Strategic Planning and Transformation Update and 2026/27 to 2028/29 General Fund Revenue Budget
Perth and Kinross Council · 4 March 2026
Back to Perth and Kinross Council — 4 March 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: Perth and Kinross Council Date of Meeting: 4 March 2026 Report Title: Strategic Planning and Transformation Update and 2026/27 to 2028/29 General Fund Revenue Budget Report Number: 26/54 Report Authors: Scott Walker, Chief Finance Officer Charlene Guild, Strategic Lead – Projects and Programmes Greg Boland, Strategic Lead – Strategic Planning, People and Performance Organisational Lead: Scott Walker, Chief Finance Officer __________________________________ 1. Purpose 1.1 This report provides Council with an update on the delivery of its ongoing strategic transformation and change programme and alignment with the Medium-Term Financial Plan approved by Council on 10 December 2025. 1.2 The report focuses on delivering the Council’s vision of tackling poverty and inequality in areas of greatest need and the protection, within available resources, of services which deliver for individuals, families and communities across Perth and Kinross. 1.3 Thereafter, the report presents the Provisional Revenue Budgets for 2026/27, 2027/28 and 2028/29 which seeks to allow the Council to continue its commitment to achieving its vision and corporate priorities. 2. Recommendations It is recommended that Council: 2.1 Approves the 2026/27, 2027/28 and 2028/29 Provisional Revenue Budgets as set out in Appendix B – see paragraph 6.18. 2.2 Agrees a Council Tax collection rate of 98.25% in 2026/27, 2027/28 and 2028/29 – see paragraph 6.24.
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2.3 Approves the Council Tax bases set out in Table 7 - see paragraph 6.25. 2.4 Approves Band D Council Tax levels (see paragraph 6.31) of: –. 2026/27 – £1,652.32 (final) 2027/28 – £1.714.28 (indicative) 2028/29 – £1.769.99 (indicative) 2.5 Approves a contribution of £120.956 million to Perth and Kinross Integration Joint Board in the 2026/27 Provisional Revenue Budget with a further £1 million earmarked in Reserves – see paragraph 6.47. 2.6 Maintains a prudent approach to the application of Reserves, in line with the Council’s Financial Principles, and earmarks the General Fund balances of £38.361 million identified in Appendix G – see paragraph 7.10. 2.7 Approves that uncommitted Reserves are maintained at between 2% and 4% of the 2026/27 Revenue Budget which equates to £10.552 million to £21.104 million – see paragraph 7.17. 3. Structure of the Report 3.1 This report is structured over the following sections: 4. Strategic Context 5. Scottish Government Budget 6. 2026/27, 20276/28 and 2028/29 Provisional Revenue Budgets 7. Reserves Strategy 8. Risk Assessment 9. Conclusions 10. Impact Value Assessment 11. Appendices 4. Strategic Context 4.1 Perth and Kinross Council’s three-year Revenue Budget (2026/27–2028/29) will be set within a challenging operating environment characterised by the complexity of delivering services in a predominantly rural/remote area and the associated cost premium, demographic changes, rising service demands, increasing levels of need for additional support, cost of living crisis and sustained financial constraints. 4.2 Despite the challenging context, Perth and Kinross Council has continued to deliver progress against its Corporate Plan corporate priorities. The Council’s Annual Performance Report 2024/2025 (Report No 25/275 refers) evidences these achievements, such as: Reducing the child poverty rate to 3.8% below the national average, nearly double the previous gap of 2%.
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Narrowing the poverty related attainment gap for primary-age literacy from 27% to 21%, and for secondary school leavers with a reduction from 40% to 28% in the gap between those leaving with at least one Level 6 qualification, and from 28% to 19% for those leaving with at least one Level 5 qualification. Maintaining stability in the number of families in temporary accommodation despite sustained pressure on housing and homelessness services. Our Home First approach has ensured stability for families requiring temporary accommodation. Between 2020 and 2024, the number of households in temporary accommodation remained steady - 6 households (15 children) in March 2025 compared with 8 households (16 children) in March 2024 - minimising disruption for children, which is critical to their development and wellbeing. Over the same period, the national figure increased by 36%. Reducing re-let times and void levels in direct response to the national housing emergency. Average re-let times reduced from 37.8 days in 2023/24 to 24.87 days in 2024/25, while the number of void properties also reduced from 136 to 95. This improvement has increased the availability of homes for people in urgent need. Delivering 264 new affordable homes which includes 234 social rented homes and 30 mid-market rent properties, while achieving a balanced geographic spread of new supply: 53% urban / 47% rural. This strong performance places Perth and Kinross as 7th in Scotland for per-capita growth in housing stock. Delivering strong economic performance, attracting investment, and supporting over 250 new business start-ups and over 250 micro- enterprises through local partnerships, with Perth and Kinross recognised by Growth Flag for the second successive year, as the Local Authority in the UK with the strongest growth potential amongst its businesses. Improving employability through targeted programmes helping adults and young people, and increased visitors to Perth and Kinross by 25%. Planting 3,142 trees in our open spaces and working with new and established community groups to plant native herbaceous, wildflower and pollinators to enrich local greenspaces.
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4.3 The IJB Annual Performance Report 2024/25 and in-year reporting demonstrate very positive trends over time including: Delivery of reablement support and care at home which has improved significantly. This has led to a large reduction in unmet need by around 800 hours since August 2024 and a sustained reduction in the number of people experiencing a delayed discharge from hospital, where 97.6% of all adults are now discharged from hospital without delay. People are now waiting less time for the support they need to live independently from the time they are identified as requiring social care support (both from hospital and in the community). This is ensuring that they get the right care at the right time, before their circumstances deteriorate and they require higher levels of personal care. The average time that a person spends in hospital is significantly trending down. Prolonged periods in hospital can lead to significant physiological, psychological and functional decline also known as “deconditioning syndrome”. This can mean that people take much longer to recover their previous capabilities, if at all, and can unfortunately require greater care and support. The number of people experiencing a delay in their discharge has been reducing over time and the Health and Social Care Partnership has maintained high performance in this measure with the local position consistently below the nationally determined rate. 4.4 Despite these achievements Perth and Kinross Council is not complacent and recognises the increasing needs within sections of our communities, the many challenges we currently face and those that lie ahead. The Annual Performance Report recognised some of these challenges and the work that we are doing to make Perth and Kinross a place to live life well, free from poverty and inequality. National Context 4.5 “Despite increased funding in 2024/25, the financial outlook for Scotland's councils presents substantial challenges. The costs of delivering services continues to rise, debt is increasing, reserve levels are falling and there is a continued reliance on non-recurring measures to close significant budget gaps. This all raises concerns around councils’ medium-term sustainability.” Accounts Commission January 2026 4.6 Like all local authorities, Perth and Kinross Council has made significant savings but continues to see the costs of and demand (need) for services rising faster than the available funding. There are limitations as to how we can address these challenges due to ringfenced funding and statutory commitments. In addition, national policy reforms across education, social care, climate change and child poverty continue to shape local priorities.
