Agenda Document Pack - Risk and Audit Scrutiny Committee - 23/06/2026
South Lanarkshire Council · 23 June 2026
Back to Risk and Audit Scrutiny Committee — 23 June 2026 and its agenda
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Council Offices, Almada Street Hamilton, ML3 0AA Friday, 12 June 2026 Dear Councillor Risk and Audit Scrutiny Committee The Members listed below are requested to attend a special meeting of the above Committee to be held as follows:- Date: Tuesday, 23 June 2026 Time: 14:00 Venue: Hybrid - Committee Room 1, Council Offices, Almada Street, Hamilton, ML3 0AA The business to be considered at the meeting is listed overleaf. Yours sincerely Paul Manning Chief Executive Members Elaine McDougall (Chair), Mary Donnelly (Depute Chair), Mathew Buchanan, Colin Dewar, Monique Equi, Alistair Fulton, Ross Gowland, Richard Lockhart Substitutes Julia Marrs, Helen Toner 1
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BUSINESS 1 Declaration of Interests Item(s) for Decision 2 Internal Audit Annual Assurance Report 2025/2026 Report dated 29 May 2026 by the Internal Audit Manager. (Copy attached) 3 - 32 3 Annual Governance Statement for 2024/2025 and Significant Governance Areas Quarter 4 Progress Report Report dated 3 June 2026 by the Executive Director (Finance and Corporate Resources) (Copy attached) 33 - 70 Item(s) for Noting 4 Unaudited Annual Accounts 2025/2026 Report dated 5 June 2026 by the Executive Director (Finance and Corporate Resources). (Copy attached) 71 - 218 Urgent Business 5 Urgent Business Any other items of business which the Chair decides are urgent. For further information, please contact:- Clerk Name: Ishara Opatha Clerk Telephone: 07385370069 Clerk Email: ishara.opatha@southlanarkshire.gov.uk 2
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Report Agenda Item Report to: Risk and Audit Scrutiny Committee Date of Meeting: 23 June 2026 Report by: Internal Audit Manager Subject: Internal Audit Annual Assurance Report 2025/2026 1. Purpose of Report 1.1 The purpose of the report is to:- provide an update on Internal Audit’s compliance with the Global Internal Audit Standards (GIAS) report on the progress and performance of Internal Audit in the provision of internal audit services in 2025/2026 report on the output and overall findings from the delivery of an approved programme of work in 2025/2026 provide an independent conclusion and opinion on the adequacy and effectiveness of South Lanarkshire Council’s (SLC’s) framework of governance, risk management and control arrangements for the year ended 31 March 2026 2. Recommendation(s) 2.1 The Committee is asked to approve the following recommendation(s):- (1) that the assessed level of Internal Audit’s compliance with the Global Internal Audit Standards, as set out at section 3 and Appendix 1, be noted; (2) that Internal Audit’s progress with delivering the 2025/2026 Internal Audit Plan, as outlined at section 4, be noted; (3) that Internal Audit’s performance, as set out in section 4, be noted; (4) that the output and overall findings from internal audit work, as outlined in section 5, be approved for inclusion in South Lanarkshire Council’s 2025/2026 governance statement; and (5) that Internal Audit’s conclusions on the level of assurance being provided in 2025/2026, as outlined in section 6 and Appendix 3, be noted. 3. Background 3.1 Purpose of Internal Audit Internal Audit forms part of SLC's wider governance framework. Its primary objective is to evaluate and improve the effectiveness of governance, risk management and control processes. As a function, it does this by delivering a programme of audit assignments for which the output allows Internal Audit to conclude on the effectiveness of SLC’s framework of governance, risk management and control arrangements in the audit year. Delivery of this internal audit service to SLC is in accordance with the GIAS, as outlined to the Risk and Audit Scrutiny Committee (RASC) in a report that was presented in February 2025. 2 3
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Link to the Council Plan and Top Risks 3.2 The Council’s vision, values, priorities, and outcomes are set out in the Council Plan, Connect. 3.3 The internal audit service seeks to support by delivering a risk-based internal audit plan each year that assesses the effectiveness of governance, risk management and internal control arrangements. 3.4 In doing so, Internal Audit contributes to the Council’s Connect Value of being ‘accountable, effective, efficient and transparent’. Approach of the Service 3.5 Annual audit planning focuses on risks (both strategic and those identified by the Council as a top risk) that could prevent the achievement of core objectives. Risks and audit ideas are assessed and then prioritised to ensure audit focus is directed towards areas where an independent review would add greatest value to the Council. In 2025/2026, 44% of risks defined by SLC as either high or very high were covered by the Internal Audit Plan (target 33% in any one year). See Table 1. Table 1 3.6 The controls subject to audit may align to broader risks in the Council’s risk register but the Audit Plan, does not, and cannot, be expected to cover all of the Council’s top risks in a single year. Across the strategic audit plan timeframe (of 3 years) there is a wider coverage of risk and controls from the risk register. 3.7 There will, however, be some risk areas for which an internal audit review would not add value and so, activity, even across the strategic timeframe, will not cover all risks and controls. In any year, audit conclusions can only be provided for the risks and controls that have been subject to audit work during the year and, as such, this annual report does not provide assurance on the controls in place that work towards mitigating SLC’s other risks. Assurance on wider controls remains one that is principally provided through internal risk management activity as well as from other sources of assurance such as external inspectors, regulators and External Audit. 3.8 The Standards require the Chief Internal Auditor1 to have oversight of the assurances provided to SLC from others and in this respect, oversight in 2025/2026 has come from a review of key reports presented to senior management and to Committees (such as the Annual Report and Accounts, the External Audit report on the audit of 1 Referenced as the Chief Audit Executive. Within South Lanarkshire Council this is the Internal Audit Manager. 4 4 3 9 11 5 0 2 4 6 8 10 12 Medium High Very High Top Risk Coverage Total Top Risks Risks Covered 4
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those accounts, the Annual Governance Statement and Risk Register updates) as well as a review of significant reports by the Council’s external inspectors and regulators. 3.9 External assurance coverage is not uniform across all strategic risks and, for some areas, there is a greater reliance placed on internal management controls and internal audit reviews. Where external assurance is indirect, thematic or absent, the Council can take assurance from internal controls, documented risk ownership, and enhanced governance oversight through senior management and the RASC. 3.10 External inspection tends to be focused on regulated service areas (e.g. Social Work, Education and Finance) and more limited or absent for cross-cutting corporate risks. Work on a mapping exercise will continue in 2026/2027 to identify where future assurance activity should be focused to strengthen overall risk mitigation. 3.11 The Institute of Internal Auditors refers to this multi-layer provision of assurance as the three lines of defence (being, management; others that provide support to management; and then, independent assurance providers, such as internal audit). Work has been completed in 2025/2026 to provide an analysis of the controls that manage and mitigate SLC’s top risks and this has been presented to the Risk Sponsors Group. This will now inform the 2026/2027 review of the Council’s top risks. 3.12 Assignments are prioritised to ensure a correct focus and that time is directed towards testing key controls. 3.13 In 2025/2026, to fulfil its mandate, Internal Audit has delivered the approved programme of audits. 3.14 During the year, the Internal Audit Manager has reported to senior management and the RASC and has attended all relevant meetings of the RASC to present the Annual Assurance Report for 2024/2025, routine activity reports and the 2026/2027 Internal Audit Plan and Audit Strategy. These reports have provided updates in relation to Internal Audit’s purpose, authority, responsibility and performance relative to the 2025/2026 Audit Plan. Members of the RASC were also provided with an opportunity to meet privately with the Internal Audit Manager during the year to provide feedback on the Service and to discuss ideas relative to the 2026/2027 Internal Audit Plan. Compliance with Global Internal Audit Standards 3.15 The function has developed a Quality Assurance and Improvement Programme (QAIP) in line with the requirements of the Standards, that has been used to self- assess the function’s compliance with GIAS in 2025/2026 and demonstrate that internal audit activity has been delivered in accordance with the Internal Audit Mandate and Charter, that the Service is operating in an efficient and effective manner and that audit activity is perceived to be adding value and improving operations. 3.16 This annual self-assessment exercise for 2025/2026 has concluded that the service is complying with the principals and requirements of the Standards, as set out in Appendix 1, and that at no point during the year has the function’s objectivity or independence been impaired in the delivery of the internal audit service to SLC. It should be noted that, although the function is compliant with GIAS principles, the Standards were only introduced at the start of 2025/2026 and so there remains opportunities for the function to further improve compliant processes going forward. 3.17 In addition to a self-assessment of compliance, an independent review is required to be carried out once in every 5-year period. To meet this requirement of GIAS, there is 5
