Revenue Budget and Council Tax 2025-26 Complete
Renfrewshire Council · 27 February 2025
Back to Council — 27 February 2025 and its agenda
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PROCEDURE TO BE FOLLOWED AT THE MEETING OF RENFREWSHIRE COUNCIL TO BE HELD ON 27 FEBRUARY 2025 DURING CONSIDERATION OF ITEM 3 CONCERNING REVENUE ESTIMATES AND COUNCIL TAX FOR THE FINANCIAL YEAR 2025/26 The purpose of this note is to give Members advance notice of the procedure which Provost Cameron has agreed should be followed at the Meeting of the Council on 27 February 2025. 1. The Convener of the Finance, Resources & Customer Services Policy Board (the Convener) will make his budget statement for financial year 2025/26 and move as appropriate. He will then speak to the principal points of his proposals. The motion will require to be seconded. 2. The Leader of the Council will second the motion and may address the meeting then or reserve the right to speak at a later stage of the debate. 3. For the purposes of the subsequent discussion and voting, the Convener's proposals will be taken as one motion. 4. An opportunity will then be given to the Leaders of the opposition groups and any other Members to move, and to have duly seconded, comprehensive amendments to the motion (i.e. taking together proposals for resource allocations, budget proposals, revenue estimates and the level of the council tax for the financial year 2025/26). 5. The motion and any amendments will require to be produced in writing and a copy given to each of the Members present prior to being spoken to at the meeting. Provost Cameron may then adjourn the meeting for 20 minutes to allow Members to consider the terms of the motion by the administration and any amendments by the opposition groups or other Members. Corporate Meeting Rooms have been arranged for the adjournment as follows: Administration – Corporate Meeting Room 2, Labour - Corporate Meeting Room 1, Conservative – Corporate Meeting Room 3, Independents – Communications Room. 6. There shall be no formal restriction upon the length of time given to the Convener and the Leaders of the opposition groups and any other Members to move their respective budget statements and speak in support of the principal points of their proposals. However, Provost Cameron shall have the power to require any person speaking to limit their speech in order to facilitate the conduct of the meeting. 7. Provost Cameron will then invite other Members to take part in the debate including Conveners of the Policy Boards who may wish to take the opportunity to respond concerning the services for which they have responsibility. 8. The debate will conclude with Provost Cameron giving the Convener the opportunity to reply. 9. A vote or votes will then be taken in accordance with the provisions of standing orders.
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To: Council On: 27 February 2025 Report by: Director of Finance & Resources Heading: Revenue Budget and Council Tax 2025/26 1. SUMMARY 1.1. This report provides Members with an overview of the Council’s anticipated financial position on the General Fund revenue budget and sets out the information required for the Council to set its budget and Council Tax for 2025/26. Members are required to bring forward proposals to secure a balanced budget, and to assist in this, Directors have been providing details of the financial, service and equality implications of any changes to current service levels, as requested by Members. 1.2. Members will be aware that the Council continues to experience a challenging and complex set of financial circumstances. It is recognised that moving into 2025/26 and beyond, the financial environment that local government in Scotland is facing remains difficult, with substantial risks even in the short term in relation to cost growth and income constraints. Longer lasting legacy impacts on service costs, service demand and income streams are anticipated. 1.3. Members will be required to take these circumstances into account when setting the 2025/26 budget, recognising that the Council’s immediate and medium-term challenges remain significant. 1.4. The economic outlook remains volatile. Inflation rates have fallen to target levels, but interest rates have been sustained at a higher level for longer than expected
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and economic growth forecasts remain subdued. The year ahead is unlikely to see much improved prospects, as the degree of uncertainty remains high due to geo- political concerns, the outcome of wage settlements and government spending and taxation decisions. 1.5. The Draft Scottish Budget was announced on 4 December, again for one financial year only. Resources were again prioritised to social security, where an additional c£1bn was allocated, which naturally places other areas of the public sector under increased financial pressure. 1.6. The local government settlement is presented in the Draft Budget as having increased by £1bn in 2025/26; however, much of this increase relates to existing or new burdens, e.g. local government pay, teachers’ pay and teachers’ pension uplift, i.e. funding that is not available to local government to address core spend pressures. The additional unearmarked sum amounts to c£289m nationally. While this increase is welcome, and an improvement over the ‘flat-cash’ anticipated grant position, the increase is marginal in terms of the scale of cost growth the Council has experienced in recent years. 1.7. The Council’s allocation has increased from £427m (on which the Council’s 24/25 budget was based) to £464m – a gross £37m or 8.7% increase (excluding unconfirmed funding in relation to eNIC costs). 1.8. The key elements of the Council’s revenue settlement are set out as follows: - i) Circular 10/2024 confirmed Scottish Government revenue grant funding in 2025/26 for the Council of £452.225 million. The local government finance order laid before Parliament on 4 February updated this allocation to £461.758 million. ii) After adjusting for new responsibilities, areas of growing responsibility and other conditional aspects of the settlement, this provides a like-for-like comparison to 2024/25 where the Council’s underlying core grant has increased by £9.9 million (2.3%). iii) Following the Stage 1 debate in the Scottish Parliament on 4 February 2025, extra funding of £144m was announced to help offset the rise in employers' National Insurance from 1 April 2025. This has not yet been reflected in the local government settlement and the distribution is, at the time of writing, still to be confirmed, but the quantum is not expected to fully fund estimated costs. Further detail is included in the report at paragraphs 4.2 and 4.3. 1.9. The Scottish Government also announced a Public Sector Pay Policy for the medium term period 2025/26 to 2027/28. This indicates a 9% pay envelope
