenance Reserve for contaminated land for works in 2026/27 (Housing and Communities) £11,000 from Historic Child Abuse Scheme for costs incurred (Children, Families and Justice) £150,000 returned to the Extended Producer Packaging reserve due to slippage on waste projects (to now be drawn down in 2026/27) (Environment and Infrastructure) 5.15 ACTION: The Committee is asked to approve the transfers to or from earmarked Reserves set out in paragraph 5.14 above. These adjustments are reflected in Appendix 1 (Column 5) to the report. Balances Held for Other Purposes 5.16 Approval is sought for an adjustment relating to the earmarked Reserve for Anti-Poverty of £31,000 to reflect actual expenditure plans. 5.17 ACTION: The Committee is asked to approve the transfer of £31,000 to the Anti-Poverty earmarked Reserve from Strategic Planning, People and
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Performance. This adjustment is reflected in Appendix 1 (Column 5) to the report. Unearmarked Reserves 5.18 Based on the latest information, the level of unearmarked Reserves at 31 March 2026 is projected to be £17.380 million or 3.5%. This position will undoubtedly change once the final outturns are available. 5.19 The level of unearmarked Reserves has increased by £542,000 since the last update in February due to further improvements in the projected outturn position. 5.20 The Reserves Strategy sets out a range of between 2% and 4%. 6. 2026/27 Revenue Budget 2026/27 Additional Funding 6.1 Other funding amounting of £247,000 will be paid outside the Revenue Support Grant mechanism as Other Grant income and is, therefore, cost neutral in terms of the budget summary. Details of this funding is set out in Appendix 5. 2026/27 Virements 6.2 To ensure that the 2026/27 Management Revenue Budget continues to reflect current Service needs and operational requirements there are several virements that are reflected in Appendix 1 (column 4) that have been processed in line with the Scheme of Administration. 2026/27 Movements in Reserves 6.3 There are a several adjustments set out above, where resources were applied to Reserves in 2025/26 that require to be drawn down in 2026/27 which are summarised as: £150,000 to Environment and Infrastructure from the Extended Producer Packaging earmarked Reserve to reflect expenditure plans. £190,000 to Housing and Communities from the Car Park Trading account to support local bus services. £20,000 to Housing and Communities from the Works Maintenance earmarked Reserve to reflect expenditure plans. £26,000 to Housing and Communities from the Communities earmarked Reserve to support community events relating to the World Cup. £618,000 to Services from Council Approved Revenue Budget Flexibility carried forward from 2025/26 to 2026/27 as detailed in Appendix 6.
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£41,000 to Economy, Development and Planning from Financial Assistance to support civic events in 2026/27. 6.4 ACTION: The Committee is asked to approve the adjustments set out at in paragraphs 6.3 which are reflected in Appendix 8 (Column 5) to this report. 6.5 There has been a series of fly-tipping incidents on the Northfield Site in Perth City with a significant amount of waste having been dumped illegally. It is estimated that the cost of clearing the site will be in the region of £20,000, the majority of this being attributable to the physical disposal of the waste material with the Council’s approved waste disposal contractor. To that end, approval is sought to draw down the funding from the Communities earmarked Reserve. 6.6 ACTION: The Committee is asked to approve the transfer of £20,000 from the Communities earmarked Reserve to Environment and Infrastructure to fund this work which is reflected in Appendix 8 (Column 5) to this report. 6.7 The Council has been approached by Heartland to consider providing financial underwriting support in response to several exceptional and largely external factors that have created a material financial risk to the delivery of two established and emerging cultural events. 6.8 The pressures are not the result of poor planning or delivery failure, but of circumstances outside the organiser’s control, leading to a relatively modest short-term funding gap that threatens the viability of both events if not addressed before critical contractual deadlines. Failure to act may result in event cancellation, leading to immediate economic loss, reputational damage, and a longer-term erosion of confidence in Pitlochry and Perth and Kinross as viable locations for major events. 6.9 By providing a level of financial support the Council would be protecting and sustaining events that generate significant visitor spend, local employment, and place-based reputational benefit for Pitlochry and Perth and Kinross more widely, while also safeguarding longer-term strategic opportunities. The events have demonstrably strong attendance potential, growing audiences, and clear pathways to future financial sustainability once current abnormal conditions ease and baseline data is established. 6.10 Approval in principle is sought to underwrite up to £30,000 to take this forward. This authority would provide officer with time to work with the organiser and security to allow the event to proceed. It would be the intention to provide an update the Finance and Resources Committee in June 2026 7. Financial Risks 7.1 In preparing the Council's revenue monitoring, officers have considered the key strategic, operational and financial risks facing the Council over this period. Whilst the risks may be managed in the current financial year, there is the potential for there to be an impact in the future.