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an intention to continue the arrangement, facilitated by the Chief Internal Auditors Group within Scotland, for reviews to be undertaken by Local Authorities on a reciprocal, no-fee basis. The latest iteration of the 5-year External Quality Assessment programme was published in April 2026. Argyll and Bute Council have been allocated to review SLC with an indicative date for reporting of the External Quality Assessment findings of 2028/2029. 3.18 In addition to the Standards, Internal Audit also continues to compare the function’s arrangements to wider best practice and to the requirements placed on the Chief Internal Auditor by Chartered Institute of Public Finance and Accountancy (CIPFA)2 in their Statement “The Role of the Head of Internal Audit”. The guidance determines that there are 5 principles that define the core activities and behaviours that belong to the role of the Chief Internal Auditor in public service organisations and the arrangements needed to support them. A review in 2025/2026 has confirmed that these core responsibilities were delivered in the year consistent with GIAS requirements. 4. Internal Audit Workload and Performance 4.1 2025/2026 Workload – Delivery of the Plan The 2025/2026 Audit Plan, presented to RASC on 18 February 2025, set out a programme of audits to be delivered in the financial year. 4.2 The function engaged with Council Services throughout the year to ensure the Audit Plan, agreed at the outset, continued to address known and emerging risks as the year progressed. The Audit Plan was subject to periodic review with amendments to the Plan approved by RASC in 2025/2026. 4.3 These reviews identified that amendments were required to defer time allocated to HOME and Liquid Logic to a future audit plan (and related follow up work for Self- Directed Support that was dependent on the implementation of Liquid Logic). Time was also deferred for other follow up work that was dependent on the implementation of Fusion Projects (now planned for 2026/2027) and to re-direct time allocated to a review of financial sustainability plans given that this was within the scope of External Audit’s work in 2024/2025 and reported to RASC in September 2025. 4.4 To create capacity to manage changes, contingency days are built into the Plan at the outset. All contingency time was used in the year to undertake anti-fraud activity, complete fraud investigations, conclude the 2024 National Fraud Initiative (NFI) Exercise and provide further time to address compliance issues with the new GIAS. 4.5 Resource Heads of Service are consulted in advance of every planned audit assignment to ensure assignments reflected governance, risk and internal control frameworks relevant to the area. 4.6 Progress with the delivery of the 63 assignments in the 2025/2026 Audit Plan3 is set out in Table 2 below with 1 audit assignment4 still in progress at 30 April 2026. Each of the audits, undertaken in the year, was conducted in conformance with GIAS. No planned assignments were deferred to a future year to accommodate unplanned work. 2 The Public Sector Accounting Body 3 A further 32 assignments were delivered for External Clients in 2025/2026 with separate audit plans approved by External Client Boards and audit committees. Progress with delivering assignments is reported throughout the year to External Client senior management, Board and Committees. 2025/2026 annual reports will be presented in the period May – August 2026. 4 Outstanding assignment relates to routine audit work in purchase cards. 6
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Table 2 4.7 Table 3 sets out planned v actual days with only a marginal differential in days across the full year Table 3 4.8 The Plan is split across 3 main areas, SLC Routine Assignments, SLC Investigative Assignments and External Clients. Table 4 sets out the planned v actual allocation of time across these t areas. Table 4 4.9 The function aims to spend at least 80% of available time on audit plan tasks and assignments. This target was met in 2025/2026, with the remainder of time used for meetings, administration and training. Table 5 4.10 During 2025/2026, Internal Audit continued to provide real-time advice and support around new systems alongside the delivery of a programme of core internal audit 98.40% 1.60% 0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 120.00% Draft Report Work in Progress Audit Plan to Draft Report 1353 1368 1340 1350 1360 1370 Days per timesheet Days per Audit Plan Planned v Actual Days 84% 4% 12% 84% 5% 11% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Routine Investigative External Clients Planned v Actual Split of Audit Plan Actual Planned 80.88% 80.00% 0.00% 20.00% 40.00% 60.00% 80.00% 100.00% Actual Productivity Target Productivity Productivity 7
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assignments. Around 14% (1 Full-Time Equivalent (FTE)) of all available time has been focused on 2 main areas; support through early implementation of Oracle Fusion and the provision of advice and guidance. Given the complex and technical nature of the work, most of this time was delivered by more senior graded members of the team. 4.11 A further 15% of available time has been spent either delivering NFI, the UK-wide anti- fraud exercise or actions required to ensure compliance with GIAS. Work to progress compliance with GIAS continued throughout 2025/2026 to fully imbed requirements of the Standards within the function’s activities. This included the development of a broader suite of performance indicators, a detailed audit strategy and completion of a wider assurance-mapping exercise. 4.12 Along with a core programme of audit assignments, the function has delivered a service that aligns to the strategies, objectives, and risks of the Council. 4.13 The 2025/2026 Internal Audit Plan reflected the evolving processes that have continued in years subsequent to implementation of Oracle Fusion with a need for ongoing support and testing. This, together with financial challenges across the Public Sector, means that the Council, like all Local Authorities, is in a period of transformational change. Investing time to fully develop data analytical tools will prove increasingly important. In 2025/2026, there was a commitment to develop a data strategy, and this was presented to RASC in December 2025. This sets out intended outcomes that include using data analytics to make more efficient use of time, deliver improved outputs in terms of the provision of assurance across a wider data set and the provision of management information as a value add to the audit. Various challenges inhibit progress such as team skills, the cost of interrogative IT tools or data not being in a format or comparable to allow meaningful analysis. Over-arching all of this is the need to act in a way that is compliant with data protection principles. 4.14 In 2025/2026, Internal Audit made use of continuous controls monitoring to extract data for the Council’s External Auditors, to review refunds ahead of processing for payment and to supply financial data to analyse Pupil Equity Fund spend. 2025/2026 Performance – Efficiency and Effectiveness – development of a suite of PIs 2023 to 2026 performance indicators met 3/26 performance indicators marginally short of target5 4.15 Audit time is split across Resources (albeit not equally on an annual basis). Table 6 sets out the number of assignments per lead Resource6. Aside from delivery of the Plan, the effective and efficient performance of the team is measured by delivering assignments within the budgeted number of days and by draft reports being issued timeously after audit testing has been completed. Tables 7 and 8 set out performance against a target of 80% for each. 5 These relate to; % of Audit Plan completed (98.4% against a target of 100%); delivery of planned audit days (99% against a target of 100%) and issue of Service questionnaires (target date March 2026, actual date June 2026) 6 Those designated as ‘All’ relate to Cross-Resource audits. 8
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Table 6 Table 7 Table 8 4.16 The Committee is asked to note Internal Audit’s workload and performance in the year to 31 March 2026 and that both were sufficient to support the audit opinion expressed within this report. 5. Basis of Audit Opinion 5.1 Internal Audit’s opinion on the effectiveness of governance, risk management and control processes, expressed within the report (at 6.5), is based on the output from the audit plan delivered during 2025/2026. The assurances obtained specific to the governance of the Council, risk management arrangements and internal controls are outlined below. 5.2 In addition to the assurance work undertaken directly by Internal Audit, as per 3.8, the function has continued to carry out reviews to ensure a level of oversight. 5.3 Many significant controls are imbedded within systems, and these have been tested throughout the year by a programme of internal and external audit testing. Key controls such as adherence to proper processes and procedures, segregation of duties, application of management checks and robust monitoring are generally vested in people and therefore remain an area of higher inherent risk. Area of Assurance – Governance 5.4 Good governance arrangements are crucial within any organisation as this promotes accountability, transparency and effective decision-making, and leads to the delivery of intended outcomes and achievement of organisational objectives. The audit opinion includes assurances around the effectiveness of the Council’s governance arrangements specific to those aspects of governance that have been subject to 24 3 4 18 4 2 0 5 10 15 20 25 30 ALL CER EDR FCR HTR SWR Audit Assignments per Resource 82% 18% 0% 20% 40% 60% 80% 100% In Budget Outwith Budget Assignments within Budget 9% 91% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Draft report outwith timescales Draft report within timescales Draft Reports Issued on Time 9