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covering this period, with flexibility for employers to configure three-year proposals within this range. Despite current lower levels of inflation, pay expectations are significantly above these levels (initial claims received average 6.5%), and will therefore still present a testing environment in which to reach agreement. 1.10. The medium-term financial outlook for the Council remains challenging. Among other significant cost pressures, pay and the revenue grant continue to be the two biggest determinants of the Council’s financial outlook. The Scottish Government block grant is likely to incorporate only very moderate increases over the next few years, giving no assurance that the local government settlement in future years will reflect a sufficient degree of increase to address core budget pressures. The current and forecast challenging financial position of Renfrewshire HSCP, and consequent potential impact on the Council financial position is an increasing concern. 1.11. The Council has consistently and correctly taken a medium-term view of its financial position, agreeing transformation and savings measures that have ensured the Council positively addresses the forecast medium-term budget deficit, whilst supporting temporary investment in priority areas, and this approach continues into 2025/26. 1.12. Applying a central range of assumptions for the three-year period beyond 2025/26, derives a forecast budget deficit range of broadly £25-40 million over this period (before any decisions on the level of Council Tax, but after assumed delivery of known recurring savings). This forecast outlook is based on relatively tight grant and pay assumptions informed by the current financial settlement and information in the UK Government 2024 Budget, as well as likely affordability constraints in relation to future pay awards. It is hoped further detail will be available in the UK Government Spending Review due to be published in the Summer which will provide further clarity. 1.13. For 2025/26, budget assumptions have been updated as appropriate, including the confirmed grant available to the Council and associated conditions, the impact of new obligations, the likely impact of increasing demographic and demand pressures and expected Council Tax yield levels for 2025/26. After taking account of the cumulative impact of each of these issues, there is a recurring budget deficit for 2025/26 of £1.941 million, subject to any further decisions taken by Members. 1.14. Given the ongoing financial sustainability challenge that lies ahead for the Council, in setting the 2025/26 budget, it is strongly recommended that any commitments by Members that would result in additional recurring expenditure (that would have the effect of increasing the projected medium-term deficit in future years) should
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be supported by offsetting sustainable savings, or increased resources arising from an increase in Council Tax. Finally, Members are encouraged to take a holistic view of the Council’s total resources, covering both capital and revenue. 2. RECOMMENDATIONS 2.1. Members are asked to:- 2.2. Submit for approval proposals for any savings, investments, and service changes as part of delivering a balanced budget for 2025/26, and in doing so: • to consider the equality impact of any proposed service changes as referred to at paragraph 8.3 • to assess whether adequate provision is being made in the 2025/26 budget to deliver against the specified commitments linked to the Council’s grant settlement for 2025/26, as detailed at section 4. 2.3. Approve the provisions for inflationary pressures, as recommended at section 5. 2.4. Approve the revenue estimates for all services for 2025/26 subject to adjustment for the allocation of specific grants, inflationary allowances and any proposals for service changes approved by Council. 2.5. Approve the financial measures outlined in section 5, including the release of additional resources made available in 2025/26 to Renfrewshire Health and Social Care Partnership. 2.6. Approve the proposals in relation to reserve balances as recommended in section 12. 2.7. Submit for approval the Council Tax banding levels A to H inclusive to apply for 2025/26, noting the information outlined in section 9. 3. FINANCIAL OUTLOOK UPDATE 3.1. Successive reports to the Council have highlighted the increasingly challenging financial and economic environment the Council is facing, predominantly linked to the legacy of recent very high levels of inflation, including wage inflation. 3.2. The year ahead is unlikely to see much improved prospects over that experienced in the past 2-3 years; but the degree of uncertainty remains high depending on several factors such as the global political environment, the outcome of wage settlements, and the (relatively new) UK government’s spending and taxation priorities. The Accounts Commission also recently noted in its Financial Bulletin
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2023/24 that “The funding increase for councils recently announced as part of the Scottish Government’s 2025/26 draft budget in December 2024 does not change the fact that the financial outlook remains challenging”. 3.3. In terms of the public finances, and particularly those in Scotland, previous reports to Council have outlined the pressure the Scottish Government budget is under with increasing service demands in the NHS and the transfer of social security benefits under the administration of the Scottish Government bringing additional costs. Therefore, significant medium-term uncertainty remains for the Council in relation to future government grant prospects. It is hoped that publication of the UK Government Spending Review in the Summer will allow the Scottish Government to develop its own medium term financial plan, which may create the circumstances whereby a multi-year settlement for Scottish local government could be agreed, as the absence of this information makes the Council’s longer term financial planning more difficult. 3.4. Beyond 2025/26, the Council’s medium-term financial outlook is based on an assumed flat-cash revenue settlement over the medium term, with a slight improvement anticipated based on the relative population growth of Renfrewshire. However, and as outlined in previous reports, it is cost increases that are driving the extremely challenging financial outlook. Incorporating an affordable level of pay increase over the period 2025/26 to 2027/28, and a reducing level of inflation on supplies and services costs suggests that the Council is facing a £25-40 million funding gap over this period, before any decisions on council tax. Assuming a 6.5% council tax increase in each of these years, this would reduce the funding gap to £5-25 million. A significant level of savings will still be required over the medium term in order to maintain financial sustainability, despite the improved single year settlement in 2025/26. 3.5. Council has previously been advised that since 2010, transformation, efficiency and corporate financing savings in the region of £190 million (including 2025/26), have been achieved, meaning that the Council’s ability to generate further recurring transformation and efficiency savings at this scale without impacting on service delivery or quality will be increasingly challenging. Additionally, over the last decade, nationally set directives as part of grant settlements as well as local priorities, have protected spend in key areas such as Education and Social Care - which constitute around two thirds of the Council’s budget. While transformation and the opportunity for increased efficiency will continue to be key priorities as was outlined in a recent report to the Leadership Board, it is likely that material service reductions and spending cuts across all services could be necessary if the Council is to remain financially sustainable and also create the financial circumstances