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These limitations and challenges will see an increasing requirement to consider the impact on the deliverability of our existing levels of universal services and the ability to target resources to those in greatest need. 4.7 Workforce pressures persist across key roles and national pay bargaining remains a significant cost driver. More widely, the pressure of continuing to try to deliver on all of the Council’s priorities while maintaining levels of service is taking its toll on our workforce with reports of lower motivation, higher absence levels in some key areas, and staff survey feedback highlighting concerns about how valued staff feel. In many cases, the delivery of services and the mitigation of cost increases continues to rely on significant levels of unpaid discretionary effort from our workforce. 4.8 Additionally, crosscutting national priorities such as digital transformation, early intervention, prevention, wellbeing, and net zero, continue to influence service redesign and investment decisions. Moving forward, services will require significant changes to remain sustainable, and the continued transformation and re-design of services will be key levers to mitigating and addressing these challenges more ambitiously and effectively. Officers are developing proposals for phase three of our Transformation, Change and Improvement programme focussing on these crosscutting priorities and ensuring alignment with our own key corporate priorities. In addition, national and regional collaborative working will continue to contribute to transformation and change, enabling councils to pool resources, share expertise and deliver services more efficiently, where there is a political commitment to do so. Local Context 4.9 Perth and Kinross Council operates within the strategic framework of the Corporate Plan. This is underpinned by a commitment to the overarching vision for “a Perth and Kinross where everyone can live life well, free from poverty and inequality”. During this year the Council will commence engagement on its new Corporate Plan which is due for renewal in 2027. This will consider our vision and corporate priorities to ensure they meet with our collective ambitions for Perth and Kinross Council and the people we serve. 4.10 The Local Outcomes Improvement Plan (LOIP) 2022–2032 also reinforces this ambition by setting out shared commitments across the Community Planning Partnership. The Best Value thematic review of the Council reinforces the importance of clear strategic priorities, strong governance, and alignment between plans and resources. 4.11 The Corporate Plan vision is delivered through seven corporate priorities: Tackling poverty Tackling climate change and supporting sustainable places Developing a resilient, stronger and greener local economy Enabling our children and young people to achieve their full potential Protecting and caring for our most vulnerable people Supporting and promoting physical and mental wellbeing
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Working in partnership with communities 4.12 These corporate priorities identify where resources must be focused to deliver the ambition set out in the organisational vision. The need for clear prioritisation is particularly acute in a period of tightening financial resources, when limited capacity must be directed towards those activities that will have the greatest impact on achieving the vision. 4.13 This focus on prioritising limited resources to achieve the Council’s vision forms the basis of the Council’s financial principles and the approach taken to our medium-term planning. As we seek to continue to work within our available resources, prioritisation and a requirement to reduce and/or stop certain activities not aligned to Council priorities is likely to be increasingly necessary and will impact on our ability to provide existing levels of some universal services. 4.14 Needs led budgets, including social care, additional support needs, transport, and homelessness, continue to exceed historic trends. These factors contribute to significant funding challenges, and continue to require sustained transformation, careful prioritisation, and a disciplined approach to financial stewardship. 4.15 The Council is continuing to progress a programme of transformation aligned to its seven strategic priorities. This includes modernising service delivery, strengthening prevention and early intervention, investing in digital capability, improving the use of data and evidence, refocusing the estate to better match future need, and enhancing workforce sustainability. 4.16 Collaborative working with communities, third sector and partners, NHS Tayside, Police Scotland, and the wider public sector remains central to delivering better outcomes for the residents of Perth and Kinross. Health and Social Care 4.17 The Council’s Revenue Budget for 2025/26 approved a contribution to the Integration Joint Board (IJB) which included additional funding of £6.7 million to protect and support the delivery of social care services, based on mid-level demand assumptions. In setting the Revenue Budget however, there was an acknowledged risk that the higher-level assumptions could result in additional costs of £5 million over and above the assumed mid-range figure. That risk materialised within the financial year. In recognition of the fact that the IJB’s financial reserves were already depleted through efforts to manage and meet increasing complexity and demand arising mainly in the post pandemic period, Council approved an additional non-recurring allocation of up to £4.180 million to the IJB in October 2025 (Report No. 25/278 refers). This allocation was to meet existing costs associated with high service demand (need) and to complete work outlined in the financial recovery plan.
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4.18 The Health and Social Care Partnership continues to perform well against its performance comparators and the Scottish average. This performance directly supports the Integration Joint Board’s Strategic Plan for 2024-2027 and is aligned to the vision and priorities set out in the Council’s Corporate Plan. This is contributing positively to prevention, early intervention and avoiding failure demand across multiple points in the health and social care system. 4.19 A programme of transformation within the Health and Social Care Partnership is focused on shifting the balance of care, addressing needs arising from demographic change, increasing equality of access and addressing unmet need in the community. Strategic Challenges 4.20 Despite a strong strategic framework, the combined demographic and geographic factors of the area present significant pressures. Demographic change remains one of the most critical challenges. The area continues to experience a growing population of older people, with a 78% projected increase in residents aged 75 between 2001 and 2028, placing sustained pressure on health and social care, housing support, and community services. At the same time a growth in additional support needs continues to place pressure on Education and Learning Services. 4.21 The rural nature of Perth and Kinross presents significant challenges and additional costs in delivering services across a 5,286km2 area with a lower- than-average population density of 29 people per square kilometre (compared to a Scottish average of 70). This presents a distinct rurality challenge for Perth and Kinross and other geographically similar local authorities which is not fully reflected in current national funding models. 70.6% of residents live in rural areas, with parts of Perth and Kinross representing some of the most access-deprived in Scotland, affecting over 31,000 people. This affects daily living and access to education, employment, digital and transport connectivity and essential health, care and support services. For the Council the dispersed nature of the area impacts on and increases the cost and limits the efficiency of delivering core services including home-to-school transport, school meal provision, social care, waste management, housing services, roads and winter maintenance. The rural poverty premium further intensifies demand and cost pressures. 4.22 These pressures have also been recognised in recent reporting by national bodies. In January the Accounts Commission’s report on delayed discharges recognised the exacerbating challenges in rural areas caused by greater difficulties recruiting and retaining carers, and the limited availability of appropriate housing to meet people’s long-term care needs in rural areas. Earlier this month the Scottish Parliament’s Equalities, Human Rights and Civil Justice Committee published a report on human rights, equalities and access to services in rural Scotland, which recognised the need for targeted action to recognise that national policy frameworks do not fully account for rural realities.
