2025/26 Financial Position (Unaudited)
Perth and Kinross Council · 24 June 2026
Back to Finance and Resources Committee — 24 June 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 or Board: Finance and Resources Committee Date of Meeting: 24 June 2026 Report Title: 2025/26 Financial Position (Unaudited) Report Number: 26/182 Report Author: Scott Walker, Chief Finance Officer Organisational Lead: Scott Walker, Chief Finance Officer ___________________________________________________________________ 1. Purpose 1.1 This report provides the Committee with an update on the Council’s financial position at the conclusion of financial year 2025/26. 1.2 The information presented considers the Revenue Budget and impact on Reserves (both earmarked and unearmarked) as well as the Capital Budget. 1.3 This update is based on the unaudited Annual Accounts (draft) that will be considered by the Audit and Risk Committee on 29 June 2026 and is subject to confirmation following completion of the external audit process. 1.4 The report sets out an underspend (subject to audit) on the 2025/26 Revenue Budget of £6.498 million. 1.5 The report further sets out total capital expenditure of £109.305 million (General Fund (composite) - £75.866 million and Housing Revenue Account (HRA) £33.439 million) 1.6 Sections 1. Purpose 2. Recommendations 3. Background 4. 2025/26 Final Outturns - Revenue 5. Reserves Update As At 31 March 2026 6. 2025/26 Final Outturn – Capital Programme 7. Conclusion 8. Impact and Value Assessment 9. Appendices
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2. Recommendations It is recommended that the Committee: 2.1 note the contents of the report 2.2 approve earmarked reserves set out in section 4 and Appendix 5 2.3 approve the application of £150,000 from earmarked Reserves to support the 15–24 Apprenticeships and Career Education (ACE) Workforce and Skills Strategy – see paragraph 5.13. 2.4 approve the level of unallocated resources of £4.974 million at 31 March 2026 as set out in paragraph 6.8. 3. Background 3.1 This report provides the Committee with an update on the 2025/26 financial position based on the unaudited Annual Accounts (draft). 3.2 The figures will not be confirmed until completion of the external audit process later this year with the unsigned audited Annual Accounts being scheduled for consideration by the Audit and Risk Committee on 30 November 2026. 3.3 It is important to note that whilst the information presented within this report is derived from the unaudited Annual Accounts, there are significant differences that have a material impact on the final presentation. To comply with accounting standards, there are material adjustments, primarily relating to pensions, the valuation of assets and the treatment of grants that are reflected in the unaudited Annual Accounts that have no impact on the resources available to the Council and therefore are excluded from this update. 3.4 For the avoidance of doubt this report provides the Committee with information on the resources that are at the disposal of the Council to contribute towards its agreed corporate priorities. 3.5 The Finance and Resources Committee received revenue and capital monitoring updates throughout 2025/26 with reports being considered on 30 April, 25 June, 1 October and 26 November 2025 and 4 February and 22 April 2026. 3.6 As with previous revenue monitoring updates, this report focusses on the movements from previous reports in so far as they impact on the Council’s General Fund balances.
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4. 2025/26 Final Outturns - Revenue Service Budgets 4.1 The total net underspend across Service budgets, which is summarised in Section 1 of Appendix 1 to this report, was £5.873 million which represents 1.6% of total net Service expenditure. This is a positive movement of £3.329 million from the position last reported to Committee in April 2026. 4.2 Details of variances against individual Service budgets are shown in Appendix 2 to this report with a summary position set out in the following paragraphs. Education and Learning 4.3 The final underspend across Education and Learning excluding Devolved School Management (DSM) and the Pupil Equity Fund (PEF) was £1.942 million or 1.1% which represents a positive movement of £816,000 from the last update. The individual elements contributing to this movement are summarised in the following table with further commentary below. Function Final Outturn Movement £’000 % £’000 Education & Learning Core overspend 7 0.6 13 Nursery Sector underspend (1,106) (4.5) (384) Primary Sector overspend 797 1.5 - Secondary Sector underspend (848) (15.9) (282) Special Sector underspend (377) (0.9) (52) Home to School Transport underspend (415) 3.7 (111) TOTAL underspend (1,942) (1.1) (816) 4.4 In Nursery and Secondary, there was an increase in the underspend of £384,000 and £282,000 respectively due to further staff slippage. 4.5 In the Special Sector there was a net increase in the underspend of £52,000 due to further staff slippage, partially offset by an increase in the number of independent school placements. 4.6 In Home to School Transport there was an increase in the underspend of £111,000 due to reduction in spend on additional support needs provision. 4.7 In the Devolved School Management Scheme there was a combined under spend of £542,000, which represents less than 1% of the budget mainly across staff costs. Under the terms of the scheme this will be carried forward in earmarked reserves. 4.8 Regarding the Pupil Equity Fund (PEF), there was an under spend of £103,000. This is mainly because expenditure is incurred by academic year rather than financial year. The balance will be carried forward within earmarked reserves.