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which would allow longer term strategic investment in the Council’s property estate and infrastructure. 4. GRANT SETTLEMENT 4.1. On 4 December 2024, the Scottish Government published its draft budget for 2025/26, which is subject to parliamentary approval over the course of February 2025. On 12 December, the draft local government finance settlement was published, as set out in the Local Government Finance Circular 10/2024, which provided details of the provisional revenue and capital funding allocations for 2025/26 for local government across Scotland. Circular 10/2024 confirmed Scottish Government revenue grant funding in 2025/26 for the Council of £452.225 million. The Deputy First Minister (DFM) outlined associated issues in a letter to all Council Leaders that set out specific commitments to be read in conjunction with the detail of the financial settlement, such as the continued prioritisation of financial support for social care. Included within the local government settlement, the Government has provided an additional £131 million nationally to support health and social care as delegated to Integration Joint Boards broken down as follows: • £125m to fund the real Living Wage uplift for adult social care workers in commissioned services via agreed contract uplifts; • £10m to uplift free personal nursing care rates; and • Removal of £3.7m of time-limited funding relating to Mental Health Renewal and Recovery. The government confirmed that taken together, the total increase in funding is to be additional to each Council’s 2024/25 recurring spending delegated to Integration Authorities and not be substitutional i.e. these allocations must be passed to the HSCP for these delegated services. This position is explained further in section 5 below. The Deputy First Minister also outlined a number of other issues: • The Settlement provides full discretion over decisions on council tax, with no freeze and no cap. • The settlement includes £186.5m to continue to maintain teacher and support staff numbers at 2023 levels (an increase of £41m). This is no longer ring-fenced as in 2024/25, but carries the expectation that teacher numbers do not fall below 2023 levels by September 2025.
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4.2. The confirmed level of funding in the local government settlement excludes funding for the increase in employers’ national insurance contributions (eNIC) set by the UK Government in their October 2024 budget. The rate is set to increase from 13.8% to 15%, and the threshold after which eNIC is payable reduces from £9,100 to £5,000 from 1 April 2025. This is estimated to cost the Council over £6 million per year for directly employed staff only. 4.3. On 4 February 2025, funding of £144 million was announced by the Scottish Government to support this increased cost for local government, but distribution is yet to be confirmed. This quantum will fund around 60% of the expected increase in costs for directly employed staff. This leaves the Council to fund the balance of this cost (£1.6 million), and additionally to also fund the expected pressure anticipated from commissioned service providers, such as early years and children’s social care provision. An estimate of these residual pressures has been factored into the draft budget for 2025/26. Within this report, the Revenue Support Grant presented in the tables includes an estimate of the Council’s expected share of this £144 million (£4.7 million). 4.4. The Council’s settlement figure includes a number of adjustments for new spending burdens, responsibilities, and conditional funding totalling £20.483 million, linked primarily to the pass-through of funding to the Integration Joint Board (IJB); and the baselining of funding for the 2024/25 pay award and increases to teachers’ pension contributions. 4.5. After adjusting for these areas of new burdens funding, new responsibilities, conditional funding and timing differences in the distribution of funding, the Council’s 2025/26 core grant figure as set out in the provisional local government finance settlement has, on a like-for-like basis, increased by 2.3% from 2024/25, still above the flat cash assumption which the Council had been working to. The Council’s share of the overall local government revenue funding settlement has increased marginally from 3.25% to 3.28%. 4.6. The total revenue grant funding therefore available to the Council is set out in Table 1 below: Table 1 – Grant Settlement 2025/26 Summary of Revenue Estimate 2025/26 2025/26 £000 £000 Specific Revenue Grants 7,306 Non Domestic Rate Income 108,844 Revenue Support Grant * 352,919 Total Government Grant anticipated 469,069 * inclusive of an estimate of the Council’s share of £144m for eNIC costs
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4.7. At the time of writing, the Budget Bill remains to be approved by the Scottish Parliament. 4.8. As reported to the recent Infrastructure, Land & Environment Policy Board, the Council has been notified of an allocation of funding from the UK Government Department for Environment, Food and Rural Affairs (DEFRA) in relation to packaging extended producer responsibilities. This framework aims to improve sustainability and waste management processes associated with packaging. Under the new framework, packaging producers are responsible for covering the costs of dealing with the waste created by their products, from when they enter the market through to the end of their life. This includes the cost of waste collection, treatment and recycling. Notification of funding of £3.054m has been received for 25/26; however there is no information to suggest this funding can be baselined within Council budgets, nor what future allocations may be. In addition, there is further clarity required as to any conditions associated with the funding. Given this uncertainty, this funding has not been incorporated into the base budget position outlined in this report; and it would be intended that once details are confirmed, a future report will be brought to the relevant Policy Board. 5. SPENDING AND DEMAND PRESSURES 5.1. An analysis has been enclosed with this report detailing, for each service, the proposed budget changes between 2024/25 and 2025/26. The budget has been adjusted to reflect: i) the continuing costs of the current level of service, including inflationary costs related to current service levels; ii) the financial impact of any decisions already taken by the Council or its Policy Boards, as well as required adjustments to budgets to reflect specific aspects included within the financial settlement. 5.2. Demographic, socio-economic and inflationary factors continue to play a major role in driving core spending pressures for the Council. As has been reported over the course of the year, the legacy of high inflation, along with specific service pressures, has led to overspends across some services in 2024/25; however, sustained high interest rates have resulted in higher than budgeted levels of investment income, bringing the overall position back to break-even for the first time in a number of years, as outlined in further detail in section 12 below. 5.3. Given the very significant financial challenges and risks facing the Council over the medium term, and in line with historic practice, general non-pay inflation is not provided for in the 2025/26 budget. However, where specific price and cost pressures are obvious, additional budget provision has been incorporated into the