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internal audit work during the year. The findings that support the overall assessment are detailed in paragraphs 5.5 to 5.18 with a summary of key assurances below. evidence of effective governance arrangements demonstration of legislative and best practice compliance promotion of effective anti-fraud arrangements evidence of continuous improvement 5.5 The function has been involved in the delivery of routine governance tasks throughout the year including participation in the process to draft the Council’s annual governance statement. Assurance around effective governance comes from this annual exercise that assesses the effectiveness of the governance arrangements within South Lanarkshire Council. This includes undertaking an assurance mapping process, in conjunction with the Good Governance Group, to inform the Council’s Annual Governance Statement. 5.6 Within individual Director’s Statement of Assurance, Resources have committed to deliver against the recommendations of external auditors and other external review agencies, and report progress to Committees and Boards. Good governance is demonstrated by the timeous implementation of actions and recommendations made by both internal and external audit and external inspectors. 5.7 While local authorities are not subject to the UK Corporate Governance Code, these principles closely align with CIPFA/SOLACE governance principles, Annual Governance Statement requirements and GIAS expectations on risk-based assurance. A mapping exercise across these sources, confirmed that current Council practice is aligned. 5.8 In terms of legislative compliance, in Scotland, there is a requirement for public bodies to assess impacts of policies and decisions; to do this before decisions are made and to ensure it informs decision-making. This requirement is reflected in the integrated impact assessment process that is in place within SLC. Time to review the process concluded that there was reasonable assurance that SLC is meeting its statutory duties by conducting robust Integrated Impact Assessments (IIA) supported by clear governance structures, senior-level accountability, and integration of IIA processes within established budget and decision-making timelines. All sampled IIAs were authorised by senior officers and published on the Council’s website, demonstrating transparency and compliance. 5.9 The Council has implemented comprehensive training programs, including workshops, online sessions, and e-learning, ensuring service leads are equipped to complete IIAs effectively. The use of standardised templates was found to further support consistency in addressing legislative requirements. There were some improvements identified around governance and documentation, and these areas are included within an action plan. 5.10 Legislative requirements were also reviewed in respect of the Economic Crime and Corporate Transparency Act 2023 and Procurement Act 2023. In respect of the former, the Act is designed to tackle economic crime (fraud, money laundering), improve corporate transparency and strengthen the UK company register (Companies House). From a local authority perspective, specifically this brings a new failure to prevent fraud offence, where a fraud is committed that benefits the local authority and reasonable prevention procedures were not in place. Time to both develop an action plan to address areas for improvement and then implement these actions was included in the 2025/2026 Internal Audit Plan. This includes a 10
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more structure approach to anti-fraud activity, a programme of communication (including annual presentations to the Risk Sponsors Group) and dissemination of general and topical fraud awareness issues. Further detail around this will be reported as part of the annual fraud report. 5.11 The embedding of a zero-tolerance approach to fraud is also evidenced in the participation in the NFI exercise. In 2025/2026, the 2024 NFI Exercise concluded with outcomes of £137.5k. The most significant outcome being in relation to Council Tax reduction (£52.4k) and the Small Business Bonus Scheme [NDR relief] (£49.7k). The increase in the former is due to improved matching criteria used by NFI for HMRC matches. Services routinely review the reason for the fraud or error and take corrective action to improve controls. There were no specific trends or patterns that merited a more detailed audit. Further detail around this will be reported as part of a separate report on the NFI Exercise to this Committee in August 2026. 5.12 In respect of the other area of legislation, the Procurement Act 2023, Legal Services are advising on guidance under Scottish Procurement Policy Note 5 with the Procurement Network already briefed on Scottish Procurement Policy Note (SPPN) 5. No contracts have been awarded to date under the new arrangements, and no new frameworks have been awarded since the effective date of February 2026. It is noted that there is an intention to comply, with SLC making any necessary amendments to the sourcing strategy and procurement process based on guidance received from Legal Services. 5.13 Across all the assignments concluded in the period, Council Resources demonstrated a good level of engagement. Importantly, where required, an action plan was developed and agreed to address areas for improvement linking to Internal Audit’s primary objective to evaluate and improve the effectiveness of processes. 5.14 GIAS requires Internal Audit to ensure that management actions arising from audit findings are tracked. In summary, that actions are agreed, delivery is monitored, that performance is reported and, where appropriate, validated. 5.15 There were 79 internal audit actions that fell due in 2025/2026 of which, 74 (94%) were delivered on time. This was tested via a programme of formal follow-up (92% of all actions falling due in the year were followed up). Where implementation cannot be fully evidenced, or the action is no longer relevant, revised actions are agreed and tracked. 5.16 Audit actions also arise from external audits. The Council’s External Auditor undertook the 2024/2025 financial audit during 2025/2026 and provided an unqualified opinion in relation to the Council’s financial statements. There were 7 separate improvement actions identified by External Audit, all of which have been implemented by 31 March 2026. There has been no formal interim audit output for 2025/2026. Internal Audit has liaised with External Audit periodically throughout the year and have collated interim and financial year-end data extracts to assist. 5.17 Actions can also arise from audit work undertaken within Glasgow City Region, of which South Lanarkshire Council form part, from audits by Glasgow City Council. In 2025/2026, there were 4 separate audits reported with no actions arising for SLC and therefore no follow-up of actions was required. 5.18 Audit Scotland published wider Public Sector reports throughout the year. Where appropriate, the key messages, their application and associated actions for SLC were 11
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reported to senior management and/or Committees. A review of these reports form part of the scope of the wider oversight exercise (as set out at 3.8). Area of Assurance – Risk Management 5.19 An effective risk management framework ensures the Council understands and mitigates potential threats that would impact continuity of service and the delivery of stated objectives. By addressing risks, financial and operational impacts can be managed, and reputational damage minimised. The Council has in place a risk management strategy and undertakes an annual review to identify the likelihood of a risk materialising and the impact of this occurring. Controls to mitigate and manage are documented and reviewed periodically. 5.20 The audit opinion expresses assurances in respect of the Council’s risk management arrangements. The findings that support the overall assessment are specific to those aspects of risk management that have been subject to internal audit work during the year, detailed in paragraphs 5.21 to 5.36 with a summary of key assurances below. evidence of effective risk management arrangements progress with mitigating top risks around business continuity, cyber and sustainability 5.21 Work to categorise controls that mitigate the Council’s top risks was presented to the Risk Sponsors Group in 2025/2026 using the Institute of Internal Auditors three lines of defence methodology. Good risk management evidence controls across all lines. This analysis has informed the overall review process that determines the Council’s top risks and how these are effectively managed. 5.22 Resource Fraud Risk Registers have again been reviewed and updated using the same three lines of defence format. Going forward, the annual review of these registers will align to the timetable of that of the Council’s top risks. 