LGBudgets 25.26
Renfrewshire Council · 18 August 2025
Back to Audit, Risk and Scrutiny Board — 18 August 2025 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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___________________________________________________________________ To: Audit, Risk and Scrutiny Board On: 18 August 2025 ___________________________________________________________________ Report by: Director of Finance and Resources ___________________________________________________________________ Heading: Audit Scotland: Local Government Budgets 2025/26 ___________________________________________________________________ 1. Summary 1.1 In May 2025, Audit Scotland published "Local Government Budgets 2025/26”, on behalf of the Accounts Commission. The budget briefing summarises key issues arising from analysis of the 2025/26 budgets recently agreed by Scotland’s 32 councils. This paper provides an overview of the Audit Scotland briefing. ___________________________________________________________________ 2. Recommendations 2.1 It is recommended that members of the Audit, Risk and Scrutiny Board: • Note the contents of this report; • Note that this report has previously been considered by the IJB Audit, Risk and Scrutiny Committee on 20 June 2025. _________________________________________________________ 3. Background 3.1 Audit Scotland published a similar briefing in 2024, providing analysis of council budgets across Scotland, as well as how councils are addressing the challenges faced in achieving a balanced budget and longer-term financial sustainability.
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3.2 This 2025/26 briefing provides analysis of council budgets set for 2025/26, considers how councils are addressing the financial challenges, and also how councils have consulted with communities on budget priorities, including the measures agreed to achieve financial savings. 4. Key Findings of the Local Government Budgets 2025/26 Briefing Council Funding and Budgets 4.1 The briefing provides details of financial settlements in recent years, and notes that the 2025/26 initial funding to councils is higher than last year, with revenue and capital funding both increasing by 6% in real terms, to £15.2 billion. However, the briefing highlights that councils continue to face recurring pressures such as inflation, annual pay deals, and growing demand for services, and that most of the increase will be used to deliver previously agreed national commitments. In addition, the briefing notes that councils face additional costs related to the increase in employer’s National Insurance contribution rates, and that investing in new buildings and assets is increasingly expensive. 4.2 The briefing highlights that, at the time of setting 2025/26 budgets, councils identified a combined revenue gap of around £647million, which represents a budget gap in the range of 3.4% of councils’ total combined revenue budgets for 2025/26. Compared with 2024/25, the total budget gap identified by councils has increased by £52million. At a council level, budget gaps ranged from £70.3million in the City of Edinburgh Council, to £4.4 million in Eilean Siar. Renfrewshire Council’s 2025/26 budget gap (prior to decisions taken by Council in setting the 25/26 budget) was £17.2million. Decisions taken by Council in setting the 25/26 General Fund revenue budget have brought the Council back to recurring financial balance. 4.4 The briefing highlights actions that councils have been taking to close their 2025/26 budget gaps, by generating additional income or by reducing expenditure. This includes all councils raising council tax rates, by between 6% and 15.6%, identifying savings, drawing on reserves, and increasing or introducing charges for accessing some services. 4.5 The briefing notes that councils are introducing new and innovative measures to reduce costs, and provides the example of Renfrewshire Council introducing its new digital advisor (Millie), available 24/7 to support any individuals with routine or transactional requests.
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4.6 The Accounts Commission briefing notes that across all councils, most savings are planned within corporate services (£68million), followed by children’s services (£58million). The briefing highlights that actions to tackle climate have the lowest level of saving measures planned, with £0.4 million of savings planned in 2025/26. 4.7 Despite taking these measures, the briefing notes that councils are still forecasting that more will need to be done in future years to achieve financial sustainability, given the projected increases in both costs and level of service demand. Social Care Budgets 4.8 In their analysis, the Accounts Commission note that, of the £18billion revenue budget in 2025/26, councils reported £4billion related specifically to social care services, equating to almost 23% of councils’ total revenue budget. The briefing highlights the financial pressures and risks experienced by Integration Joint Boards (IJBs), including, they note, “reliance on non-recurring sources of income, such as reserves and one-off savings, and reserve levels falling below individually agreed minimum reserve policy levels”. The briefing states that these have a strong impact on council budgets, and collaborative working and planning is needed across IJB partners in the budget- setting process. 4.9 The Accounts Commission refers to its IJB Finance Bulletin 2023/24 in the briefing, and notes that the agreement of savings plans and NHS partner funding were the most common reasons for balanced budgets not being agreed at the start of the financial year. The Accounts Commission asserts that this “misalignment” in budget processes presents a challenge as councils look to identify savings, and transform how they deliver services, given the significant proportion of council budgets dedicated to providing social care services. Consulting with Communities 4.10 The Accounts Commission briefing highlights that as councils continue to make difficult decisions, it is more important than ever that local communities are involved in the decisions that impact their services. 4.11 The briefing notes that 31 councils completed Equality Impact Assessments (EIAs), as part of the 2025/26 budget setting process. In the Accounts Commission analysis, 30 councils provided evidence of
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how they engaged with residents while identifying saving measures and wider proposals within their 2025/26 budgets. However, the Accounts Commission highlights that approaches taken varied in terms of depth and level of how councils engaged with communities in budget setting. 4.12 The briefing notes that budget setting processes vary across councils, and that it is challenging for the Accounts Commission to compare information across the sector. They note that within individual councils, the way in which budget information is presented could be improved. To improve accessibility, the briefing notes that with more transparent reporting of agreed budgets, the budget gaps faced, and how to make use of reserves, councils can inform and better include their local communities in making the choices still needed to address ongoing financial challenges. 5. Accounts Commission Expectations 5.1 The briefing sets out the expectations the Accounts Commission has for councils to encourage more active participation in the budget setting process, summarised below: • budget papers and financial monitoring reports provided to elected members include clear and understandable headline figures, that state the impact of specific budget decisions on the overall financial position of the council • budgets should link back to the council’s corporate plan to allow elected members to make spending choices better informed by, and based upon, the council’s priorities • fundamental information, such as the forecast budget gap, is clearly presented as part of the consultation process with residents • estimated costings of how specific proposals will contribute to managing the budget gap are made available to residents, including the potential contribution of any proposed increase to council tax, and the anticipated impact on levels of service delivery • general public consultations are supplemented by targeted consultations with groups most impacted by changes to specific services, and that consideration is given to how to encourage participation
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• the ongoing impact of budget decisions are fully assessed, including through Equality Impact Assessments, to enable elected members to make informed decisions. ___________________________________________________________________ Implications of the Report 1. Financial – none, though the report references national trends in relation to local government finance 2. HR & Organisational Development - none 3. Community/Council Planning – none 4. Legal - none 5. Property/Assets – none 6. Information Technology – none 7. Equality & Human Rights - the recommendations within this report have not been assessed in relation to their impact on equalities and human rights as the report concerns a national briefing on local government finance and is for noting only. 8. Health & Safety – none 9. Procurement – none 10. Risk – none 11. Privacy Impact – none 12. Climate Risk –not applicable 13. Children’s Rights –not applicable. 14. COSLA Policy Position –not applicable. _______________________________________________________ List of Background Papers None
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