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draft position outlined in this report. The Bank of England currently forecasts that the level of CPI inflation will increase to c3.7% in late 2025, falling back to around the 2% target thereafter. 5.4. The recommended 2025/26 base budget position detailed in Table 3 includes a provision for pay inflation that reflects what is affordable for the Council (3%). It is noted that initial pay claims received by COSLA exceed the level of provision incorporated into the budget, and the position remains subject to negotiation. 5.5. The Financial Regulations require charges for services to be reviewed at least annually. The overview of the Council’s spending in Table 3 makes provision of £0.293 million for a general inflationary uplift to charges at 5%. Adult Social Care 5.6. In terms of the core Adults and Older People Services budget, the IJB most recently reported a 2024/25 forecast year-end overspend position of £6.2m, which is expected to be funded from IJB reserve balances. This position remains subject to change over the remainder of the 2024/25 financial year. The HSCP is also indicating that it faces significant financial pressures moving into 2025/26 and is currently expecting to achieve a balanced budget by relying heavily on the use of reserves and the delivery of savings options recently agreed by the IJB. 5.7. The HSCP is currently forecasting recurring gross pressures of £33m in 2025/26. It should be noted that this is based on the most up-to-date projections and is subject to change as more detail emerges around prescribing pressures and eNIC funding. Scottish Government funding pass-throughs from both local government and the NHS are expected to amount to £11 million, and the second (and final) year of the employer superannuation contribution reduction will avoid £4 million of costs. The IJB recently agreed a programme that should generate savings of around £8 million in 2025/26, assuming they are fully implemented. All of these mitigating actions may still lead to a planned budget gap of £10 million, which could be funded from IJB reserve balances in-year. 5.8. This will, however, deplete the available IJB reserve balances leave the HSCP with little financial resilience as it enters 2026/27, and despite a continued drive to achieve savings through its Sustainable Futures programme, a recurring budget gap of £25-30m is expected in 2026/27, with minimal reserve balances available to support this position. It is therefore possible that the HSCP may be required to consider financial recovery measures, perhaps even during the course of 2025/26. The Integration Scheme states that should the IJB be unable to achieve a balanced budget for future years, it would be required to seek additional funding from its Partner Bodies.
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5.9. As outlined above, there are specific conditions within the local government settlement which mandate the pass-through of funds related to social care to Integration Authorities. In 2025/26 there is a total of £131.3 million within the settlement nationally which requires to be passed through: Table 2 Funding National £m Renfrewshire £m Free Personal and Nursing Care 10.0 0.321 Living Wage (commissioned) 2025/26 125.0 5.388 Mental Health Renewal and Recovery* (3.7) (0.115) Total pass-through 131.3 5.594 *relates to time-limited funding no longer included in the settlement 5.10. In addition, the draft Council budget proposes to transfer a proportion (£0.500 million) of funding received to support the increase in employers’ national insurance contributions from 1 April 2025 to the HSCP on a recurring basis. This figure will be confirmed when the Council’s share of the £144m available nationally is determined. Children’s Services 5.11. Funding in relation to teacher numbers has been included within the grant allocation from the Scottish Government, with the national sum increased to £186.5 million. While the prior year ring-fencing is now removed, the funding still carries an expectation that teacher numbers are held at September 2023 levels at the next census. Specific Attainment Challenge funding has again reduced. 5.12. In terms of known pressures within Education, the increased costs of pupil transport are noted and provision has been included within the draft budget to address this. The Scottish Government has also indicated an aspiration to begin a phased reduction in class contact time, beginning in the 2025/26 school year. This is an emerging pressure as reduced class contact time will potentially impact on the number of teachers required. There is no allocated funding within the local government settlement to address this cost, and the issue will continue to require close monitoring. It is anticipated that any costs which may be incurred to implement a reduction in class contact time will require to be funded from the funding available for teacher numbers. 5.13. Within the wider Children’s Service, additional budget provision has been made in line with increased funding for Additional Support for Learning staff, the full year
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impact of the increase to teachers’ pension rates, and an increase to the Whole Family Wellbeing Fund. 5.14. The Council approved a 20-year Learning Estate Strategy in August 2024. Work has since been ongoing to develop a long term financial model which will underpin this strategy and clearly outlines the scale of investment that would be required as and when decisions are made about investment priorities. The Council will require to make a significant commitment to increasing its borrowing capacity if it is to progress the level of investment required over the longer term. 5.15. Table 3 - Summary of Recommended Base Budget Adjustments 2025/26 2025/26 Impact of previous Council and Board Decisions £000 £000 Right for Renfrewshire Savings (146) Financial Sustainability Workstreams (1,382) Directorate Targets (3,518) Corporate budget adjustments (2,000) Total Reductions (7,046) Add Unavoidable Pressures: Financial Settlement adjustments HSCP 5,594 HSCP estimated share of eNIC funding (tbc) 500 Financial Settlement adjustments Other 13,389 Staff related 3,492 Contract Payment Adjustments 3,753 Requisition Adjustments 817 Other Unavoidable Pressures 2,565 30,111 Long-term debt budget 1,350 Net Increase in Provision for inflationary pressures (pay) 11,471 Net Base Budget Increase 35,885 6. FINANCING COSTS AND LONG-TERM BORROWING 6.1. The provision for financing costs includes both debt charges payable as a result of the Council's capital investment programme and the interest gained on temporary investment of cash. In setting the 2022/23 budget, Members agreed to adjust the base budget by £7.5 million, in the knowledge that this position would require to be unwound over the medium to longer term.
