2025/26 Revenue Budget – Update No. 2
Perth and Kinross Council · 26 November 2025
Back to Finance and Resources Committee — 26 November 2025 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: 26 November 2025 Report Title: 2025/26 Revenue Budget – Update No. 2 Report Number: 25/326 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 August 2025 ledger, updated for any subsequent known material movements, and the projected financial position of the Housing Revenue Account. 1.2 The total net projected overspend on the 2025/26 General Fund Management Budget, currently is £339,000 (see Appendix 1). This has reduced since the last update following the decision of Council on 29 October to apply up to £4.180 million to address the growing in-year demand for social care. 1.3 Sections 1. Purpose 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. Financial Risks 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 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 Note the financial risks set out in Section 6 and Appendix 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 August 2025 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 and 1 October 2025 (Report No’s 25/99, 25/172 and 25/248 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 overspend on Service budgets, which is summarised in Section 1 of Appendix 1 to this report, is £300,000 which represents 0.1% of total net Service expenditure. 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.
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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 £51,000 or 0.03% of the budget which represents a positive movement of £51,000. The individual elements contributing to this position are summarised in the following table with commentary on the significant variances below. Function Projected Outturn Movement £’000 % £’000 Education and Learning Core Overspend 6 0.5 - Nursery Sector Underspend (361) (1.1) 180 Primary Sector Overspend 1,114 2.0 - Secondary Sector Underspend (489) (8.7) 171 Special Sector Overspend (41) (0.2) (122) Home to School Transport Underspend (280) (2.0) (280) TOTAL Underspend (51) (0.0) (51) 4.6 In the Nursery Sector, there is a reduction in the projected underspend of £180,000 due to updated staff cost projections. 4.7 Within the Secondary Sector, there is a reduction in the projected underspend of £171,000 due to updated staff cost projections. 4.8 In the Special Sector there is a reduction in the projected net overspend of £122,000 due to updated staff cost projections and reductions in the cost of independent school placements. 4.9 In Home to School Transport there is a projected under spend of £280,000 due to a reduction in the number of school days, smaller increase than budgeted and a rationalisation of vehicles. 4.10 The Devolved School Management Scheme is currently projected to be on target. 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). 4.11 At this stage of the academic year, expenditure met from the Pupil Equity Fund (PEF) is projected to be on target. Children, Families and Justice 4.12 There is currently a projected underspend for Children, Families and Justice of £270,000 or 1.0% of the approved budget, which represents the same position as the last update to Committee. The individual elements contributing to this position are summarised in the following table with narrative on the significant variances below.
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Function Projected Outturn Movement £’000 % £’000 Children & Families Underspend (270) (1.2) - Justice Service On Target - - - TOTAL Underspend (270) (1.0) - 4.13 In Children and Families, there is a reduction in the projected overspend on staff costs which is offset by an increase in the cost of residential placements. Economy, Development and Planning 4.14 There is currently a projected underspend for Economy, Development and Planning of £53,000 or 0.3% of the approved budget which represents a positive movement of £201,000. The individual elements contributing to this position are summarised in the following table with narrative on the significant variances below. Function Projected Outturn Movement £’000 % £’000 Service Wide Overspend 47 0.8 (30) Tourism, Culture and Place Overspend 100 2.1 29 Development Management and Building Standards Underspend (200) - (200) TOTAL Underspend (53) 0.3 (201) 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 The projected outturn for Environment and Infrastructure is currently anticipated to be £525,000 or 1.6% more than budget, which represents an adverse movement of £500,000. The individual elements contributing to this position are summarised in the following table with narrative on the significant variances below. Function Projected Outturn Movement £’000 % £’000 Service Wide Overspend 500 (4.0) 500 Traffic and Network Underspend (100) (8.0) (50) Waste Disposal Underspend (250) (2.9) - Refuse Collection Overspend 175 3.4 - Fleet Overspend 200 - 50 TOTAL Overspend 525 1.6 500 4.17 Service wide there is a projected overspend of £500,000 due to updated staff cost projections which currently indicate that the budgeted slippage target will not be achieved.