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4.23 The Council Leader has also written to COSLA on behalf of the Council, to highlight the need for greater recognition of rural delivery factors within the allocation of funding and as an intensifying factor on demographic projections. COSLA has confirmed a willingness to examine these issues and has welcomed Perth and Kinross’s support in working with other local authorities to do so. It is hoped that with COSLA’s support there will be progress to reflect the growing urgency of ensuring rurality is properly accounted for in future funding distribution. 4.24 Rurality remains a significant factor, alongside demographic projections, in balancing the Council’s statutory duties, financial planning, and determining the scale of savings required in the 2026–2029 period. 4.25 The medium-term challenge is shaped by a combination of structural and emerging pressures: Rising demand associated with increasing levels of need: increased volume and complexity across social work services for all ages, adult social care, and additional support needs. Workforce constraints: recruitment difficulty, retention challenges, future skills requirements, and reliance on temporary staffing in specific roles and the wellbeing impact of continuing demand pressures within teams as we seek to maintain current services levels. Cost pressures: uplifted contract and utilities costs, transport inflation, and asset maintenance backlogs. Demographic change: significant population ageing and changing household patterns. Asset and estate limitations: ageing buildings, decarbonisation pressures and digital infrastructure requirements, with the need to consider the best use of all of our estate, corporate, educational, leisure and other, to best meet the needs of communities whilst balancing the financial challenges. External uncertainty: volatility in government funding, policy change and broader economic risks. 4.26 At the same time, a comparatively static or declining working age population restricts labour market capacity and creates recruitment challenges across key frontline services and professional roles. These demographic shifts also intensify cost pressures in areas such as additional support needs, child protection, complex adult social care, and homelessness services. 4.27 Together, these pressures create an unsustainable trajectory without the help of strategic transformation and multiyear financial planning. As part of that planning it will be necessary to continue to ensure that resources are directed towards supporting those who most need it, based on evidence and aligned to
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organisational priorities. This will require a review of some universal services to determine where performance, standards of service delivery or frequency may be reduced, while continuing to meet statutory responsibilities. This approach will be necessary to support the reallocation or targeting of finite resources to where investment is most needed, and improving outcomes for vulnerable people, families and communities. 4.28 Put bluntly we cannot continue to deliver everything we currently do, in the way we do, with the available resources. Strategic and Transformation Opportunities 4.29 We have continued to make good progress with our phase two Transformation and Change Programme, and a full update will be presented at Finance and Resources Committee in April 2026. Key highlights over the past year include: Audit Scotland best value audit on Transformation: How councils are redesigning their services to deliver services more efficiently was carried out in Perth and Kinross Council in 2025 and highlighted several areas of good practice including clear vision, strategy and programme and savings made as a result of transformation projects. Another area of strength was the regular, clear and open communication and reporting to Elected Members on progress. Recommendations were few and have all been addressed. Secured Fairer Futures funding to expand the Fairer Communities for all programme into 2026/27 and beyond based on past successes. Development of Career Long Professional Learning Pathways and three additional Intensive Support Units through our Additional Support Needs programme and improvement of support and guidance for 16+ transitions. Launch of the Copilot Pathfinder Programme to integrate Microsoft Copilot and enhance productivity. Options appraisal for a future ALEO model presented to full Council in October 2025 with a new Strategic Alliance between three ALEOs and Perth and Kinross due to start in April 2026 (subject to Council approval) to improve collaboration, focus on shared services, efficiencies and improved outcomes, workforce planning and income growth. 4.30 While much of the Council’s transformation work is visible through redesigned services and improved processes, a substantial part of its impact is hidden in the costs which have been avoided by making these changes. By redesigning processes, consolidating services and teams and focusing on early intervention, we have avoided pressures that many other councils are now facing. Examples include: Preventing and tackling homelessness through the Home First (and other) initiatives, which meant that while homelessness is a growing challenge
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for all local authorities, Perth and Kinross continues to perform well comparatively. The introduction of REACH to support young people who may otherwise have been placed in external residential placements, meant that while complex cases have risen post-COVID, the baseline number of placements in Perth and Kinross was lower than it would otherwise have been. We perform exceptionally well nationally, in the balance of care for children and young people who are looked after in a community setting. Using technology to re-design Care at Home, using mapping tools to show where packages are needed and introducing a new contract model where providers can be more flexible and responsive to where demand is, increasing the number of hours available to provide care. While the growth in demand for older people’s services has been significant, it would have been even more difficult to manage without these transformation improvements. The costs per hour for home care in Perth and Kinross continues to be one of the lowest in Scotland as reported in the Local Government Benchmarking Framework. 4.31 The above examples and others are estimated to be saving the Council millions of pounds through cost of avoidance / mitigation. We also recognise that our committed workforce provide a level of discretionary effort which also mitigates and avoids further cost pressures. 4.32 Work to improve productivity, speed up service delivery, reduce waiting times, and ensure that projects are focused on delivering the Council’s priorities, hasn’t always resulted in cashable savings. However, these measures have contributed to avoiding failure demand, improving customer experience, reducing duplication, and ensuring that costs are managed within existing budgets. 4.33 We recognise that there are still more opportunities to further transform and redesign services, to consider cross cutting national challenges within this context and encourage a renewed focus on strengthening sustainability and efficiency. This will align with the national programme for Transformation and Change led by Improvement Scotland and SOLACE which is driving collaborative reform across all 32 councils. Areas of national and local focus are: Digital and Automation: accelerating end to end process redesign and digital self-service. Service Redesign and Prevention: shifting resources to early intervention and outcomes focused models. Regional Collaboration: joint commissioning, partnership working and shared services with neighbouring authorities and local partners.
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Asset Optimisation: rationalising the estate, improving energy efficiency and supporting net zero objectives. Income and Commercial Opportunities: reviewing charging models, expanding traded services, and maximising external funding. 4.34 These opportunities will underpin the future direction of the Transformation and Improvement Programme, from June 2026. Phase three will sharpen the Council’s strategic focus on a targeted approach to change, building on the proven impact of place-based approaches such as Fairer Communities and Fairer Futures. By using local data and insight as a driver to identify need and opportunities, and working closely with our community partners and with residents, our Strategic Leadership Team will champion the need to increasingly consider provision through more focused lens - enabling solutions that better reflect the needs and priorities of communities and individuals most in need, and improve outcomes where pressures are greatest. 4.35 This renewed focus will be supported by a strengthened organisational approach to productivity, efficiency and the prevention of failure demand, including the integration of the Transformation and Business Improvement teams, and even closer alignment with digital transformation and organisational development. 4.36 Together with a wider programme of leadership development with our middle managers to understand these drivers for change and their role in improving productivity, preventing failure demand, and improving efficiencies we will ensure that finite resources are directed to where they make the greatest difference, that transformation is rooted in evidence and place, and that the Council can deliver sustainable and evidence-based improvements across Perth and Kinross. 4.37 This requires increased pace across a streamlined Transformation Programme with a strengthened focus on improvement outcomes, cross service delivery and collaboration. Budget Consultation 4.38 Between 5 December 2025 and 16 January 2026, the Council carried out an online survey exercise to gauge resident views on budget issues and priorities. 4.39 Overall, there were 946 responses received to the online survey. This is an improvement on the 761 responses received to the survey undertaken for the 2024/25 budget. Appendix A provides an overview of the responses received with comparisons to previous years where relevant. 4.40 While this report summarises the comments made by respondents, the full text comments (apart from minimal redactions to remove any personally identifiable information) was shared with elected member Budget Review Groups to support their considerations.