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6.2. The proposed base budget for 2025/26 incorporates the continued re-building of the loans charges budget, with a provision of £1.350 million included. Provision on this scale will require to be made over the medium to longer term in order to rebuild the core loans charges budget; with non-recurring support as required being provided through a draw on the ringfenced Loan Charges Flexibility fund. The actual position will be influenced by the progress of capital investments, with any rephasing of spend on capital projects in effect deferring the requirement to draw from balances. 6.3. Renfrewshire Council has one of the lowest debt to spend ratios in Scotland. At 31 March 2024, the ratio of financing costs to net revenue stream (General Fund) was 3.1% and the Scottish average sat around 5.5%. 6.4. In order to support the funding of the Learning Estate Strategy over the next 20 years, the Council should consider the level of loan charge budget it requires to build within its annual revenue estimates decisions. For indicative purposes, borrowing £25 million at current PWLB rates would incur an annual cost of around £2 million in loan charges. The existing learning estate new build programme in delivery over the next four years is currently estimated at approximately £175 million, covering a new build secondary, two primary schools and a secondary school extension. The scale of investment need in the whole learning estate over this much longer-term period will be significantly greater by comparison. 7. SAVINGS 7.1. Reports to Council over the course of 2024 and previous years have outlined a range of service transformation activity alongside the development of a range of financial sustainability workstreams which aim to achieve savings over the medium term. Due to both the time taken to recommence transformation activity after the pandemic pause and, more acutely, the significant increase in cost pressures over the years since, the Council’s development and delivery of savings has fallen behind the level required to support overall financial sustainability. 7.2. Council previously agreed an £8 million departmental savings target each year for three years from 2025/26. This scale of recurring savings is necessary to ensure that the Council returns to a position of recurring financial balance over the medium term. Directors and their management teams are developing options to deliver savings at this scale; however, the implementation of proposals is now expected to be phased towards later years. Based on work undertaken by services to date, and that for which specific plans are being developed over the next two years, it is estimated that £3.5 million of savings can be confidently incorporated into the 2025/26 base budget.
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7.3. The Council will continue to require to generate savings at scale to ensure ongoing financial sustainability over the medium term, and a recent report to the Leadership Board outlined the next phase of transformation and change, building on a long period of successive change programmes which the Council has undertaken since 2009. 7.4. As in 2024/25, a temporary, non-recurring saving has been possible through the reduction in employer pension contributions for the local government workforce. Council has previously agreed that this will be utilised to support the Council’s medium-term financial position, and will therefore be transferred to the Financial Sustainability Fund in-year. 7.5. Taken together, the above savings, as well as the full-year impact of increased income from interest on cash balances, and legacy Right for Renfrewshire and Financial Sustainability workstreams, will provide £7.046 million of recurring support to the 2025/26 revenue budget position. 8. EXPENDITURE OVERVIEW 8.1. The Council approved spending for 2024/25 of £547.262 million. It is estimated that £583.147 million (as detailed in Table 4) is needed to fund the costs of maintaining present service levels, new responsibilities and conditional funding commitments provided as part of the financial settlement, new cost burdens, and addressing known pressures and demands in 2025/26. Table 4 – Estimated Spending Need 2025/26 Summary of Revenue Estimate 2025/26 2025/26 £000 £000 Estimated Funding Estimated Spending need 2024/25 547,262 Adjustments per Table 3 Budget reductions (7,046) Unavoidable budget increases 30,111 Long-term debt budget provision 1,350 24,415 Base Budget 2025/26 571,512 Inflationary cost provision (pay) 11,471 Estimated Spending Need 2025/26 583,147
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8.2. Significant cost pressures are anticipated to persist beyond 2025/26 for the Council. Members will continue to be updated on the medium-term financial position but should be aware that in setting the 2025/26 budget, any commitments to additional recurring expenditure will increase the projected deficit in future years, unless they are offset by recurring savings, or increases in Council Tax or other income. Similarly, any decision taken now to address the future year budget deficits provides greater certainty for service planning and the workforce, and also supports the future financial stability of the Council. 