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7.2 To alleviate the impact these risks may have if they occur, a number of general risk mitigation factors are utilised by the Council which include detailed budget monitoring carried out by Services and having general fund balances available to meet unforeseen expenditure. 7.3 There is clearly a concern that there will be an impact of the global tension on the cost of Council services. This is not likely to impact on 2025/26 but will be kept under review for 2026/27 and beyond. 7.4 Risks are captured within the body of the report with a summary being maintained in Appendix 9. 7.5 Going forward, risks to the Revenue Budget will be captured with mitigating actions identified. 8. Workforce Management Updates Probationary Periods 8.1 The Council is introducing a four month probationary period for all new starts joining the Council on or after the 1 July 2026. A structured probationary period allows time to ensure that the time and effort that is invested in recruiting a new employee is further enhanced by giving focus to a robust induction, support and training to perform well in the role. It also is an effective tool to assess compatibility with the new job role for both parties. Pay and Grading Review 8.2 There is a continuing requirement to future proof the lower end of the SJC salary scales to ensure that the Council’s salary scales remain fit for purpose. 8.3 The impact of national pay awards over recent years, which has majored on bottom loaded pay awards and this along with the increases to the Real Living Wage, require a review of existing scales to ensure that the Council continues to recognise and value the experience of staff at the lower end of the pay scales from entry level posts and ensure differentials remain between all grades. This will create a more attractive incentive package for both new and existing employees. 8.4 Officers intend to meet with SJC unions to consider how to future proof our scales for the lowest paid employees whilst ensuring we continue to apply the principles of Fair Work First. 8.5 It is anticipated that the Committee will receive further updates in June and September 2026 with the intention being to implement a change in November 2026 alongside the next Real Living Wage increase. 8.6 ACTION The Committee is asked to approve the commencement of a period of engagement with the progress to be reported back to future meetings of this committee.
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Chief Education Officer Remuneration 8.7 A salary adjustment for the Chief Education Officer is required due to the impact of recent external pay awards / adjustments, specifically teacher pay awards and job-sizing outcomes. This has resulted in the salary of the Chief Education Officer being overtaken by the highest paid head teacher. 8.8 The independent Chief Executive Salary Review agreed by Cosla Leaders in October 2025 agreed a pay hierarchy in which a nominal 10% step between Head Teachers and a “Director level Education role” was established as the “bottom line” in 2025. Whilst Perth and Kinross Council does not have a specific Director of Education post, this statutory function is held by the Strategic Lead, Education & Learning/Chief Education Officer. 8.9 Given the recent changes to the head teacher salary placing, it is proposed that the salary of the Strategic Lead, Education & Learning/Chief Education officer is adjusted with a supplement, consistent with the proposal at paragraph 8.8 above to ensure that this post is paid more than the highest head teacher. This will result in an additional cost of £18,000. Going forward, this supplement will be maintained to ensure that the Council is consistent with the external salary review identified above. 8.10 ACTION The Committee is asked to approve the adjustment to the salary of the Chief Education Officer set out in paragraph 8.9. 9. Conclusion 9.1 This report provides an update on the financial performance of Perth and Kinross Council for 2025/26. The report highlights a projected net underspend of £2.501 million. 9.2 The report also outlines several adjustments to the 2025/26 Revenue Budget, including additional funding from the Scottish Government and various virements to ensure the budget aligns with current service needs. 9.3 Financial risks are identified and mitigated through detailed budget monitoring and the availability of general fund balances. 9.4 The latest monitoring indicates that the Council will have unearmarked General Fund balances of £17.480 million or 3.5% on 31 March 2026. 9.5 The report recommends approval of the proposed budget adjustments and notes the importance of continued vigilance in managing financial risks. 9.6 Finally, the report recommends several adjustments to the 2026/27 Revenue Budget to ensure it also aligns with service activity. 10. Impact and Value Assessment 10.1 This is an operational report, and as such, an impact and value assessment is not required.
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11. Appendices Appendix 1 - 2025/26 Management Budget Appendix 2 - General Fund 2025/26 Projected Outturn - Service Analysis Appendix 3 - Perth and Kinross Health and Social Care Partnership - 2025/26 Projected Outturns Appendix 4 - Housing Revenue Account 2025/26 Projected Outturns Appendix 5 - Other Grant Funding 2025/26 and 2026/27 Appendix 6 - Council Approved Revenue Budget Flexibility Appendix 7 - General Fund Reserves Update Appendix 8 - 2026/27 Management Budget Appendix 9 - Financial Risks