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4.18 In Traffic and Network there is an increase in the projected underspend of £50,000 due to additional income from statutory road network charges. 4.19 In Fleet, there is an increase in the projected overspend of £50,000 following a review of vehicle materials and repairs. Housing and Communities 4.20 The projected outturn for Housing and Communities is currently anticipated to be £257,000 or 1.3% more than budget, an adverse movement of £273,000. The individual elements contributing to this movement are summarised in the following table with commentary on the significant variances below. Function Projected Outturn Movement £’000 % £’000 Bereavement Services Overspend 14 1.7 - Public Transport Unit Overspend 75 (0.5) 105 Parking and Civil Contingencies Overspend 94 - 94 Specialist Services Overspend 74 1.16 74 TOTAL Overspend 257 1.3 273 4.21 In the Public Transport Unit there is a reduction in the projected underspend of £105,000 due additional expenditure on park and ride services and Perth Bus Station, and a reduction in income from park and ride departure charges. 4.22 Within Parking and Civil Contingencies there is a projected overspend of £94,000 on the visitor ranger service due to additional demands for the service in the year to date. 4.23 In Specialist Services, there is a projected overspend of £74,000 due to set up costs for temporary accommodation due to increased demand. Property Services 4.24 The projected outturn for Property Services is currently anticipated to be £154,000 or 0.2% more than budget, a positive movement of £68,000. The individual elements contributing to this movement are summarised in the following table with commentary on the significant variances below. Function Projected Outturn Movement £’000 % £’000 Service Wide Overspend 662 1.5 (116) Energy Underspend (780) (10.0) 60 Facilities Management Overspend 418 12.2 - Catering Underspend (146) (1.7) (12) TOTAL Overspend 154 0.2 (68)
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4.25 On a Service Wide basis, there is a reduction in the projected overspend of £116,000. This is due primarily to savings on water consumption following a recent audit. 4.26 On Energy, there is a reduction in the projected underspend of £60,000 based on the latest consumption information. Legal and Governance 4.27 Within Legal and Governance there is a projected underspend of £108,000 or 2.6%, which represents an adverse movement of £53,000. This is made up of updated assumptions on income, staff costs and supplies and services. Customer and Digital Services 4.28 The projected outturn for Customer and Digital Services is currently anticipated to be £13,000 or 0.1% less than budget, which represents a favourable movement of £93,000. The individual elements contributing to this movement are summarised in the following table with commentary on the significant variances below. Function Projected Outturn Movement £’000 % £’000 IT and Customer Services Underspend (87) (1.16) (37) Revenues and Benefits Overspend 74 1.34 (56) TOTAL Underspend (13) (0.1) (93) 4.29 In IT and Customer Services and Revenues and Benefits there is an reduction in the projected spend of £93,000 due to updated staff cost projections. Strategic Planning, People and Performance 4.30 The projected outturn for Strategic Planning and Performance is £116,000 or 1.8% less than budget which represents a favourable movement of £48,000 due to updated staff cost projections Finance and Business Support 4.31 The projected outturn for Finance and Business Support is currently anticipated to be £25,000 or 0.2%, a favourable movement of £15,000 due to updated staff cost projections. Scott Street Fire 4.32 At this time, there are no costs included within the Service monitoring information in relation to the fire that took place at Scott Street, Perth in June 2025. 4.33 To date the Council has incurred costs of £841,000, with projections currently exceeding £3.2 million.
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4.34 Work continues with insurance companies to recover costs, and the Council has appointed its own loss adjuster to represent it in the complex discussions. Dialogue is ongoing with the Scottish Government in relation to costs that may not be recoverable. 4.35 Further updates will be provided to future meetings of the Finance and Resources Committee. 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 8 October 2025, Perth and Kinross Integration Joint Board considered a report on the 2025/26 Financial Position, based on financial information to month five (August 2025) and a financial recovery plan (Report No. G/25/158 refers). 4.38 The financial recovery plan identified measures that could be delivered in the current financial year (part A) which are reflected in the projected outturn below, as well as other measures (part B) which will require further consideration and may be deliverable over the longer term. 4.39 The financial update included an updated projected net overspend across the Health and Social Care Partnership of £4.608 million which is summarised in the following table and in detail in Appendix 3. This position remains consistent with the financial challenges facing health and social care across Scotland. Social Care £m Health £m Health and Social Care Partnership £m Gross Projected Overspend 4.594 1.128 5.722 Application of Remaining General Reserves (0.164) - (0.164) Financial Recovery Actions - (Part A) (0.250) (0.700) (0.950) Net Projected Overspend 4.180 0.428 4.608 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 Integration Joint Board will receive comprehensive impact assessments on the part B options on 17 December 2025. This information will be shared
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with elected members at the Council meeting on 14 January 2026 and will be available for consideration for the 2026/27 Revenue Budget. 4.42 The Finance and Resources Committee will receive further updates as information becomes available. Funding 4.43 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 4.44 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. 4.45 Monitoring of Council Tax collection levels is carried out monthly. The following graph sets out collection performance to 31 October 2025 together with prior year comparative figures for the previous five financial years. 4.46 Between 2020/21 and 2024/25, the average collection figure to 31 October was 63.64%. The actual collection figure to 31 October 2025 was 63.65% which is 0.01% more than the five-year average and 0.11% more than the comparable position in 2024.