5.23 Business continuity remains one of the Council’s top risks. Business Continuity plans outline important arrangements and considerations for Resources in the event of ongoing incidents (that disrupt business as usual) and around how this is managed during the recovery period. Follow up work in the year has confirmed that there has been progress in the refinement of plans with a number of scenario, desk-based workshops to explore responses in the event of a disruption to business as usual. Work to align high level plans with Service specific responses continues with activity reflecting the relative risk status. 5.24 Linked to business continuity, the Public Switched Telephone Network (PSTN) switch- off in the UK, when all remaining analogue services will be discontinued, is scheduled for 2027, having been extended from the original 2025 deadline. Within South Lanarkshire, community alarm service users relied on analogue alert alarms, which would have become incompatible. SLC established an Analogue to Digital programme to manage this transition. As part of the plan, a digital alarm implementation team was created to facilitate the shift to a modern and effective telecare service with the programme reported as complete in January 2026. 5.25 A cyber-attack is recognised as one of the events where business continuity could be impacted. It is intended that Resource continuity plans should pay proper cognisance to the impact of cyber incidents on business continuity and the prioritisation of systems in a recovery phase. Resource risk registers capture the risks and controls required to mitigate. Key improvements in year included an updated and tested Cyber Incident 12
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Management Protocol and the securing of specialist support. This is supported by plans around mandatory training. 5.26 Core technical controls and monitoring are in place. A programme to replace legacy systems is being developed to allow the award of accreditations. This is being monitored to manage risks and dependencies. 5.27 Cyber Security remains a significant risk with an attack possible, despite controls being in place resulting in, potentially, significant reputational, operational and financial impact. Cross-sector attacks highlight that vulnerabilities can be exploited to such an extent that normal operation is suspended7. It is recognised, that, disruption in terms of the time that would elapse over a period of restoration, testing and establishing of a live production environment is, potentially, an area which cannot be fully mitigated. Recovery priorities and readiness are continually assessed through exercises and testing and a programme of end-to end system restores has been developed and aligned to business priorities. The focus remains on a continuing strengthening of cyber response preparedness. 5.28 Supply chain security is acknowledged as an emerging risk area. Current processes align with Strategic Framework for a Cyber Resilient Scotland 2025-2030 and there will be a continuation of engagement with wider national initiatives such as the Supply25 assessment tool. 5.29 Digital transformation is viewed as a core enabler of modern governance, service delivery and financial sustainability and is a key element of the Council’s response to many of the risks and pressures faced by wider local government. 5.30 Based on the review of the documents presented to the Performance and Review Scrutiny Forum between June 2025 and February 2026, there is evidence of governance, delivery and a direction for the Digital Transformation Programme. Strategic assessments (digital capability mapping, current‑state reviews and data maturity assessment) have largely been completed, providing a base for future strategies. 5.31 Governance arrangements are established and in operation, with reporting lines, defined roles and oversight through Programme Review Boards. The use of alternative digital tools and phased delivery approaches have been implemented. 5.32 The programme now needs to transition from assessment and pilot activity to sustained delivery and benefits realisation. This is dependent on the completion of several tasks. 5.33 Delivery remains vulnerable to execution risks, particularly where timescales are compressed, dependencies exist between workstreams, or capacity relies on temporary or short‑term resources. If not actively managed, these risks could delay strategy refresh, adoption, and the realisation of anticipated productivity, customer and data‑driven benefits. 5.34 Overall, the programme is appropriately designed and controlled, but continued progress will require prioritisation, completion of outstanding assessments and strategies, strengthened change and engagement activity, and sustained focus on embedding learning and benefits realisation as delivery matures. 7 Audit Scotland report: Cyber-attack affecting operations and services: The 2023/24 audit of Comhairle nan Eilean Siar reported to Finance and Corporate Resources May 2026. 13
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5.35 Sustainability remains another of the Council’s top risks. Although mitigating controls have been identified, and a series of actions are being taken (across different council strategies and action plans) these are not such as to reduce the risk score significantly. 5.36 Throughout 2025/2026, progress has been reported across sustainability and climate change programmes, with most actions under the Sustainable Development and Climate Change Strategy assessed as on track. Significant emissions reductions have been achieved historically; however, reports continue to highlight that the Council is not currently on a trajectory to meet net zero targets, with delivery dependent on substantial investment, external funding, and national policy developments. Key risks relate to financial sustainability, delivery capacity, and data and reporting robustness and are reflective of similar challenges faced by all local authorities in this risk area. Area of Assurance – Internal Control 5.37 Robust internal controls are important, irrespective of the activity or process, with their effective implementation supporting delivery of vital Council services to people and businesses in South Lanarkshire. The audit opinion expresses assurances in respect of the Council’s internal control framework specific to those aspects of internal control that have been subject to internal audit work during the year. The findings that support the overall assessment are detailed in paragraphs 5.38 to 5.61 with a summary of key assurances below. improvements in internal controls within Oracle Fusion continuous control processes embedded adequate processes within areas of audited activity development of revised overtime processes and controls improved anti-fraud controls 5.38 In 2025/2026, there was a continuing commitment to respond to requests to support and review processes that have been amended following the implementation of Oracle Fusion. Most of this time related to assistance to resolve specific technical issues or to deliver more routine accounting assistance. In undertaking these tasks, there has been a level of audit testing that has identified areas for improvement and has provided assurance around improved controls that are now embedded within the system. Where issues have been identified, these have been resolved and tested to ensure that processes are working as intended. 5.39 This work has extended to a further review of duplicate payment controls albeit a fuller review will continue into 2026/2027. The development of this consultancy role reflects the new standards and, in particular, the delivery of output that evidences a level of insight and foresight. 5.40 These assignments were considered best use of the Oracle Fusion time budget in the 2025/2026 Audit Plan. The 2026/2027 Plan includes further time to review wider system functions. Given the span of the system, audit testing across all Fusion modules will feature in multi-year audit plans. 5.41 Data matching of refunds continued in 2025/2026. The exercise covered the 4 main refund categories with no fraudulent transactions identified in year. 5.42 Other routine audit work included a review of the process to gather Early Year fees to ensure that this is effective and efficient and that key controls are in place. This found that there was a clear policy that provides a solid framework for managing fees, exemptions and entitlements. It was found, however, that the policy could be applied more consistently in practice and that debt recovery arrangements could be more 14