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4.41 The budget survey responses provide feedback on priorities and themes that are important to residents. While comments vary and do not provide detail on the extent to which respondents use universal or specific Council services, the key theme which emerges is that residents want to see essential services protected and a focus on efficiency and the streamlining of processes. While definitions of essential services will vary by what individuals use and need, the broad position of respondents is to focus on services which support the most vulnerable and at-risk people, recognise the additional challenges of living in rural areas (particularly in relation to transport access), and the importance of community and social wellbeing. 4.42 Officers recognise that limitations of the budget survey process means that the responses received represent only a relatively small proportion of residents and communities. Work is planned during 2026 to review how consultation and engagement insight is captured, shared and informs strategic decisions across Council services, including the proposed development of a Citizen’s Panel with the flexibility to work at both an area-wide level and be targeted at communities where voices are often not heard in existing consultation activities. This approach will inform how and where engagement to inform future Council budgets, and the development of the next Corporate Plan, is undertaken. These measures and consultation responses also need to be included alongside other qualitative feedback from service users on the quality and value of services to those who make greatest need of have the highest levels of reliance on council services. Impact of this context 4.43 The three-year Revenue Budget proposals have been developed within the local, national and strategic context set out in this section, and with the aim of ensuring that the Council’s finite resources are directed towards activities that most effectively support the strategic priorities and deliver the vision of a Perth and Kinross where everyone can live life well, free from poverty and inequality. 4.44 This proposed budget balances ambition with realism, acknowledging the pressures ahead while reaffirming the Council’s commitment to improving outcomes, reducing inequalities, and sustaining high quality public services for the residents of Perth and Kinross, particularly those with the highest levels of identified needs. 5. Scottish Government Budget 5.1 The Scottish Budget 2026/27 and Local Government Finance Circular 1/2026 were published on 13 January 2026 which was significantly later than previous years.
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Local Government Finance Circular 1/2026 5.2 Local Government Finance Circular 1/2026 includes the provisional financial settlement for 2026/27 at an individual Council level. The information provided in January 2026 only related to 2026/27. 5.3 The Circular provides details of the provisional total Revenue and Capital funding allocations for 2026/27, as well as the latest information on funding redeterminations for 2025/26. The Circular also provides details on a range of Non-Domestic Rates measures, including the proposed 2026/27 poundages and changes to certain reliefs. 5.4 The provisional total funding allocations form the basis for the annual consultation between the Scottish Government and COSLA ahead of the Local Government Finance (Scotland) Order 2026 being presented to the Scottish Parliament. This is currently scheduled for the end of February 2026. 5.5 The Circular sets out a national funding package of almost £15.7 billion and includes the following. Where the amount for the Council is known, this is shown in italics. a further £773.8 million of funding has now been baselined as General Revenue Grant. additional General Revenue Grant of £253.9 million to support local priorities an additional £3 million to support free school meals £160 million for adult social care workers in commissioned services (£4.612 million) An additional £11 million to improve pay for early learning and childcare workers in commissioned services (£316,000) £11 million to support development of people working in children’s social work £7 million to support provision of free personal and nursing care £20 million to tackle the climate emergency £40 million to improve active travel infrastructure An additional £11.4 million (revenue) and £15.5 million (capital) to improve inter-island connectivity. £20 million announced for the Real Living Wage 5.6 As has been the case in previous years, Finance Circular 1/2026 also contained information on undistributed revenue funding, part of which has been distributed, with the remainder following during the financial year. 5.7 Based on Finance Circular 1/2026 (updated), the total Revenue funding being made available by the Scottish Government to Perth and Kinross Council in 2026/27 is £390.527 million (see Table 1 below).
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Table 1: Scottish Government Grant Funding – Perth and Kinross Council 2026/27 2025/26 Movement £m £m £m General Revenue Funding 311.825 304.896 Non-Domestic Rates 71.661 63.537 Ring-Fenced Grants 3.896 1.967 TOTAL REVENUE FUNDING 387.382 370.400 Subsequent Announcements 3.145 - UPDATED REVENUE FUNDING 390.527 370.400 20.127 Source: Finance Circular 1/2025 – 27 February 2025 Finance Circular 1/2026 – 13 January 2026 5.8 The 2026/27 Scottish Government provisional funding allocation of £390.527 million represents a £20.127 million increase in absolute cash terms from the allocation for 2025/26 (or 5.4%). 5.9 However, the 2026/27 provisional funding allocation includes £15.356 million where there is an expectation or requirement for the Council to apply funding for a stated purpose (most notably 2025/26 and 2026/27 pay awards, employer’s national insurance contributions and social care (real living wage). 5.10 Therefore, on a like for like basis, the provisional Scottish Government funding allocation for 2026/27, represents a £4.771 million cash increase (or 1.3%) over the equivalent position for 2025/26. 5.11 Table 2 summarises the movements in the total funding package from the Scottish Government to facilitate a comparison of the 2026/27 provisional allocation with 2025/26 on a comparable basis. Table 2: Cash movements between 2026/27 and 2025/26 (on a comparable basis) £m 2025/26 – Finance Circular 1/2025 370.400 2026/27 – Finance Circular 1/2026 (updated) 390.527 Year on year cash increase in funding 20.127 Year on year % increase in cash funding +5.4% Less funding directed to service delivery/commitments (15.356) £ cash increase (on a comparable basis) 4.771 % cash increase 1.3%
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Implications for the Capital Budget 5.12 Finance Circular 1/2026 also includes provisional Capital Grant allocations for 2026/27. The impact of these allocations is included within the Strategic Investment and Capital Budget 2026/27 – 2031/32 (Report No. 26/55 refers) which is on the agenda for this Council meeting. Non-Domestic Rates 5.13 Finance Circular 1/2026 also includes the Non-Domestic Basic Rate poundage for 2026/27 of 48.1 pence, a reduction 1.7 pence from 2025/26. Two additional rates are levied on properties with rateable values over £51,000 (53.5 pence, reduction of 1.9 pence) and £100,000 (54.8 pence, reduction of 2 pence). 5.14 A new 15% relief will be available in 2026/27 to 31 March 2029 for retail, hospitality and leisure premises with a rateable value up to and including £100,000 (capped at £110,000 per ratepayer per year). 5.15 Revaluation transitional relief will be available for the three years (2026/27 to 2028/29) which is set out in Table 3 below. This will cap increases in gross rates liabilities for those seeing the highest increases in rateable values at revaluation. Table 3: Year on Year Revaluation Transitional Relief Caps (%) – 2026/27 to 2028/29 2026/27 2027/28 2028/29 Small (rateable value up to £20,000) 15% 22% 38% Medium (rateable value £20,001 to £100,000) 30% 44% 75% Large (rateable value over £100,000) 50% 75% 113% 6. 2026/27, 2027/28 and 2028/29 Provisional Revenue Budgets Background 6.1 The Council first approved the 2026/27 Provisional Revenue Budget on 28 February 2024, (Report No. 24/63 refers). On 26 February 2025, the 2026/27 Provisional Revenue Budget was updated and the 2027/28 Provisional Revenue Budget was set for the first time (Report No. 25/36 refers). 6.2 In setting the 2026/27 and 2027/28 Provisional Revenue Budgets, the Council has previously agreed the expenditure pressures and budget reductions set out in Table 4. Table 4: Council Decisions 28 February 2024 and 26 February 2025 2026/27 2027/28 Total Expenditure Pressures £5.696m £2.879m £8.575m Budget Reductions £(4.806)m £(1.283)m £(6.089)m