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Children, Families and Justice 4.9 The final overspend across Children, Families and Justice was £123,000 or 0.5% which represents an adverse movement of £73,000 from the last update. The individual elements contributing to this movement are summarised in the following table. Function Final Outturn Movement £’000 % £’000 Children & Families overspend 88 0.4 38 Justice Service overspend 35 6.5 35 TOTAL Overspend 123 0.5 73 Economy, Development and Planning 4.10 The final underspend across Economy, Development and Planning was £602,000 or 3.8% which represented a positive movement of £292,000 from the last update. The individual elements contributing to this position are summarised in the following table with narrative on the significant variances below. Function Final Outturn Movement £’000 % £’000 Service Wide underspend (330) (5.3) (157) Tourism, Culture and Place overspend 224 4.8 (139) Development Management and Building Standards underspend (802) - (302) Roads Infrastructure overspend 306 - 306 TOTAL Underspend (602) 3.8 (292) 4.11 Service Wide there was an increase in the underspend of £157,000 due to additional staff slippage and a reduction in the level of bad debt provision. 4.12 In Tourism, Culture and Place, there was an increase in the underspend of £139,000, primarily due to additional income and reduced expenditure on consultancy. 4.13 In Development, Management and Building Standards there was an increase in the underspend of £302,000 due to additional income from planning applications and building warrants. 4.14 In Roads Infrastructure there was expenditure of £306,000 in respect of landscaping works around the Cross Tay Link Road. Originally this was to be included in the Capital Budget and this underspend is included in paragraph 6.7.
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Environment and Infrastructure 4.15 The final underspend across Environment and Infrastructure was £203,000 or 0.6% which represents a positive movement of £428,000 from the last update. The individual elements contributing to this position are summarised in the following table with narrative on the significant variances below. Function Final Outturn Movement £’000 % £’000 Service Wide overspend 342 2.7 42 Waste Disposal underspend (721) (8.1) (321) Refuse Collection overspend 186 3.6 11 Fleet overspend 182 18.8 (18) Traffic and Network underspend (235) (18.8) (85) Roads Maintenance Partnership overspend 271 11.1 21 Street Lighting Partnership underspend (171) (8.9) (21) Climate Change and Zero Waste underspend (57) (2.5) (57) TOTAL underspend (203) (0.6) (428) 4.16 In Waste Disposal there was an increase in the underspend of £321,000 due to additional income from recyclates as well as savings on the waste disposal contract and fuel. 4.17 Across Traffic and Network there is an increase in the underspend of £85,000 due to additional income from road network charges and reduced expenditure across the function. 4.18 There was an underspend on Climate Change and Zero Waste projects of £57,000. Housing and Communities 4.19 The final overspend for Housing and Communities was £27,000 or 0.1% less than budget which represents a positive movement of £342,000 since the last update. The individual elements contributing to this movement are summarised in the following table with commentary on the significant movements below.
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Function Final Outturn Movement £’000 % £’000 Service Wide underspend (79) - (50) Bereavement Services overspend 83 10.1 (41) Community Learning and Development underspend (42) 2.0 (42) Public Transport Unit overspend 30 0.8 (65) Parking and Civil Contingencies overspend 84 - (21) Specialist Services underspend (49) (0.8) (123) TOTAL overspend 27 0.1 (342) 4.20 In the Public Transport Unit there is an increase in the underspend of £65,000 across a number of budget headings in this area. 4.21 In Specialist Services there was an underspend of £123,000 due to savings on housing costs as well as additional income. Property Services 4.22 The final underspend across Property Services was £845,000 or 1.3% less than budget which represents a positive movement of £623,000 from the last update. The individual elements contributing to this movement are summarised in the following table with commentary on the significant movements below. Function Final Outturn Movement £’000 % £’000 Service Wide overspend 462 1.1 (157) Energy underspend (1,246) (16) (197) Maintenance overspend (10) (0.3) - Facilities Management overspend 493 6.3 (14) Catering underspend (544) (6.5) (255) TOTAL underspend (845) 1.3 (623) 4.23 On a Service Wide basis, there is a reduction in the overspend of £157,000 due, primarily to further staff slippage and additional income since the last update. 4.24 On Energy, there is an increase in the underspend of £197,000 following receipt of final bills for 2025/26, primarily due to reduced consumption. 4.25 In Catering there is an increase in the underspend of £255,000 now that final costs are known. The movement is due to a reduction in food costs in quarter four as well as additional income.