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effective. The audit highlighted that the need for completeness of supporting documentation and more effective monitoring arrangements. 5.43 A review of Self-Directed Support (SDS) direct payments sought to assess whether payments were being used as intended in line with an approved support plan, and that these were monitored and reviewed. Audit testing established that there is no formal SDS policy in place but did confirm that there was evidence of a standard operating procedure, guidance documents available to both employees and service users on SDS and direct payments and training being delivered within the SDS team. 5.44 Sample testing identified some minor weaknesses in relation to the availability of documentation and around assurances that key reviews are taking place on a timely basis and that these captured all required checks. It was noted that the Resource was already aware of this gap and plans were in place to resolve. An action plan has been agreed to address the identified weaknesses and improve overall internal controls, including the development of a SDS policy. This will provide an opportunity to enhance fraud prevention references in the SDS process to help mitigate any risks, aligning with the requirements of recent fraud prevention legislation. 5.45 Work to test overtime processes has been included across 2 audit plan years, 2025 to 2027. The 2025/2026 Internal Audit Plan included walkthrough testing of the pre- system and system controls in relation to overtime claims submitted and approved via Oracle Fusion for a sample of overtime claims relating to Social Work Resources. This is in preparation for more detailed sample testing planned during 2026/2027 which will confirm controls are in place and working as intended within Oracle Fusion. 5.46 Findings from walkthrough tests has established that some key overtime controls remain off-system with reliance placed on approving managers ensuring overtime is valid, has been worked, is accurately submitted by the employee (including any additional authorisations required), and is paid at the correct rates. 5.47 Planned overtime audit work in 2026/2027 will seek to review reports produced in relation to overtime, the process followed by managers to monitor overtime (including frequency and evidence) and seek assurance that identified issues are acted upon timely and appropriately. 5.48 An audit of licensing processes to assess whether SLC is meeting its statutory duties was also included in the 2025/2026 Internal Audit Plan. This found that the licensing application process was sound although it was noted that the system does not currently generate automated alerts for licences approaching expiry or the end of the consultation period. Instead, there is a reliance on ad hoc reviews to identify. It is noted that a replacement licensing system is being progressed. 5.49 Procedures, although available, had not been updated for a period. It was recommended that these procedures should also consider fraud controls and that segregation of duties should be embedded in processes. 5.50 The Service recognised an historical backlog existed that was being addressed. Management of this going forward could be supported by formal escalation and improved monitoring mechanisms. At the time of the audit, key performance indicators for Landlord Registration were being developed to allow effectively monitoring. 5.51 Aside from this, a training plan has been established for both new and existing staff, incorporating updates and newsletters from the Scottish Government on legislative changes, as well as on-the-job shadowing with experienced team members. 15
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5.52 It was noted that there was secure data handling and system access controls but that the creation of a centralised document repository would strengthen information governance by collating evidence, communications and correspondence within a single file. 5.53 An action plan has been agreed with progress in delivering audit recommendations tested in 2026/2027. 5.54 Internal Audit undertook further work within Housing and Technical Resources Stores in 2025/2026 to assess progress with previously agreed actions given Stores is an inherently high-risk area where strong controls are required to protect Council stock. 5.55 There was reasonable assurance that controls were generally in place in relation to the holding and administering of stock. Independent year-end stock checks are undertaken however a programme of regular in-year stock checks was less evident. Linked to this was the need to review the frequency and timing of in year adjustments to identify potential patterns or issues. 5.56 Whilst it was noted that there was a strengthening of controls, there remains further work to ensure all identified areas for improvement have been implemented across all Stores locations. Further actions around completion of forms, formal timetables and training were identified. Visits are planned in 2026/2027 to assess progress and to review controls within the Stores module that form part of the new system, HOME. 5.57 During the year, implementation of actions relating to information governance have been tracked. This has confirmed that some progress has been made in implementing audit actions. Further work is required however, to ensure that adequate controls have been put in place to fully mitigate the gaps identified in the original audit. 5.58 Time spent on investigative work was broadly in line with the planned split of days available across the year (see Table 4). Twelve separate, investigative assignments were completed in the year covering financial frauds or wider, operational issues. The majority, on investigation, found substance to concerns or allegations and appropriate actions were agreed to address the issue and amend processes going forward. Each of the concerns were investigated in line with established fraud procedures and reflecting the Council’s zero tolerance approach to fraud. A detailed report on fraud statistics and activity will be presented separately to RASC. 5.59 External auditors are required to report significant frauds, or suspected frauds, to Audit Scotland, where they were caused or facilitated by weaknesses in public bodies’ internal controls. Frauds and irregularities are considered significant where the value of the loss is over £5,000 or where it is of significance owing to the nature of the activity. SLC complied with this requirement in 2025/2026. 5.60 Audit Scotland routinely report these significant frauds within technical bulletins which also includes detail around improvements to controls to prevent similar frauds occurring. Bulletins are reviewed and cases shared with relevant Services to assess whether controls require amendment. 5.61 Internal Audit has also monitored fraud alerts through internal and external sources and disseminated information as appropriate. In 2025/2026 these have continued to relate to adhoc issues and have been shared with Council Resources as appropriate. 16
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6. Summary of overall assurance and audit opinion Context 6.1 Internal Audit’s audit conclusions and overall opinion on the adequacy of governance, risk management and internal controls is based on the delivery of the approved 2025/2026 Internal Audit Plan. There were no impairments to the independence or objectivity of Internal Audit activity during 2025/2026, and no restrictions placed on scope, access or reporting. 6.2 Adequate arrangements exist within SLC to escalate any concerns the Internal Audit Manager may have in relation to the level of risk accepted. The presence of an internal audit function does not, however, negate the importance of effective internal controls. 6.3 Whilst the work of others has been considered to provide context and oversight, the opinion at paragraph 6.5 is based solely on assurance obtained directly from Internal Audit work undertaken during 2025/2026. 6.4 The opinion does not provide assurance over any matters not subject to audit during the year, nor does it represent a guarantee that all control weaknesses or risks have been identified. Internal control remains, primarily, a management responsibility to ensure that SLC conducts its business in a manner that has due regard to the principles of good governance. Audit Opinion 6.5 Based on the work undertaken during 2025/2026, as Chief Internal Auditor, I am satisfied that South Lanarkshire Council has established adequate and effective arrangements for governance, risk management and internal control. 6.6 This opinion is based on a programme of risk-based internal audit work carried out in accordance with GIAS, together with consideration of other relevant sources of assurance. 6.7 The audit work completed provides sufficient and appropriate evidence to support this conclusion. Where Internal Audit identifies areas of high residual risk, these are reported to management and to the RASC, with agreed actions in place. I am satisfied that the risk acceptance positions in place during the year were transparent and formally acknowledged. 6.8 Internal Audit has operated in conformance with GIAS during the year, and no significant limitations in scope or access were identified that would impact on the reliability of this opinion. 6.9 The Committee is asked to note the above findings and approve inclusion in the Council’s Annual Governance Statement. An Annual Internal Statement of Assurance is included at Appendix 3 based on the view of the Council’s own internal audit function. 7. Employee implications 7.1 The Internal Audit service in 2025/2026 was delivered by a team of 8 (FTE 7.34). 87.5% of the team are fully qualified through either the Chartered Institute of Internal Auditors or one of the Consultative Committee of Accountancy Bodies. There were no changes to the team during the year and there were no vacancies. 7.2 Feedback received in relation to audit assignments is used to highlight areas for training and development. These are progressed on an individual basis as part of the 17