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4.47 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. 4.48 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 4.49 The actual collection rate to 31 October 2025 was 67.13%, compared to 67.43% for the same period in 2024/25. 71,000 72,000 73,000 74,000 75,000 76,000 77,000 01/04/2020 01/07/2020 01/10/2020 01/01/2021 01/04/2021 01/07/2021 01/10/2021 01/01/2022 01/04/2022 01/07/2022 01/10/2022 01/01/2023 01/04/2023 01/07/2023 01/10/2023 01/01/2024 01/04/2024 01/07/2024 01/10/2024 01/01/2025 01/04/2025 01/07/2025 01/10/2025 Council Tax - Number of Band D Equivalent Properties budget Band D Equivalents
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Other Updates Housing Revenue Account 4.50 In terms of recurring activity across the Housing Revenue Account, a break- even position is projected for the current financial year. The main elements are summarised below and set out in Appendix 4. 4.51 Within this projection, there is a reduction in the projected underspend of £132,000. This is made up of the additional cost of the 2024/25 pay award and the purchase of additional environment sensors for tenants’ homes. 4.52 As a result of this movement, the amount of Capital from Current Revenue will reduce by £132,000 in the current financial year. 4.53 In terms of non-recurring activity across the Housing Revenue Account, there requirement to draw down from the earmarked Reserve has reduced by £22,000 which is reflected in Appendix 4. 4.54 The net result of this latest monitoring on Housing Revenue Account Balances is as follows – • HRA unearmarked Reserves - £1 million • HRA earmarked Reserves - £829,000 Real Living Wage 4.55 On 30 October 2024, the Council agreed that in future financial years, any uplift in the Real Living Wage would be implemented at the earliest possible date (Council Minute 30 October 2024). 4.56 On 22 October 2025, the Living Wage Foundation announced an increase in the Real Living Wage (RLW) rate from £12.60 to £13.45 per hour, representing a 6.75% increase. 4.57 As an accredited Real Living Wage Employer, Perth and Kinross Council will implement the new RLW rate of £13.45 per hour effective from 1 November 2025. This change will be reflected in the November 2025 payroll, with payment being made on 28 November 2025. 4.58 There are 87 employees who will benefit from this increase and the cost to the Council from 1 November 2025 to 31 March 2026 is £34,317 including employer on costs. 5. 2025/26 Revenue Budget Adjustments Additional Funding 5.1 Since elected members were provided with the 2025/26 Revenue Budget update on 1 October 2025 (Report No. 25/248 refers), notification has been received of additional resources in the current financial year from several
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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: • Resettlement Teams (Warm Scottish Welcome): £106,266 (Housing and Communities) • Scottish School Milk Subsidy Scheme £28,000 (Property) 5.2 The Scottish Government has advised that the increase in Revenue Support Grant identified above of £134,266 will be made through a redetermination of the Council’s funding. It is therefore necessary to adjust budgets for Housing and Communities, Property and Revenue Support Grant. Other Funding 5.3 Other funding amounting to £1.754 million 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 £1.754 million of additional resources, with this funding being reflected within Economy, Development and Planning and Environment & Infrastructure 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. Virements 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 Capital Financing Costs and Interest on Revenue Balances be transferred from or to the Capital Fund. 5.6 The latest monitoring indicates a projected increase in capital financing costs (loan charges) of £222,000 based on the latest treasury management activity and an increase of £539,000 in income from interest on revenue balances due to reduced cashflows. This will result in an increased Contribution to the Capital Fund of £317,000 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 £222,000 to the Capital Financing Costs (Loan Charges) Budget and £539,000 to Interest on Revenue Balances with a corresponding increase in the projected
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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 virements that are reflected in Appendix 1 (column 4) that have been processed in line with the Scheme of Administration. Movements In Reserves 5.9 Included at Appendix 6 is an update on the Council’s General Fund Reserves which includes the following: • Earmarked and unearmarked Reserves at 31 March 2025 (per unaudited 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 earmarked Reserves under iii. above will include more detail for elected member consideration. Balances Held Under Statute / Regulation 5.12 There are no adjustments to the earmarked Reserves held under statute or regulation. 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.