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Legal and Governance 4.26 The final underspend within Legal and Governance was £155,000 or 3.7% which represents a net increase of £44,000. Customer and Digital Services 4.27 The final underspend across Customer and Digital Services was £1.062 million or 7.9% less than budget which represents an increase of £400,000 from the last update. The individual elements contributing to this movement are summarised in the following table with commentary on the significant movements below. Function Final Outturn Movement £’000 % £’000 IT underspend (910) (12) (341) Revenues and Benefits underspend (152) (2.6) (59) TOTAL Underspend (1,062) 7.9 (400) 4.28 In IT there was an increase in the underspend of £341,000 due to additional staff slippage and the accelerated delivery of approved savings. 4.29 Across Revenues and Benefits there was an increase in the underspend of £59,000 due, primarily to improved debt recovery in relation to housing benefit subsidy. Strategic Planning and Performance 4.30 The final under spend within Strategic Planning and Performance, was £555,000 or 9.5% which represents a net increase of £44,000 from the last update. Finance and Business Support 4.31 The final underspend across Finance and Business Support was £659,000 or 6.3% less than budget which represents an increase of £413,000 since the last update. Most of this movement relates to an accounting adjustment for a historic balance sheet adjustment as well as additional staff slippage. Corporate Budgets Tayside Contracts 4.32 Included within Appendix 1 is an update on the final outturns of Tayside Contracts. In 2025/26, the unaudited accounts for Tayside Contracts set out a total distributable surplus to constituent councils of £1.657 million. As agreed with the Joint Committee in November 2025, Perth and Kinross Council will receive 41% of this, which equates to £679,370 or £129,370 more than originally budgeted for by the Council. This additional income is reflected in Appendix 1.
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Perth and Kinross Health and Social Care Partnership 4.33 Included within Appendix 3 is the final position for the Health and Social Care Partnership that was considered by the Integration Joint Board on 22 June 2026. 4.34 The update to the Integration Joint Board advised of social care overspends of £2.814 million on devolved activity and £193,000 on non-devolved functions. This is less than the £4.180 million of funding that the Council applied from reserves to support social care activity in 2025/26. This has a positive impact on the level of unearmarked reserves of £1.193 million. 4.35 In addition, there was an overspend of £1.547 million on health activity, which, under the terms of the Integration Scheme, will fall to NHS Tayside. Council Tax Income 4.36 The level of Council Tax income collected in 2025/26 was £677,000 less than budget. This was a combination of an increase in the council tax reduction scheme, reduced collection from previous years and an increase in the level of discounts. 4.37 As reported to the Finance and Resources Committee in April 2026, the Council’s in year collection level for 2025/26 was 97.5%. The national Council Tax collection statistics were published on 17 June which showed that the Council had the second highest level of in year collection performance which was 2.3% higher than the national average. Housing Revenue Account 4.38 There was an underspend of £762,000 on the Housing Revenue Account (HRA) in 2025/26. Within this under spend, £453,000 was utilised to fund borrowing (capital from current revenue (CFCR) and therefore reduce future costs. 4.39 Within the overall underspend, £562,000 related to activity funded from the HRA’s earmarked Reserve and was returned to fund activity in future years. The other £200,000 was applied to the HRA’s unearmarked Reserves to increase the balance to £1.2 million, or 3.1% of the gross budget. 4.40 At 31 March 2026, the HRA had Reserves of £2.752 million split as follows: Earmarked Reserves £1.552 million Unearmarked Reserves £1.2 million 4.41 Information on the final position for the Housing Revenue Account is set in more detail in Appendix 4.