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performance development review process. Best practice information is shared and learning points discussed throughout the year. 7.3 Training arrangements include regular team briefs, internal training sessions, attendance at professional body conferences and external seminars and briefings. By utilising these various training routes, each member of the team completed more than 5 days of training in 2025/2026. 7.4 The Internal Audit Mandate and Charter commit to always keeping lines of communication open with any concerns reported directly to the Internal Audit Manager. Although no formal complaints have been made in 2025/2026, Internal Audit remain committed to responding to feedback and addressing any concerns raised. 7.5 Membership of the Chief Internal Auditor’s Group (Scottish Local Authorities Chief Internal Auditor’s Group) has continued, during 2025/2026, to provide access to a valuable network of internal auditors across Scottish Local Authorities. South Lanarkshire Council’s (SLC’s) internal audit function has engaged with this Group throughout the year. The Group has supported members through significant professional change, particularly the introduction of GIAS, strengthened collective capability through training, conferences and sub-group work and provided tangible benefits to councils through assurance, shared learning and cost-effective peer review. 8. Financial implications 8.1 Internal Audit, during 2025/2026, marginally underutilised its allocated budget. Sufficient resources were available to deliver the 2025/2026 Internal Audit Plan. 9. Climate Change, Sustainability and Environmental Implications 9.1 There are no climate change, sustainability, or environmental implications in terms of the information contained in this report. 10. Risk and Other Implications 10.1 There are no additional risks associated with this report. The output from Internal Audit in 2025/2026 has contributed to the mitigation of wider risk impacts of poor governance, inadequate risk management arrangements and ineffective internal controls. 10.2 In doing so it supports the Council in demonstrating that it is delivering in an accountable, effective, efficient and transparent manner. 10.3 To comply with the principles of GIAS, embedded within audit assignment’s scope is the identification of efficiency through the provision of insight, foresight and oversight. In practice this often translates to suggesting more efficient processes and procedures. From Resources’ perspective, much of the value-added element of an internal audit service is linked to the function’s ability to provide advice and guidance relating to specific queries or the implementation of a new system or process. Responding to Services’ requests for assistance and participation in internal working groups is accommodated within the Plan and through contingency time. 10.4 To mitigate against the risk of non-delivery of the Plan, the progress of every assignment is monitored. 18
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11. Integrated Impact Assessment and Consultation Requirements 11.1 This report does not introduce a new policy, function or strategy or recommend a change to existing policy, function or strategy and, therefore, no integrated impact assessment is required. 11.2 Resource Executive Directors, Heads of Service and elected members were consulted during preparation of the 2025/2026 annual audit plan. Resource Heads of Service are consulted in advance of every planned audit assignment and following completion of fieldwork. There is no requirement to undertake any further consultation in terms of the information contained within this report. 11.3 To comply with GIAS, members of RASC were provided with an opportunity to meet privately with the Internal Audit Manager during the year. Meetings were also convened periodically throughout the year with the Chief Executive, Executive Directors and Heads of Service. 11.4 A formal questionnaire has been developed in 2025/2026. This will be issued early 2026/2027 to gather feedback. 11.5 Days were included in the 2025/2026 Internal Audit Plan for Internal Audit to supply an extract of financial data to Audit Scotland, the Council’s External Auditor, for the purposes of their audit of SLC’s Accounts for the years ended 31 March 2025 and 2026. Outwith this, Audit Scotland may wish to consider the findings from this report. Yvonne Douglas Internal Audit Manager 29 May 2026 Link(s) to Council Values/Priorities/Outcomes Accountable, effective, efficient and transparent Previous References Risk Audit Scrutiny Committee - 18 February 2025 (2025/2026 Internal Audit Plan Report) Risk Audit Scrutiny Committee - 18 February 2025 (Global Internal Audit Standards Report) Risk Audit Scrutiny Committee - 25 June 2025 (2024 National Fraud Initiative Exercise Report) Risk Audit Scrutiny Committee - 25 June 2025 (Internal Audit Annual Assurance 2024/2025 Report) Risk Audit Scrutiny Committee - 30 September 2025 (Fraud Statistics Annual Report 2024/2025 Report) Risk Audit Scrutiny Committee - 30 September 2025 (Fraud Statistics Six Monthly Update 2025/2026 Report) Risk Audit Scrutiny Committee - 6 May, 25 June, 30 September, 9 December 2025 and 10 March 2026 (Internal Audit Activity Reports) 19
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List of Background Papers Figtree extracts Global Internal Audit Standards Contact for Further Information If you would like to inspect the background papers or want further information, please contact:- Yvonne Douglas, Internal Audit Manager Ext: 2618 (Tel: 01698 452618) E-mail: yvonne.douglas@southlanarkshire.gov.uk 20
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Quality Assurance Improvement Programme 2025/2026 Appendix 1 Purpose of the Quality Assurance Improvement Programme: To evaluate and ensure the internal audit function conforms with the Global Internal Audit Standards, achieves performance objectives, and pursues continuous improvement. Type of Assessment Nature of Assessment Outputs Internal Assessment Ongoing monitoring: supervisory reviews, methodology compliance checks, file quality reviews, hot/cold reviews, and client feedback surveys embedded across engagements, performance monitoring, resourcing and skills/competency. Periodic self-assessment: annual review against GIAS requirements, with evidence mapped to the standards and examples of conformance. Established processes and procedures within Internal Audit include specific quality reviews. Performance monitoring undertaken throughout the year and reported to the Risk and Audit Scrutiny Committee. Performance data for the year to 31 March 2026 included in report (text in bold). Resourcing and skills/competency of teams set out in Section 7. Feedback surveys have been developed and will be issued in June 2026. Annual assessment of compliance with GIAS requirements – see Appendix 2. External Assessment An External Quality Assessment (EQA) is required at least once every five years. The last EQA review of SLC’s internal audit function was undertaken in 2022/2023 and reported in 2023/2024. The overall assessment was that SLC’s internal audit function, ‘fully conformed’ with seven standards and ‘generally conformed’ in the remaining seven areas. This was a positive outcome with no significant areas of improvement identified. An action plan to address the areas for 21
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non-compliance was developed and subsequently implemented in 2023/2024. The next EQA of the internal audit function within South Lanarkshire Council will assess compliance with the Global Internal Audit Standards, effective from 1 April 2025, and is scheduled for 2028/2029. Conclusion: Based on the Quality Assurance Improvement Programme undertaken during 2025/2026, Internal Audit generally conforms to the Global Internal Audit Standards and has met its approved performance objectives. The Quality Assurance Improvement Programme has evidenced that the processes promote continuous improvement in supporting the organisation’s objective. Where improvement opportunities were identified, actions were agreed with target dates and tracked to completion. Opportunities for Internal Audit to further improve compliant processes will continue to be assessed using the Quality Assurance Improvement Programme during 2026/2027. 22
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GIAS Compliance Assessment Checklist Appendix 2 Purpose: This checklist is designed to assess compliance with the Global Internal Audit Standards (GIAS). It covers the five domains and fifteen principles, providing a structured approach to evaluate adherence, identify gaps, and plan corrective actions. Domain/Principle Requirement Evidence Status Domain 1: Purpose, Authority, and Responsibility Principle 1 – Purpose of Internal Audit Is the internal audit function clearly defined in the charter? Does it align with organisational objectives? Internal Audit Mandate and Charter set out the purpose of the internal audit function. This was presented to the Risk and Audit Scrutiny Committee in February 2025. This document also confirms that Internal Audit seeks to enhance governance, risk management and control processes within the Council to support achievement of the organisation’s objectives and its ability to serve the public interest. C Domain 1: Purpose, Authority, and Responsibility Principle 2 – Independence and Objectivity Is the internal audit function independent from management? Are safeguards in place to maintain objectivity? The Internal Audit Mandate and Charter set out the purpose of the internal audit function and states that Internal Audit is an independent assurance function. The internal audit function operates within a position of organisational independence with a direct accountability to the Council’s Risk and Audit Scrutiny Committee. Internal Audit is located within Finance and Corporate Resources, under the direction of the Proper Officer, the Executive Director Finance and Corporate Resources. The Chief Internal Auditor is positioned at a level in South Lanarkshire Council that enables an internal audit service and responsibilities to be performed without interference from management and establishes the idependence of the internal audit function. C 23