8.3. Where the Council is making decisions in relation to its spending priorities, it is obliged to comply with the public sector equality duty set out in the Equalities Act 2010. This means that the Council must have due regard to the need to: • Eliminate unlawful discrimination, harassment and victimisation and other prohibited conduct; • Advance equality of opportunity between people who share a relevant characteristic and those who do not; and • Foster good relations between people who share a protected characteristic and those who do not. 8.4. To meet this requirement, where necessary the Council must assess the impact of applying a new policy or decision against these three needs and at the point where a decision is made, elected members must have sufficient information available to them to assess that impact. Members, in considering their budget proposals prior to presentation at the Council meeting, are therefore encouraged to seek advice from Directors on the equality implications of each proposal, including any which are covered by the Fairer Scotland duty. Specific service areas may also need to be impact assessed in relation to Armed Forces Covenant duties or the Environmental Assessment (Scotland) Act 2005. 9. COUNCIL TAX 9.1. The Council’s level of Council Tax (Band D) for 2024/25 is £1,436.17 and is £7.91 (0.6%) above the Scottish average. It is estimated that in 2025/26 each £1 of Council Tax will yield £77,732 gross (£63,741 net of adjustment for Council Tax Reduction), higher than 2024/25. The increase in the yield reflects anticipated growth in the number of dwellings charged (the Council Tax base). 9.2. A maximum net gross yield of £111.6 million can be anticipated from the forecast Council Tax base and present Council Tax levels. Within the context of the current service resources, specific collection initiatives continue to be implemented to support the collection of Council Tax, including the recovery of arrears for prior
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years. It is anticipated that £0.500 million will be collected next year from prior year levies. 9.3. Members will recall from the financial update report to Council in September, the assumed level of council tax increase was 6.5% over the next four financial years. Increases at this level (assuming all other assumptions hold true) may still leave the Council with a substantial structural deficit over this period, even after planned savings are assumed to have been delivered. 9.4. Given that the 2024/25 council tax freeze placed the Council further behind in terms of meeting its challenging financial outlook, Members should consider options for a level of council tax increase in 2025/26 which will return the Council to a recurring balanced budget position. 9.5. Members are required to determine the level of Council Tax for Bands A to H inclusive, which should apply for 2025/26. 10. RESOURCE ALLOCATIONS 10.1. Appendix 1 attached summarises the provisional resource allocation for each service. The resource allocations will be subject to amendment to reflect the Council's views on budget proposals, inflationary pressures and the allocation of central support costs, specific grants and capital charges. 11. BUDGET OVERVIEW 2025/26 11.1. The overview budget position for the Council for 2025/26, prior to any changes in service levels or Council Tax levels, is outlined in Table 5 below. For clarity, this position includes an estimated £4.723 million in funding from the Scottish Government to support the increase in employer’s national insurance contributions (not yet confirmed). This overview position confirms a recurring budget deficit position before any council tax decision, which could be temporarily addressed through the application of the ring-fenced Financial Sustainability Fund. As members are aware, the use of ring-fenced reserves can only ever be a temporary solution to the financial position and should only be agreed while substantive measures are taken to move the Council’s finances back to recurring financial balance.
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Table 5 – Budget Overview 2025/26 Summary of Revenue Estimate 2025/26 2025/26 £000 Estimated Funding Total Government Grant advised 469,069 Council Tax Income 111,637 Council Tax / Community Charge Arrears Recovery 500 Total Income 581,206 Total Estimated Spending Need 583,147 Estimated Recurring Deficit (1,941) 12. PROBABLE OUTTURN 2024/25, BALANCES AND RESERVES 12.1. Appendix 1 to this report details an overview of the Probable Outturn for 2024/25. The Council’s general fund balances as at 1 April 2024 were £117.620 million (see Table 6 below) and the significant majority of this was earmarked for specific purposes. This balance also reflects the previously agreed de minimis in unallocated balances of £10 million. As reported to Members over the course of 2024/25, a small year-end underspend position in the order of £0.1 million is projected for the Council (Period 8, excluding adult social care services), owing to a forecast of increased investment income. 12.2. It remains important that the Council maintains sufficient unallocated reserves to provide an appropriate degree of financial protection and immediate financial resilience moving forward, and that the level of unallocated reserves held is guided by the risk profile faced by the Council. The Financial Sustainability Fund was established for this primary reason, to support the financial position of the Council in circumstances where, in the short term, savings have not been generated at the scale or pace required to ensure financial balance. 12.3. It is recognised that the financial risk profile for the Council has increased significantly over the past number of years and in this context the Council previously approved to maintain unallocated balances at a minimum £10 million. The actual outturn on unallocated balances in 2023/24 of £10.279 million represented 2.0% of the Council’s budgeted net expenditure. It is estimated that this balance will remain broadly static in closing the 2024/25 financial year - a level that remains both prudent and appropriate for the Council’s circumstances. As always, the Accounts Commission will continue to closely monitor the Council’s position in respect to unallocated reserves as part of its wider assessment of the Council’s financial stability and resilience.