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5.14 Specifically, authority is sought to adjust the following earmarked Reserves identified below: • £38,000 from the Feasibility earmarked Reserve to support economic development. • £25,000 to the Community Resilience Reserve as this funding is no longer required due to partnership working with other local authorities. 5.15 ACTION: The Committee is asked to approve the transfers 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 Transformation and Workforce Management of £98,000 for the modernisation of financial systems. 5.17 ACTION: The Committee is asked to approve the transfer of £98,000 from the Transformation and Workforce Management to Finance and Business Support and Education & Learning for staffing. These adjustments are reflected in Appendix 1 (Column 5) to the report. 5.18 Approval is sought for an adjustment relating to the earmarked Reserve for Anti-Poverty of £127,000. 5.19 ACTION: The Committee is asked to approve the transfer of £127,000 from the Anti-Poverty Reserve to Strategic Planning, People and Performance. This adjustment is reflected in Appendix 1 (Column 5) to the report. 5.20 It is proposed that the Council uses the Communities earmarked Reserve to apply funding to enhance the standard of annual weed control in Council managed streets including roundabouts and publicly accessible hard surfaces in some housing areas. Part of this will be to trial a growth retardant so as to not increase the quantity of glyphosate used. 5.21 Therefore, approval is sought to apply £110,000 from the Communities earmarked Reserve (two years at £55,000 per annum) to allow the trial to take place. Should this be successful this would come back as an expenditure pressure in future revenue budgets. 5.22 ACTION: The Committee is asked to approve the transfer of £110,000 from the Communities earmarked Reserve to Housing and Communities for annual weed control for two years. This adjustment is reflected in Appendix 1 (Column 5) to the report. Unearmarked Reserves 5.23 Based on the latest information, the level of unearmarked Reserves at 31 March 2026 is projected to be £12.132 million or 2.4%. This position will change throughout the financial year as more information becomes available.
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5.24 There are three reasons for the reduction in both the level and percentage of unearmarked Reserves. Firstly, this update assumes a net overspend in the current year of £339,000 million or 0.1% (there is a risk that this figure increases). Secondly, there is a planned contribution from unearmarked Reserves of £1.989 million or 0.4% (in the 2026/27 and 2027/28 Provisional Revenue Budgets there is a net contribution of £1.062 million or 0.2% back to unearmarked Reserves). Thirdly, the impact of previous decisions, including the contribution of £4.180 million towards the growing demand in social care 5.25 The Reserves Strategy sets out a range of between 2% and 4%. 6. Financial Risks 6.1 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. 6.2 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. 6.3 Risks are captured within the body of the report with a summary being maintained in Appendix 8. 6.4 No new risks have been identified. 6.5 Going forward, risks to the 2025/26 Revenue Budget and beyond will be captured with mitigating actions identified. 7. Conclusion 7.1 This report provides an update on the financial performance of Perth and Kinross Council for 2025/26. The report highlights a projected net overspend of £339,000. This is after the application of up to £4.180 million to support the social care pressures in 2025/26. 7.2 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. 7.3 Financial risks are identified and mitigated through detailed budget monitoring and the availability of general fund balances. 7.4 The latest monitoring indicates that the Council will have unearmarked General Fund balances of £12.132 million or 2.4% on 31 March 2026. 7.5 The report recommends approval of the proposed budget adjustments and notes the importance of continued vigilance in managing financial risks.
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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 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 Appendix 6 – General Fund Reserves Update Appendix 7 – Council Approved Revenue Budget Flexibility Appendix 8 – Financial Risks