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The Chief Internal Auditor reports directly to the Risk and Audit Scrutiny Committee. This Committee serves as the audit committee for South Lanarkshire Council and independently provides assurance on the soundness of the Council’s control environment and the adequacy of governnace and risk management frameworks. The Chief Internal Auditor has direct access and reports administratively to the Executive Director Finance and Corporate Resources, the Proper Officer, as defined in Section 95, Local Government Act 1973, meeting with this officer on a regular one to one basis. This relationship is the escalation route for issues arising within Internal Audit and for those matters where it is appropriate for the Chair of the Risk and Audit Scrutiny Committee to be briefed. The Chief Internal Auditor also has direct access to the Council’s Monitoring Officer and will use this route to report as appropriate. The Chief Internal Auditor confirms to Risk and Audit Scrutiny Committee on an annual basis that the internal audit function is organisationally independent. Any factors that impact on independence will be disclosed to the Risk and Audit Scrutiny Committee along with any issues encountered relating to a limitation of scope, performance or communication of internal audit findings and conclusions. Within South Lanarkshire Council, the Employee Code of Conduct provides guidance on the type and nature of interests that should be declared (including paid employment outside the Council and personal interests in 24
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contracts). Auditors declare any interests in accordance with the Code of Conduct and with regard to the audit principle of independence, notifying the Chief Internal Auditor of any conflicts of interest which may arise. This formal declaration is required to be renewed on an annual basis but is revisited should any conflicts arise. This disclosure extends to any impairments of independence either actual or perceived with an expectation that internal auditors act with profesional objectivity in all aspects of the audit engagement, that this results in balanced assessments that considers all facts and circumstances and avoids bias and undue influence. The Chief Internal Auditor is required to report to the audit committee and senior management any potential impairments to independence. Domain 1: Purpose, Authority, and Responsibility Principle 3 – Professional Responsibility Are auditors adhering to ethical standards and professional conduct? Employees are required to accept the terms of the Council’s Code of Conduct as a condition of employment. The Internal Audit team (qualified and part qualified) are members of various professional accountancy bodies with a requirement to adhere to ethical standards and professional conduct. A structured programme of training is in place. Within South Lanarkshire Council, the Employee Code of Conduct provides guidance on the type and nature of interests that should be declared (including paid employment outside the Council and personal interests in contracts). Auditors must declare their interests in accordance with the Code of Conduct and with regard to the audit principle of independence, notify the Chief Internal Auditor of any conflicts of interest which may C 25
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arise. This formal declaration is required to be renewed on an annual basis but is revisited should any conflicts arise. This disclosure extends to any impairments of independence either actual or perceived with an expectation that internal auditors act with profesional objectivity in all aspects of the audit engagement, that this results in balanced assessments that considers all facts and circumstances and avoids bias and undue influence. Domain 2: Governance Principle 4 – Governance Structure Is there clear oversight by the board or audit committee? The Executive Director Finance and Corporate Resources and the Chief Internal Auditor seek to maintain sound working relationships with appropriate elected members and ensure that good channels of communication are maintained. The audit committee discuss with the Chief Internal Auditor, the function’s mandate in terms of its role, responsibility, scope and services and review and approve the Internal Audit Mandate and Charter on an annual basis. Members of the Risk and Audit Scrutiny Committee and the Chief Internal Auditor are able to meet privately. Internal Audit report all findings from concluded assignments via progress reports to the Risk and Audit Scrutiny Committee. Lines of communication between the Chairs of all Committees and the Chief Internal Auditor is open at all times. All elected members are free to raise concerns directly with the Chief Internal Auditor and input to the Internal Audit Charter and audit plan. Areas suggested for inclusion in the audit plan are assessed in terms of risk prior to any audit work being undertaken. C 26
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Enquiries from elected members follow the Council’s protocols and guidance. The Risk and Audit Scrutiny Committee approve a risk- based internal audit plan on an annual basis having satisfied itself around the adequacy of budgets, qualifications and competencies of the internal audit function and of the Chief Internal Auditor to deliver the plan. The Committee satisfy itself that a quality assurance and improvement programme has been established and review the results of the quality assurance and improvement programme on an annual basis. The Risk and Audit Scrutiny Committee seek assurances that there has been no limitation in scope or resources and receive regular updates in relation to performance to allow this to be assessed relative to the function’s objectives and individual roles and responsibilities. Domain 2: Governance Principle 5 – Board Oversight Does the board approve the audit plan and monitor performance? The audit committee discusses with the Chief Internal Auditor the function’s mandate in terms of its role, responsibility, scope and services and reviews and approves the Internal Audit Mandate and Charter on an annual basis. The Risk and Audit Scrutiny Committee approves a risk- based internal audit plan on an annual basis having satisfied itself around the adequacy of budgets, qualifications and comptencies of the internal audit function and of the Chief Internal Auditor to deliver the plan. C 27
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Any factors that impact on independence are disclosed to the audit committee along with any issues encountered relating to a limitation of scope, performance or communication of internal audit findings and conclusions. The Risk and Audit Scrutiny Committee seek assurances that there has been no limitiation in scope or resources and receive regular updates in relation to performance to allow this to be assessed relative to the function’s objectives and individual roles and responsibilities. A suite of performance measures are reported at each meeting of the audit committee and to senior management as part of the annual reporting process. Domain 2: Governance Principle 6 – Organisational Alignment Is internal audit integrated into governance processes? Internal Audit within South Lanarkshire Council forms part of the Council’s wider governance framework. Output from the function is the delivery of a planned programme of internal audit assignments. Each assignment is formally reported to the Council’s Risk and Audit Scrutiny Committee and, from 1 April 2025, an ‘assignment conclusion’ (previously an ‘audit opinion’) expressed based on the level of assurance that testing has provided. These assurances, in turn, inform an overall assessment of the adequacy and effectiveness of the Council’s framework of governance, risk management and control arrangements that is reported annually to the Corporate Management Team and the Risk and Audit Scrutiny Committee and captured within the Council’s Governance Statement that forms part of the Annual Accounts. C Domain 3: Managing the Internal Audit Function Principle 7 – Internal Audit Strategy Is there a documented strategy aligned with organisational goals? A process to map current practice to all elements of the new GIAS has been completed. A final Audit Strategy was presented alongside the 2026/2027 Internal Audit Plan (March 2026). C 28
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Domain 3: Managing the Internal Audit Function Principle 8 – Resource Management Are resources adequate and appropriately skilled? No resourcing constraints that would prevent delivery of the Audit Plan. Training includes regular team briefs, internal training sessions, attendance at professional body conferences and external seminars and briefings. C Domain 3: Managing the Internal Audit Function Principle 9 – Quality Assurance and Improvement Is there a QAIP (Quality Assurance and Improvement Programme)? Quality Assurance and Improvement Programme has been developed and is reported as part of the Internal Audit assurance report. C Domain 4: Performing Internal Audit Services Principle 10 – Engagement Planning Are objectives, scope, and criteria clearly defined? Standard audit remit template that sets out a review of governance, risk management and control processes; the audit objective and scope; testing and sample details; arrangements for the reporting of findings; Audit Staff who will deliver the audit; liaison arrangements; audit timescales and budget. C Domain 4: Performing Internal Audit Services Principle 11 – Engagement Execution Are audits conducted in accordance with standards? Compliant processes have been developed. Audit assignments are planned; risk-based approach and methodology developed; sufficient fieldwork and evidence gathered; clear reporting protocol in place; follow up and monitoring arrangements established and continuous improvement promoted. C Domain 4: Performing Internal Audit Services Principle 12 – Evidence and Documentation Is sufficient, appropriate evidence maintained? Electronic audit files are retained for all assignments. C Domain 5: Communicating Results and Monitoring Progress Principle 13 – Reporting Are reports clear, accurate, and timely? Reports are subject to review before issue. Target timescales track timeous issue. Standard format for all audit reports. C 29