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12.4. Table 6 below summarises the forecast movement and year-end position of General Fund balances, including those earmarked for agreed purposes and estimated future liabilities. It should be noted this forecast is subject to some volatility as the 2024/25 financial position is closed out. Table 6 – General Fund Balances 2024/25 Summary of Usable Reserves 2024/25 Balance at 1/4/2024 Forecast Movement Forecast Balance at 31/03/2025 General Fund Balances £000 £000 £000 Alcohol and Drugs Commission 767 (259) 508 Children's Services 5,005 (1,503) 3,502 City Deal 1,903 (824) 1,079 Civil Contingencies Shared Service 126 - 126 Culture Bid Legacy 2,009 (641) 1,368 Development Contribution Paisley Town Centre 519 (297) 222 Digital Infrastructure 1,441 (1,000) 441 Early Years Change Fund 2,100 - 2,100 Employability 10,590 (621) 9,969 Environment & Infrastructure 790 (450) 340 Fairer Renfrewshire Programme 2,855 (1,138) 1,717 Financial Sustainability Fund 13,244 13,038 26,282 Leisure: Inclusive Play Facility 7 - 7 Loan Charges Flexibility Fund 48,759 1,000 49,759 Local Authority Economic Recovery Fund 100 - 100 Paisley Town Centre Heritage Asset Strategy 334 (322) 12 Private Sector Housing Grant 2,308 (214) 2,094 Pupil Equity Fund 524 - 524 Resettlement and Asylum Fund 1,429 (285) 1,144 School Music Participation Funding 276 (179) 97 Service Modernisation and Reform Fund 10,662 (3,029) 7,633 Sustainable Communities Fund 394 (96) 298 Villages Investment Fund 200 (200) - Welfare Reform 999 (113) 886 Unallocated General Fund Balance 10,279 - 10,279 Total General Fund Balances 117,620 2,867 120,487
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12.5. As previously reported to Council in its consideration of the annual accounts, and as detailed in Table 7 below, other specific reserves continue to be maintained. Table 7 – Specific Reserves 2024/25 Summary of Specific Reserves Balance at 1/4/2024 Forecast Movement Forecast Balance at 31/03/2025 Specific Reserves £000 £000 £000 Insurance Fund 2,901 - 2,901 DHN Repair and Renewal Fund 186 - 186 Reservoir Repair Fund 341 - 341 Education Capital Items Fund 1,454 (65) 1,389 Investment Programme Capital Fund 86,035 (4,631) 81,404 Total Specific Reserves 90,917 (4,696) 86,221 Total Usable Reserves 208,537 (1,829) 206,708 12.6. The Insurance Fund covers the main classes of insurance and is earmarked for insurance purposes such as the cost of insurance excesses and premiums. 12.7. The DHN Repair and Renewal Fund is earmarked for future component replacement of the District Heating Network at the Advanced Manufacturing Innovation District Scotland (AMIDS). 12.8. The Reservoir Repairs Fund represents funding received from a developer for repairs in perpetuity in relation to the Thornly Dam. 12.9. The Education Capital Items fund is earmarked for specific schools for the planned purchases of a capital nature such as computers and information communication technology equipment. 12.10. The Investment Capital Fund is used to hold planned contributions to the delivery of the ongoing capital investment programmes, as well as resources that support the long-term debt smoothing strategy. These debt smoothing resources are utilised to manage both the debt levels linked with the capital investment programme and the associated debt servicing costs i.e. principal repayments, chargeable to the revenue account each year. 13. BUDGETARY CONTROL 13.1. Directors are expected to manage their approved budgets on a bottom-line basis in accordance with the Financial Regulations. If an overspend emerges during the
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year on any approved budget line the Director is expected to take corrective action, seeking Policy Board approval for any policy changes involved in such actions. Members should also be aware that, given the reliance on non-recurring reserves to produce a balanced budget, any further decisions taken by the Council or Policy Boards to increase spend over the course of the year must give consideration to how this spend will be funded. 14. FURTHER ACTION 14.1. Members wishing clarification of the details of this report or the enclosed Revenue Estimates pack should contact the Director of Finance & Resources or the Chief Executive or any Director in relation to their specific service responsibilities. 14.2. Members wishing advice on budget proposals should contact the appropriate service Director. ————————————————————————————————————— Implications of the Report 1. Financial - The report and enclosures provide the background information on the 2025/26 revenue budget, identifying a recurring deficit position in year, with a significant budget deficit of up to £25-40 million forecast over the following three years. Council is required to set council tax levels for 2025/26. 2. HR & Organisational Development - implications will be subject to any budget proposals agreed. 3. Community/Council Planning – implications will be subject to any budget proposal agreed. Members should however keep in mind that over the medium term the Council is anticipated to have to continue to increasingly make key choices to direct resources to support the delivery of those outcomes of greatest priority as defined in the Council Plan. 4. Legal – the Council is legally required to set a balanced budget by 11 March each year. 5. Property/Assets - implications will be subject to any budget proposals agreed. 6. Information Technology - implications will be subject to any budget proposals agreed. 7. Equality & Human Rights - Where the Council is making decisions in relation to its spending priorities, it is obliged to comply with the public sector