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6.3 Furthermore, in agreeing the Medium Term Financial Plan in December 2025, the Council agreed indicative Council Tax levels of 7.5%, 3.75% and 3.25% for 2026/27, 2027/28 and 2028/29 respectively (Report No. 25/356 refers). 6.4 These decisions are the basis for the updated 2026/27 and 2027/28 Provisional Revenue Budgets, and for the 2028/29 Provisional Revenue Budget that is being considered by Council at this meeting. Process for Updating the 2026/27 and 2027/28 Provisional Revenue Budgets 6.5 Adjustments to the 2026/27 and 2027/28 Provisional Revenue Budgets are included in the Executive Summaries set out in detail in Appendix C. 6.6 The Executive Summaries include an assessment of the potential impact of budget reductions against the following criteria: Fairness – including the potential socio-economic impact on vulnerable individuals and groups. Workforce – including general commentary on the workforce implications. Customers – including information on the effect on all customers /stakeholders (both external and internal). Equalities/Diversity – ensuring that any statutory equalities issues are considered. Outcome and Performance – identifying any significant impact on the Local Outcomes Improvement Plan and/or Service Business Management and Improvement Plans. Climate Change – including positive and negative impact 6.7 Where workforce implications are identified within the Appendix C, the Council’s positive and proactive approach to workforce management is designed to mitigate the impact on its people, including investment in skills for the future, retraining, support to take on new job roles, career coaching and building resilience. 6.8 Equality and Fairness Impact Assessments for individual expenditure pressures and reductions were prepared which facilitated the preparation of a cumulative impact assessment. 6.9 The Executive Summaries set out in Appendix C have been subject to scrutiny by Elected Member Budget Review Groups. 6.10 The detailed analysis of these expenditure pressures and reduction proposals are set out in Appendix C. Total updated expenditure pressures of £40.545 million and total budget reductions / funding of £23.085 million, are included in Table 5.
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6.11 Also included Table 5 is the impact on 2028/29 of decisions taken in previous financial years. The most significant adjustment is the unwinding of the last tranche of the Service Concession scheme when “funding” of £1 million ends. In addition, the consequences of other decisions (predominantly the ending of non-recurring expenditure proposals) helps to reduce the gap in 2028/29 by £124,000. The impact of these adjustments is shown in Table 5 below. Table 5: Updated Expenditure Pressures and Budget Reductions 2026/27 £m 2027/28 £m 2028/29 £m Total £m Expenditure Pressures 20.740 7.361 12.444 40.545 Budget Reductions (20.740) (1.746) (0.599) (23.085) Balance (per Appendix C) - 5.615 11.845 17.460 Other 2028/29 Pressures (net) - - 0.876 0.876 2027/28 and 2028/29 Gap - 5.615 12.721 18.336 6.12 The Council is required under statute to set a balanced revenue budget for the year ahead (i.e. 2026/27) and the proposals set out in Appendix C meet that requirement. However, looking ahead into 2027/28 and 2028/29, there is a cumulative funding gap of £18.336 million – see Table 5. 6.13 As Elected Members will be aware the timeline for the 2026/27 budget process has been particularly challenging due to the dates of the UK Government budget and the subsequent impact Scottish Government budget announcements. Given the cumulative funding gap for the next two years, it is essential that work to address this begins as soon as possible, including early engagement with elected members and communities. Learning from what has worked well and what could have been better in this year’s budget preparation process and the feedback which will and has been received from elected members will inform the approach to this. 6.14 Elected Members are reminded that the position summarised in Table 5, is based upon the assumption that all expenditure pressures and all reductions within the Executive Summaries attached as Appendix C, and those in previous years are approved. In addition, it is based on the Council Tax Strategy approved by Council on 10 December 2025. Furthermore, this position is subject to the current known funding available from Government. 6.15 As set out above, the 2026/27 Provisional Revenue Budget is based on an increase in Council Tax of 7.5%. Should the final level of Council Tax vary, then this would either allow the Council to reject more cuts or require it to identify more cuts. For illustrative purposes, Table 6 sets out the implications of a range of Council Tax levels.
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Table 6: Implications of Changes to Council Tax Levels for 2026/27 5% 6% 7.5% 8% 9% 9.5% -£2.917m -£1.750m - +£0.583m +£1.750m +£2.333m 6.16 The 2026/27, 2027/28 and 2028/29 Provisional Revenue Budgets have been prepared based upon the information currently available, both in terms of financial resources and anticipated service delivery pressures. The analysis reflects the judgement of Council officers, a focus on Council priorities and financial principles, however, there is a significant risk that these assumptions may require to be revised as part of the ongoing monitoring of Council expenditure and income. 6.17 Finally, the Council is recognised by external auditors for its prudent approach to financial management. Given the level of uncertainty over the short to medium term in relation to additional expenditure, reduced income, the previously approved use of Reserves, and the unknown impact of the cost of living on local communities and the local economy, Council is advised to adopt a cautious and prudent approach towards the application of Reserves. Council has already agreed the principle of not funding recurring activity from general fund Reserves. 6.18 ACTION: The Council is asked to approve the 2026/27, 2027/28 and 2028/29 Provisional Revenue Budgets as set out in Appendix B – RECOMMENDATION 2.1. 6.19 The Council is also advised that there may be delays implementing some additional expenditure proposals, to allow lead in arrangements to be established. This may result in some activity slipping into future financial years. Any additional projects introduced through the Revenue Budget Motion/ Amendments, must reflect the Council’s priorities and approved financial principles, including a focus on need rather than responding to demand and be based on evidence and data. Delivery of new proposals may also require a commensurate increase in staffing capacity which may delay implementation as appropriately skilled officers are recruited. Council Tax Collection Rate 6.20 In February 2025, the Council agreed a Council Tax collection rate of 98.25%. This target, whilst remaining challenging, was supported by the Council’s collection performance over recent years and represents a realistic budgeted collection over time. 6.21 Elected members receive regular updates on Council Tax collection through reporting to the Finance and Resources Committee. 6.22 Despite the challenges facing households, Council Tax collection is holding up. It is therefore proposed that the collection rate of 98.25% is maintained for 2026/27, 2027/28 and 2028/29. It should, however, also be noted that there
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remains a risk to collection levels due to the economic environment, changes in legislation in relation to debt recovery and welfare reform. The cost-of-living challenges and its impact on household incomes may also continue to have a significant impact. 6.23 It usually takes on average around six years to reach or exceed a collection level of 98.25%. The Council remains committed to sustaining and improving performance in respect of all its income recovery activities. 6.24 ACTION: The Council is asked to agree a Council Tax collection rate of 98.25% in 2026/27, 2027/28 and 2028/29 – RECOMMENDATION 2.2. Council Tax Base 6.25 The number of chargeable band D equivalent dwellings for Council Tax purposes, the Council Tax base (after adjusting for assumed non-collection of 1.75%), is estimated to be as follows: Table 7: Council Tax – Number of Band D Equivalent Properties 2026/27 75,910 2027/28 76,600 2028/29 77,456 6.26 The Council’s tax base is regularly reviewed, based upon an analysis of recent trends, and adjusted for anticipated growth in the number of dwellings as well as increases in the number of discounts and exempt dwellings. 6.27 ACTION: The Council is asked to approve the Council Tax bases set out in Table 7 – RECOMMENDATION 2.3. Council Tax Rates 6.28 Consistent with the decision of Council on 10 December 2025, the 2026/27, 2027/28 and 2028/29 Provisional Revenue Budgets have been constructed on the basis of Council Tax increases of 7.5%, 3.75% and 3.25% respectively. 6.29 For illustrative purposes, Table8 sets out the impact of the proposed increases on a monthly, weekly and annual basis for a Band D Council Tax payer. Table 8: Impact of Council Tax Rises Weekly Increase Monthly Increase Annual Increase 2026/27 £2.22 £9.61 £115.28 2027/28 £1.19 £5.16 £61.96 2028/29 £1.07 £4.64 £55.71 6.30 Any proposal to deviate from this position will have either positive or negative implications on the Council’s financial position depending on the final decision.