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Net Expenditure (General Fund) 4.42 The movements summarised in section 4 above, alongside the variances reported to previous Finance and Resources Committee meetings, result in a positive variance / reduced contribution from Reserves of £6.498 million. The impact of this on the Council’s Reserves is set out in section 5 below. 5. Reserves Update As At 31 March 2026 5.1 The audited 2024/25 Annual Accounts included the following reserves (earmarked and unearmarked) for the General fund at 31 March 2025 as follows: £m Total General Fund Reserves 68.284 Earmarked Reserves 49.569 Unearmarked Reserves 18.715 5.2 The Finance and Resources Committee were kept updated on the reserves position, with the last report on 25 April advising of the application of £1.989 million in setting the final 2025/26 Revenue Budget in March 2025 and a further £3.974 million throughout the course of the year. 5.3 All things being equal, this would have resulted in a level of unearmarked Reserves at 31 March 2026 of £12.752 million or 2.5%. 2025/26 Final Outturns 5.4 Appendix 1 sets out a final unaudited underspend of £6.498 million. 5.5 Given that this underspend is larger than the amount projected in April 2026, the unaudited annual accounts include two adjustments, both in relation to ongoing and potential future claims. The first relates to an ongoing appeal which may result in the Council incurring additional cost (both recurring and non-recurring) and therefore a provision for £1 million is included in the accounts. The second relates to potential future claims, and therefore a further £1 million has been earmarked for this purpose, should liabilities come forward. 5.6 Should these claims not materialise, then this would be reported to future meetings of the Committee and increase the level of unearmarked reserves. 5.7 The impact of the final outturns and the adjustments set out above is included in Appendix 5 with unearmarked Reserves of £17.790 million or 3.5%. Earmarked Reserves 5.8 Appendix 5 also provides details of the earmarked Reserves of £43.143 million being held by the Council. Of this £28.433 million relates to balances held under statute / regulation; £8.623 million is for previously (pending)
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approved purposes and £6.087 million is available to support delivery of the Council’s priorities, including – • Anti-Poverty - £1.278 million • Communities - £723,000 • Transformation and Workforce Management - £4.086 million 5.9 The updated Reserves position as 31 March 2026 (subject to audit) is set out in the following table – £m Total General Fund Reserves 60.933 Earmarked Reserves 43.143 Un earmarked Reserves 17.790 % of Revenue Budget 3.5% Proposal to Apply Earmarked Reserves 5.10 The Committee is asked to apply £150,000 (across 2026/27 and 2027/28) to enable Phase 1 delivery of the 15–24 Apprenticeships and Career Education (ACE) Workforce and Skills Strategy. This investment will support an earlier and better coordinated action to improve outcomes for young people, strengthen regional skills pipelines and respond to current and future workforce shortages. The proposed funding would provide the Council with the means to initiate targeted pilot activity aligned to local labour market demand, while supporting wider corporate priorities around inclusive growth, tackling poverty and enabling children and young people to achieve their full potential. 5.11 This contribution would also position the Council to lever in wider external and partnership funding as the programme develops including Skills Development Scotland, the Highland Workforce North Co-investment Fund, Tay Cities Deal- related opportunities, government grant funding, social value and community benefit mechanisms, and potential private sector sponsorship and industry co- investment. In that context, the Council’s commitment will enable investment allowing for the establishment of the initial delivery model, demonstrating commitment to partners and improving the prospects of securing longer-term sustainable funding. 5.12 This investment will build on an increased focus on routes into employment for young people being important in terms of tackling poverty. Internally within the Council this follows on from the extension of our summer placement pilot last year and again this summer. More widely the Council has been supporting an increased focus and visibility on the value of apprenticeships, including the introduction of an annual apprenticeship awards programme for Perth and Kinross businesses, which last year and again later this year, will recognise young people’s success in their apprenticeship journeys as well as the businesses who have supported them.