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equality duty set out in the Equalities Act 2010. Further detail is outlined in Section 8 of this report. 8. Health & Safety – none arising directly from this report. 9. Procurement – none arising directly from this report. 10. Risk - As outlined in the report, the Council continues to be faced with significant financial risk in setting its 2025/26 budget. The financial outlook over the medium term remains loaded with downside risks, and the scale of cost reduction necessary to align Council spending with available resources over the medium term brings with it additional risk for the Council. In recognition of this it is critical that the Council’s financial resilience is maintained and that decisions taken by the Council pay due regard to the medium-term financial outlook. 11. Privacy Impact - implications will be subject to any budget proposals agreed. 12. Cosla Policy Position – implications will be subject to any budget proposals agreed. 13. Children’s Rights - implications will be subject to any budget proposals agreed. 14. Climate Risk – implications will be subject to any budget proposals agreed. Author: Alastair MacArthur, Director of Finance & Resources
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APPENDIX 1 2025/26 Net Expenditure Approved Estimates Revised Estimates* Probable Outturn Estimates COMMUNITIES AND HOUSING SERVICES £000 £000 £000 £000 Children's Services 253,831 261,618 262,519 262,720 Adult Services 106,490 106,810 111,453 112,584 Environment, Housing and Infrastructure 58,924 61,854 63,014 61,925 Finance and Resources 44,488 42,694 43,641 46,107 Miscellaneous Services 6,750 23,590 20,590 22,827 Leisure Services 13,243 13,406 13,406 13,945 Chief Executive Services 10,580 12,168 12,041 10,612 Loans Fund 7,201 7,201 7,201 6,551 Strathclyde Passenger Transport 3,238 3,265 3,265 3,352 Renfrewshire Valuation Joint Board 1,665 1,665 1,665 1,672 Corporate Items 41,502 15,016 15,016 40,852 Total Estimated Spending Need 547,912 549,287 553,811 583,147 Funding Income (per Table 5) (538,628) (544,963) (544,963) (581,206) Budget Deficit/ (Surplus) 9,284 4,324 8,848 1,941 * Includes £2.025m of non-recurring funding. The recurring revised Budget Deficit in 2024/25 is £2.299m RENFREWSHIRE COUNCIL PROVISIONAL RESOURCE ALLOCATION STATEMENT (subject to amendment for any budget proposals approved by Council) 2024/25
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RENFREWSHIRE COUNCIL PAPER 1 SUMMARY OF 2025/26 REVENUE ESTIMATES ENVIRONMENT, HOUSING AND INFRASTRUCTURE Analysis of Change between 2024/25 and 2025/26 £ 2024/25 Estimates 58,923,974 Adjustment to Current Year Estimates Settlement Adjustments: Free School Meals P6-7 337,000 337,000 Unavoidable Pressures: CWRR Operational Team, insurance and maint contracts 1,000,000 Property Lifecycle Maintenance increase 1,000,000 POPS/WUDS Disposal 500,000 Environment and Place recurring funding 550,000 Waste collection - increased households 135,000 Contract Price Increase for Waste Disposal 126,000 Inflation on vehicle hire and Streetscene supplies 210,000 Sustainability Lead Officer 80,000 Transport Costs Soft FM (School meals) 43,000 Online cashless schools system (ParentPay) 24,000 National Assistance Act burials 20,000 Network Rail charges (bridge maintenance) 33,000 Fire Dampers contract and Property Condition surveys 100,000 3,821,000 Proposed Savings: Right for Renfrewshire (88,000) Financial Sustainability Workstreams (189,000) Service Redesign and staff restructure (722,000) Temporary Accomodation cost recovery (158,000) (1,157,000) 2025/26 Estimates (before Council decisions) 61,924,974
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RENFREWSHIRE COUNCIL PAPER 1 SUMMARY OF 2025/26 REVENUE ESTIMATES STRATHCLYDE PASSENGER TRANSPORT Analysis of Change between 2024/25 and 2025/26 £ 2024/25 Estimates 3,237,698 Adjustment to Current Year Estimates Transfers (to) / from other Services: Inflationary increase in SPT requisition 114,000 114,000 2025/26 Estimates (before Council decisions) 3,351,698
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RENFREWSHIRE COUNCIL PAPER 1 SUMMARY OF 2025/26 REVENUE ESTIMATES RENFREWSHIRE VALUATION JOINT BOARD Analysis of Change between 2024/25 and 2025/26 £ 2024/25 Estimates 1,665,150 Adjustment to Current Year Estimates Settlement Adjustments: Increase in Barclay requisition to RVJB 7,000 7,000 2025/26 Estimates (before Council decisions) 1,672,150
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RENFREWSHIRE COUNCIL PAPER 1 SUMMARY OF 2025/26 REVENUE ESTIMATES LOANS FUND Analysis of Change between 2024/25 and 2025/26 £ 2024/25 Estimates 7,201,176 Adjustment to Current Year Estimates Unavoidable Pressures: Loan Charges rebuild 1,350,000 1,350,000 Proposed Savings: Investment Income (2,000,000) (2,000,000) 2025/26 Estimates (before Council decisions) 6,551,176
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RENFREWSHIRE COUNCIL PAPER 1 SUMMARY OF 2025/26 REVENUE ESTIMATES FUNDING INCOME Analysis of Change between 2024/25 and 2025/26 £ 2024/25 Estimates (Gross) (538,627,624) Adjustment to Current Year Estimates Settlement Adjustments GRG Increase (46,691,200) Specific Grant adjustment 4,796,000 Council Tax base growth (683,538) (42,578,738) 2025/26 Estimates (before Council decisions) (581,206,362)