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6.31 ACTION: The Council is asked to approve Council Tax levels as follows – RECOMMENDATION 2.4. 2026/27 – £1,652.32 (final) 2027/28 – £1,714.28 (indicative) 2028/29 – £1,769.99 (indicative) 6.32 The 2027/28 and 2028/29 indicative Council Tax levels will be confirmed when setting the final Revenue Budgets in February/March 2027 and 2028 respectively. 6.33 Again, consistent with the previous Council decision on 4 December 2024, 1.25% of future Council Tax income per year will be ringfenced and applied to supporting the Capital Budget to ensure delivery of key infrastructure projects and supporting programmes such as roads, bridges and IT investment. 6.34 In the event that future Council Tax increases are restricted or prohibited, a corresponding amount from the Revenue Budget would be applied to Loan Charges in order to ensure the sustainability of the Capital Budget in the medium and longer term. Fees and Charges 6.35 The proposals set out in Appendix C include the financial implications of increases to existing levels of charges in 2026/27. Full details of recommended charges for 2026/27 are set out in Appendix D. 6.36 The annual review of charges considers several factors including an assessment of previous year’s income levels, trends in user demand, inflationary pressures, savings targets, alternative charging structures and the potential impact on vulnerable groups. 6.37 All fees and charges should be set in line with the approved individual charging policy and fall into one of the following categories set out in Table 9 below.
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Table 9: Charging Categories Charging Strategy Objective Commercial Charges The Council aims to cover the cost of providing the service and make a surplus. Full Cost Recovery The Council aims to cover the cost of providing the service from those who use it. Subsidised The Council wishes users of the service to contribute to the costs of provision. This might meet a service objective or allow competition with other providers. Free The Council chooses to make the service available at no charge to meet a service objective. Statutory Charges are determined in line with legal requirements. Perth and Kinross Integration Joint Board 6.38 The Public Bodies (Joint Working) (Scotland) Act 2014 introduced joint working with NHS (Tayside) in the form of an Integrated Joint Board (IJB) for the strategic planning of community health and social care across Perth and Kinross. 6.39 The Perth and Kinross IJB has an approved Strategic Plan for 2024-2027 and a series of Strategic Delivery Plans to deliver on its objectives for vulnerable adults who rely upon community health and social care for daily living. The IJB has issued directions to the Council to deliver social work and social care services for adults which are in line with integration principles for community health and social care, and, to support transformation in key priority areas such as older people services including care at home; expansion of support and independent living for people with a learning disability service and securing better outcomes in community mental health and wellbeing. 6.40 The IJB approved a financial strategy for 2024-2027 which includes a drive for greater efficiency and transformation to build best practice in health and social care provision and ensuring an integrated, whole system approach to meeting needs and improving outcomes. The HSCP, supported by the Council’s Executive Leadership Team continues to implement transformational approaches aimed at building on best practice in health and social care provision. 6.41 The Local Government Finance Circular confirmed that funding would be provided to increase the Living Wage for adult social care workers in commissioned services, and to increase the rate of Free Personal and Nursing Care.
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Correspondence was subsequently received on 12 February 2025 that confirmed additional funding to “meet the uplift to the Real Living Wage in full across adult social care, children social care and early learning and childcare”. 6.42 The 2026/27 Provisional Revenue Budget assumes the Council will pass on its full share of the funding included in the local government funding settlement from the Scottish Government. 6.43 The IJB has requisitioned an uplift of £10.046 million from 2026/27 and a total Recurring Budget Required £121.956 million to address pressures arising from the increasing needs of the population, which is included in the Council 2026/27 Provisional Revenue Budget. This will support an adjusted financial scenario planning nuanced to demand pressures in different service areas/care groups. There is a risk that these assumptions are underestimated. 6.44 The Council has made provision for £120.956 million in the 2026/27 Revenue Budget with a further £1 million earmarked in Reserves. 6.45 At this stage work remains underway on the IJB Budget for 2027/28 and 2028/29. 6.46 The IJB is scheduled to meet on 18 March 2026 to consider its budget for 2026/27. This budget will consider the funding received from each Partner Body alongside the pressures which have been identified for 2026/27. The IJB will require to make decisions in relation to savings to deliver a balanced budget for 2026/27 in line with those presented in the attached summaries. Until both NHS Tayside and the Council confirm their 2026/27 Revenue Budget, there is a risk to the delivery of the IJB Strategic Plan. 6.47 ACTION: The Council is requested to approve the contribution of £120.956 million to Perth and Kinross Health and Social Care Partnership in the 2026/27 Provisional Revenue Budget with a further £1 million earmarked in Reserves – RECOMMENDATION 2.5. Scottish Water Charges 6.48 The Council has received notification from Scottish Water that domestic water supply and wastewater collection charges for 2026/27 will increase by 8.67%. This results in a band D equivalent charge for water and waste from Scottish Water of £652.32, an increase of £51.93 (£600.39 in 2025/26). 6.49 Scottish Water charges for water and wastewater continue to be charged using the Council Tax multiplier that was in place prior to 1 April 2017. 7. Reserves Strategy 7.1 In accordance with the existing statutory and regulatory framework, the Chief Finance Officer, as Responsible Financial Officer (or “Proper Officer”), is responsible for advising the Council on the level of Reserves it should hold.