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5.13 ACTION: The Committee is asked to approve the transfer of £150,000 from the Transformation (including Workforce Management) earmarked reserve to Education and Learning to take forward the 15–24 Apprenticeships and Career Education (ACE) Workforce and Skills Strategy. 6. 2025/26 Final Outturn – Capital Programme 6.1 The final outturns on the Composite and HRA Capital Programmes, subject to audit, are summarised in the table below. Net Expenditure/Borrowing Final Budget 22 April 2026 Final Outturn (unaudited) Movement % of Final Budget £M £M £M % Composite Programme 81.103 75.866 (5.237) 93.5 HRA 32.745 33.439 0.694 102.1 Total 113.848 109.305 (4.543) 96.0 6.2 Variances on individual budgets in both the General Fund and HRA will be carried forward to 2026/27 and future years and considered in the first monitoring report to the Finance and Resources Committee in September 2026. Key highlights are set out in the following narrative. Composite Programme (General Fund) 6.3 On the Composite Programme, the biggest expenditure was on the Comrie Flood Protection Scheme (£14.627 million), which is due to be completed in the autumn of 2026, the new Perth High School (£10.759 million), which was opened in August 2025, the Bertha Park Link Road (£10.807 million), which is expected to be operational by the summer of 2026, and on the annual structural maintenance programme of road improvements (£10.926 million). 6.4 Expenditure in 2025/26 also included £5.916 million for the purchase and re- purposing of Pullar House, as well as £1.708 million for the purchase and upgrade of Kinnoull Street Car Park. A further £3.280 million was incurred in completing Destiny Bridge and the new Kingsway which opened to traffic in March 2025. A total of £16.671 million was also spent on upgrading the school estate (including the new Perth High school), with £4.749 million on other property improvements. ICT Infrastructure developments also amounted to £4.002 million. 6.5 The main variances against the approved Budget for 2025/26 related to the following budgets and programmes: • A9/A85 Road Junction Improvements - expenditure of £1.020 million against remaining final budget of £0.014 million following the settlement of all remaining land claims in the year.
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• Destiny Bridge – expenditure of £3.280 million against final budget of £5.785 million, with much of the remaining budget required for maintenance works. • Commercial Property Programme – expenditure of £1.299 million against final budget of £4.337 million, particularly at Northfield Business Park and Kinross West (Plot 4) due to underspends. • Harris Academy – the remaining provision of £392,000 for outstanding works is longer required, resulting in an underspend on the project. • Balhousie Primary school – a total of £785,000 is chargeable to the former Balhousie Primary School following the fire at the site, which should be, at least partially, offset by an ongoing insurance claim. Unallocated Composite Capital Budget Resources 6.6 In April 2026, the Finance and Resources Committee was advised that the Council had projected level of unallocated composite capital budget resources of £5.258 million. 6.7 In closing the 2025/26 accounts (unaudited) this balance has increased by underspends on Harris Academy (£392,000), Almondbank Flood Protection Scheme (£24,000) and Destiny Bridge (£306,000), and was reduced by the increased costs relating to the A9/A85 junction improvements (£1.006 million). 6.8 This means that the closing balance of unallocated capital budget resources is £4.974 million at 31 March 2026. Housing Investment Programme (HRA) 6.9 On the Housing Revenue Investment Programme, the main areas of expenditure was on the Council Housing Buy-Back programme (£14.821 million, supported by £4.410 million of grant) with 116 properties purchased on the open market and a further 20 from the National Trust in Dunkeld. Furthermore, there was expenditure on the New Build Council Housing (£5.947 million, supported by £2.730 million of grants and contributions), mainly for the new developments at Broich Road, Crieff and Kinloch Gardens, Rattray. There was also £361,000 of fees chargeable to the HRA programme in respect of the Development of the Glover Street site which is anticipated to be progressed in 2026/27. 6.10 There was also £4.336 million incurred on the Multi-Storey Flats Upgrade project at Pomarium in Perth, with works ongoing throughout 2026/27, and £4.114 million (supported by £1.690 million of grant) on the Chalet Replacements at Double Dykes. 7. Conclusion 7.1 This report provides an update on the financial performance of the Council for 2025/26.
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7.2 As at 31 March 2026, subject to audit, the Council will have £17.790 million of unearmarked Reserves or 3.5% of the 2025/26 net Revenue Budget. 7.3 In addition, the Council has £43.143 million of earmarked Reserves including: • Anti Poverty - £1.278 million • Communities - £723,000 • Transformation and Workforce Management - £4.086 million 7.4 In conclusion, the Council's proactive financial management has resulted in a favourable outturn for 2025/26, with strategic adjustments and risk mitigation measures in place to support future financial stability. 8. Impact and Value Assessment 8.1 This is an operational report, and as such, an impact and value assessment is not required. 9. Appendices Appendix 1 - 2025/26 Management Budget Appendix 2 - General Fund 2025/26 Final Outturn - Service Analysis Appendix 3 - Perth and Kinross Health and Social Care Partnership 2025/26 Final Outturn Appendix 4 - 2025/26 Housing Revenue Account Appendix 5 - General Fund Balances