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7.2 In determining Medium Term Financial Plans and preparing budgets, the Council needs to consider the establishment and maintenance of Reserves in accordance with its statutory powers. Reserves can be held for three main purposes: Working balances to help cushion the impact of uneven cash flows and avoid unnecessary temporary borrowing – this forms part of General Reserves. A contingency to cushion the impact of unexpected events or emergencies – this also forms part of General Reserves. A means of building up funds often referred to as Earmarked Reserves, to meet known or predicted liabilities. 7.3 LAAP Bulletin 99 also provided guidance on the further categories of Earmarked Reserve that the Council is permitted to hold including insurance, unspent grants and school balances. 7.4 The audited 2024/25 Annual Accounts included £68.284 million of General Fund Reserves. More details on the levels of cash backed Reserves are set out in Appendix E. When the earmarked Reserves of £49.569 million (see Appendix G) were removed, there was an uncommitted balance of £18.715 million which equates to 4% at 31 March 2025. Proposals to Earmark Reserves 7.5 Revenue Budget 2025/26 - Update No 3, which was considered by the Finance and Resources Committee on 4 February 2026 (Report No. 25/24 refers), included the projected outturn for the Council’s 2025/26 General Fund Revenue Budget. These projections have been further refined to recognise several adjustments which are required in closing the Council’s 2025/26 Annual Accounts and represent material changes to the projected outturn. 7.6 The impact of these projections on the level of balances is summarised in Appendix F, which indicates a projected General Fund (excluding HRA) balance of £55.431 million at 31 March 2026. Of this projected balance, £38.361 million is earmarked for the specific purposes as set out in Appendix G with a projected uncommitted balance of £17.070 million. 7.7 As is the case in previous years, there remain some areas of uncertainty in relation to the projected level of balances at 31 March 2026 including the final impact of weather-related events or additional grant income. 7.8 Based on the Council’s existing financial and policy commitments and the work undertaken in preparing the Provisional Revenue Budgets, it is proposed that the amounts included in Appendix G be earmarked against the projected General Fund balance.
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7.9 The balances of £38.361 million identified in Appendix G above and described in more detail in Appendix H will be monitored as part of the revenue monitoring process. Any proposals to make use of the balances will be subject to approval by either the Finance and Resources Committee or Council. 7.10 ACTION: The Council is asked to maintain a prudent approach to the application of Reserves and earmark the General Fund Balances of £38.361 million identified in Appendix G – RECOMMENDATION 2.6. Proposed Approach to Managing Unearmarked General Fund Reserves 7.11 To assess the adequacy of unearmarked General Fund Reserves, it is necessary to take account of the strategic, operational and financial risks facing the Council, which are set out in Section 8 of this report. 7.12 In addition, Councils are expected to retain the equivalent of 0.2% of their annual Net Revenue Budget to deal with unforeseen emergencies (£902,502 in 2025/26 for Perth and Kinross Council) before being eligible for support through the Bellwin Scheme. 7.13 Taking account of all the risks and historical experience in Perth and Kinross since 1996, it is recommended that the targeted level of uncommitted non-HRA General Fund Reserves continues to be in the range of 2% to 4% of the Council’s Net Revenue Budget in the medium term. 7.14 Based on the Net Provisional Revenue Budget for 2026/27 of £527.619 million as detailed in Appendix B, this would mean a level of uncommitted Reserves of between approximately £10.552million and £21.104 million for 2026/27. 7.15 The Council has targeted a level of uncommitted Reserves between 2% and 4% range for several years. Whilst this range is still considered to be appropriate, it should be noted that the level of risk involved in managing the Council’s Revenue Budget is significant. There is currently no confirmation of the Council’s Scottish Government funding beyond 2026/27, and it is anticipated that Council services will continue to operate in a challenging financial environment in future years. 7.16 Based on the level of Earmarked Reserves of £38.361 million as set out in Appendix G, the level of unearmarked Reserves is £17.070 million which equates to 3.24%. 7.17 ACTION: The Council is asked to approve that uncommitted Reserves are maintained at a minimum of 2% to 4% of the 2026/27 Net Revenue Budget which equates to £10.552 million to £21.104 million – RECOMMENDATION 2.7. 7.18 In the event that any use of General Fund Reserves is made in determining the 2026/27, 2027/28 and/or 2028/29 Revenue Budgets, this should only be done on the basis of a sustainable strategy, which ensures that future years’ Revenue Budgets are not dependent upon the continuing use of Reserves.
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7.19 Appendix I to the report shows the contributions to and from Reserves recommended in setting the Provisional Revenue Budget for 2026/27 and anticipated in 2027/28 and 2028/29. 8. Risk Assessment 8.1 Determining the Revenue Budget and Reserves Strategy requires consideration of the strategic, operational, financial and non-financial risks potentially facing the Council. 8.2 The General Fund Reserves Strategy is integral to supporting the Council’s approach to the management of financial risk. Both the uncertainty of future events and resource constraints make it impractical to mitigate against all potential risks. In developing its medium-term financial plan, the Council must also be aware of the sustainability of its expenditure proposals. Significant risks, which are of relevance are outlined below. Financial Risks Uncertainty in National and Local Government Funding 8.3 There remains significant uncertainty over future funding levels from the Scottish Government. The Medium-Term Financial Plan highlights ongoing volatility in the fiscal environment, which affects the Council’s capacity to plan with confidence over multiple years. A commitment to providing multi year settlements from the Scottish Government would assist with financial planning. Constraints on national budgets, distribution methodology, and emerging policy commitments continue to represent a major risk to financial planning. Inflationary and Economic Pressures 8.4 High inflation and wider economic pressures continue to drive up the cost of delivering services, including construction, contracts, utilities, and supplies. Current economic conditions, particularly in the construction sector, are weakening the reliability of cost assumptions underpinning both revenue and capital budgets. Global uncertainty adds further levels of risk in this area. 8.5 Income streams, such as planning fees, council tax, rents, and commercial returns, also remain sensitive to wider economic conditions. Pay Awards and Workforce Costs 8.6 Future pay awards remain a substantial financial risk. Budget assumptions include pay increases of around 3% annually, however recent agreements have exceeded the budgeted provision. Without additional funding to offset these pressures, this represents a material risk to the Council’s financial position.
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Delivery of Approved Savings 8.7 There is a risk that due to capacity constraints, workforce shortages, and rising demand in statutory service areas, there are delays and challenges in delivering approved savings. Where savings rely on transformation, service redesign, or partnership working, timelines and deliverability may slip, affecting in year and future year budget positions. Social Care Pressures 8.8 The Health and Social Care Partnership continue to experience rising levels of need and structural funding challenges. Coupled with the demographic projections that show significant levels of growth in the number of older people, this places significant pressures on resources. Reserves and Financial Resilience 8.9 The Council’s ability to manage financial shocks depends on the adequacy of its level of both earmarked and unearmarked reserves. Within the Reserves Strategy, £1 million has been earmarked to provide additional capacity to support social care activity should projections exceed the mid-range scenario that has been developed. Non-Financial Risks Demographic Change and Rising Service Demand 8.10 Population ageing continues to drive increased demand in social care, health, and community-based services. Shifts in need intensity, particularly for older people and vulnerable adults, pose significant service and financial challenges. Changes in population distribution also affect school rolls, transport demand, and infrastructure planning-based services. Workforce Availability and Recruitment Challenges 8.11 The ability to recruit and retain staff with the right skills is a growing risk, particularly in social care, technical roles, digital services, and specialist areas. Workforce shortages can affect service performance, reduce organisational capacity, and impede the delivery of transformation programmes and savings. 8.12 We are reviewing options for our lowest paid workers to maintain pay differentials and establish an entry-level rate that differs from the current grading structure. Our plan is to explore these options and work with the unions to address pressures from the Real Living Wage (RLW) and implement any changes once this year's RLW announcement is made, which is expected in October 2026, with any proposed changes effective from 1 November 2026.
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Staff Resilience 8.13 The Council’s most recent Employee Engagement Survey indicates a significant reduction in the proportion of staff who believe that their wellbeing is a priority for the organisation, with a 10.5% reduction compared to the 2024 survey. While full survey analysis is still underway, early insights from open text comments highlight that workload pressures and staffing levels are the primary factors influencing this decline. 8.14 Feedback suggests that many employees are providing considerable discretionary effort to mitigate the impact of staffing reductions, support service delivery, and manage slippage against targets. Although the Council does not yet have a quantified measure of the extent to which this discretionary effort is sustaining performance, work is being planned to assess this. Early indications are that such reliance is contributing to the maintenance of some service areas, but that this position is unlikely to be sustainable in the long term. 8.15 Reduced perceptions of wellbeing, alongside employee commitment to maintaining public services in challenging circumstances, present a risk to the organisation. These factors may affect workforce resilience, recruitment and retention, service quality, and the Council’s ability to deliver its transformation ambitions at pace. As part of ongoing workforce planning and risk mitigation, this area will remain under close review. Climate Change and Severe Weather Events 8.16 Climate change increases the frequency and severity of extreme weather events, placing pressure on roads, flood prevention, and emergency response services. These events can cause unplanned expenditure and disrupt service delivery. Transformation and Change Delivery Risks 8.17 The Council’s transformation programme is essential for long-term financial sustainability. However, transformational change carries inherent risks, including dependency on partner organisations, consultation requirements, service redesign complexities, and the need for robust change management. Slippage or redesign failures could impact both budget savings and service outcomes. Partnership and Third Sector Dependencies 8.18 External partners and voluntary sector organisations play a critical role in delivering community services. Reductions in grant funding or changes in commissioning may impact service continuity. Dependencies on third sector providers also carry risks if organisations face financial fragility.
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Legislative and Policy Changes 8.19 New statutory duties, changes to national policy (including education, health and social care reform, and environmental regulations), and potential alterations to local taxation frameworks could increase demand, create additional responsibilities, or reduce flexibility in local decision-making. Technology, Cybersecurity, and Digital Reliance 8.20 Increasing reliance on technology to deliver services introduces risks relating to cyber-security, system failure, and data protection compliance. A significant cyber incident could disrupt operations and require substantial investment in system restoration and security enhancement. General Risk 8.21 Officers have deliberately minimised the level of expenditure pressures that were introduced into the revenue budget. Should there be increases in levels of demand (need) across the range of Council functions, this may have a direct impact on service delivery and the ability to work within the financial plan set out within this report. 8.22 The Council faces a complex risk environment characterised by increasing demand pressures, financial uncertainty, escalating workforce challenges, and external volatility. Effective mitigation will require: Robust medium term financial planning and regular review of assumptions Continued focus on transformation to deliver sustainable service models Strengthening of reserves and risk based decision making based Close monitoring of economic, policy, and demographic trends Strong partnership working across public, private, and third sector stakeholders 8.23 Finally in relation to risk, a lack of organisational willingness to respond to the challenges we face, to consider data and evidence, consider the requirement to review all services, statutory, non statutory, universal or targeted will impact on our ability to continue to deliver a balanced budget and the Council’s stated corporate priorities. 9. Conclusions 9.1 The Strategic Planning and Revenue Budget Report sets out a clear and evidence based approach to how Perth and Kinross Council will navigate a period of sustained demographic, financial and operational pressure while maintaining a strong focus on its vision: a Perth and Kinross where everyone can live life well, free from poverty and inequality. 9.2 The three year Provisional Revenue Budgets for 2026/27 to 2028/29 are framed within this ambition.
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They balance the requirement for financial sustainability with the need to protect and invest in services that support individuals, families and communities experiencing the greatest need. They balance the requirement for financial sustainability with the need to protect and invest in services that support individuals, families and communities experiencing the greatest need. 9.3 Despite a cash increase in the Scottish Government’s funding package for 2026/27, much of this is directed toward nationally determined commitments. 9.4 Significant cost pressures, rising demand in social care and education, workforce constraints, inflationary impacts, and increasing statutory obligations continue to shape complex choices for the Council. 9.5 The Council’s strong track record of prudent financial management, as recognised by external audit, underpins the proposed approach. The Reserves Strategy ensures appropriate levels of both earmarked and uncommitted balances, supporting resilience against future uncertainty while avoiding reliance on reserves to fund recurring expenditure. 9.6 At the same time, the Transformation and Improvement Programme continues to deliver real benefits - modernising services, driving prevention and early intervention, strengthening partnership working, and maintaining a disciplined approach to prioritisation. 9.7 Looking ahead, the financial outlook beyond 2026/27 remains challenging, with a projected funding gap emerging in 2027/28 and 2028/29. Addressing this gap will require early and meaningful engagement with elected members, communities and partners to reshape services, focus resources on what matters most, and continue the pace of transformation across the organisation. 9.8 Overall, this report demonstrates that while the scale of challenge should not be underestimated, Perth and Kinross Council remain committed to: delivering on its Corporate Plan priorities supporting those with the greatest need protecting frontline services where possible investing in innovation, prevention and long-term sustainability working collaboratively with partners to improve outcomes for local people 9.9 Through strong governance, clear strategic focus and disciplined financial stewardship, the Council can continue to meet the needs of its communities and uphold its commitment to working together towards a Perth and Kinross where everyone can live life well, free from poverty and inequality. 10. Impact Value Assessment Impact and Value Assessment
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11. Appendices A. Budget Survey Results - Summary Report B. 2026/27, 2027/28 and 2028/29 Provisional Revenue Budgets C. Executive Summaries D. 2026/27 Fees and Charges E. Summary Cash Backed Reserves – 2024/25 Actual and 2025/26 Projected F. Projected General Fund Balance at 31 March 2026 G. Earmarked Reserves at 31 March 2026 H. Summary of Earmarked Reserves at 31 March 2026 I. Summary of Projected Use of General Fund Balances 2026/27, 2027/28 and 2028/29