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Domain 5: Communicating Results and Monitoring Progress Principle 14 – Follow-up and Monitoring Are corrective actions tracked and verified? All actions are logged in a database. Actions are logged together with a ‘responsible owner’ and a due date. Verbal updates are obtained when the action falls due. This is classed as informal follow up and included within routine performance indicators reported to the Risk and Audit Scrutiny Committee. Separately, actions are formally followed up to confirm that there is evidence of action being taken and the findings of these reviews reported to the Risk and Audit Scrutiny Committee throughout the year. C Domain 5: Communicating Results and Monitoring Progress Principle 15 – Continuous Improvement Is there a process for ongoing improvement? There is ongoing evaluation of performance (performance indicators); a Quality Assurance and Improvement Programme has been developed; emerging risks are evaluated throughout the year; best practices in audit processes are identified and implemented; promotion of continuous professional development for audit staff and stakeholder engagement to review expectations and alignment with organisational objectives and governance requirements. C 30
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Appendix 3 To the members of South Lanarkshire Council, the Chief Executive and Executive Directors As Internal Audit Manager of South Lanarkshire Council, and the Chief Internal Auditor, I am pleased to present my annual statement and report on the effectiveness of the governance, risk management and internal control systems of the Council for the year ended 31 March 2026. Respective responsibilities of management and internal auditors in relation to governance, risk management and internal control It is the responsibility of the Council’s senior management to establish appropriate and sound systems of governance, risk management and internal control and to monitor the continuing effectiveness of these systems. It is the responsibility of the Internal Audit Manager to evaluate and improve the effectiveness of governance, risk management and control processes. The Internal Audit Manager cannot be expected to give total assurance that control weaknesses or irregularities do not exist but can form a conclusion based on work undertaken during the year and knowledge of control systems. The Council’s framework of governance, risk management and internal controls South Lanarkshire Council has a responsibility to ensure its business is conducted in accordance with legislation and proper standards and adheres to and works within a framework of internal values and external principles and standards. The governance framework comprises the systems and processes, culture and values by which the Council is directed and controlled and how it accounts to communities. It enables the Council to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate services and value for money. The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It cannot eliminate all risk of failure to achieve policies, aims and objectives and therefore only provides reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks that would prevent the achievement of South Lanarkshire Council’s policies, aims and objectives, to evaluate the likelihood and potential impact of those risks being realised, and to manage them efficiently, effectively and economically. The work of Internal Audit Internal Audit is an independent and objective assurance function established by the Council to evaluate and improve the effectiveness of governance, risk management and control processes. It objectively examines, evaluates and reports on the effectiveness of these arrangements as a contribution to general governance arrangements and more specifically to demonstrate that the Council is accountable, effective, efficient and transparent. Internal Audit has in place a Quality Assurance Improvement Programme to evaluate and ensure the function conforms with the Global Internal Audit Standards, achieves performance objectives, and pursues continuous improvement. The results of this assessment in 2025/2026 concluded that Internal Audit generally conforms with the Global Internal Audit Standards and has met its approved performance objectives. The section undertakes an annual programme of work approved by the Risk and Audit Scrutiny Committee. Annual audit planning focuses on risks (strategic and risk register) that 31
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could prevent SLC achieving core objectives. Risks and audit ideas are assessed and then prioritised to ensure audit focus is directed towards areas where an independent review would add greatest value to the Council. The Plan is subject to periodic review throughout the year. All internal audit reports identifying risks, areas for improvement and/or non-compliance with expected controls are brought to the attention of management and include appropriate recommendations and agreed action plans. It is management’s responsibility to ensure that proper consideration is given to internal audit reports and that appropriate action is taken to implement audit recommendations. Internal Audit ensure that management has understood agreed actions or assumed the risk of not taking action. Adequate arrangements exist within SLC to escalate any concerns the Internal Audit Manager may have in relation to the level of risk accepted but the presence of an internal audit function does not negate the importance of effective internal controls. A programme of informal and formal follow-up audit assignments provides assurance around the complete and timeous implementation of audit recommendations. All output from internal audit work is reported to the Executive Director Finance and Corporate Resources and the Council’s Risk and Audit Scrutiny Committee. Basis of opinion The audit work completed provides sufficient and appropriate evidence to support this conclusion. Where Internal Audit identified areas of high residual risk during 2025/2026, these were reported to management and to the Risk and Audit Scrutiny Committee, with agreed actions in place. Internal Audit is satisfied that the risk acceptance positions in place during the year were transparent and formally acknowledged. Internal Audit’s audit conclusions and overall opinion on the adequacy of governance, risk management and internal controls are based on the delivery of the approved 2025/2026 Internal Audit Plan. Whilst the work of others has been considered to provide context and oversight, the opinion is based solely on assurance obtained directly from Internal Audit work undertaken during 2025/2026. The opinion is based on a programme of risk-based internal audit work carried out in accordance with the Global Internal Audit Standards, together with consideration of other relevant sources of assurance. Limitation of scope Internal Audit has operated in compliance with the Global Internal Audit Standards during the year. There were no impairments to the independence or objectivity of internal audit activity during 2025/2026, and no restrictions placed on scope, access or reporting. Opinion Based on the work undertaken during 2025/2026, as Chief Internal Auditor, I am satisfied that South Lanarkshire Council has established adequate and effective arrangements for governance, risk management and internal control. Signature:- Yvonne Douglas BA CA 14 May 2026 32
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Report Agenda Item Report to: Risk and Audit Scrutiny Committee Date of Meeting: 23 June 2026 Report by: Executive Director (Finance and Corporate Resources) Subject: Annual Governance Statement for 2024/2025 and Significant Governance Areas Quarter 4 Progress Report 1. Purpose of Report 1.1. The purpose of the report is to:- [purpose] provide the proposed Annual Governance Statement for 2025/2026 for inclusion in the Council’s 2025/2026 Annual Accounts and progress update on significant governance areas for Quarter 4 [1purpose] 2. Recommendation(s) 2.1. The Committee is asked to approve the following recommendation(s):- [ (1) that the Annual Governance Statement attached at Appendix 2, due to be included in the Council’s 2025/2026 Annual Report and Statement of Accounts, be approved; and (2) that progress against the significant governance areas identified within the Annual Governance Statement 2024/2025, attached at Appendix 3, be noted. [1recs] 3. Background 3.1. Each year, the Council undertakes a comprehensive review of the governance arrangements that are required to support the Council’s financial and operational controls. The annual review of governance arrangements informs the Governance Statement, which is included within the Council’s Annual Accounts. 3.2. Good Governance is underpinned by the principles contained in the Delivering Good Governance in Local Government framework and guidance for Scottish Local Authorities which were published in December 2016. The Chartered Institute of Public Finance and Accountancy (CIPFA) and the Society of Local Authority Chief Executives (SOLACE) established the framework. The Council’s governance assurance framework is detailed in Appendix 1. 3.3. To achieve good governance, the Council should be able to demonstrate that its governance structures comply with the principles contained in the CIPFA/SOLACE framework (referred to as ‘the framework’ from here on) and should, therefore, develop and maintain a Local Code of Governance and governance arrangements reflecting these principles. The Council’s Local Code of Corporate Governance is reviewed and re-published annually. Compliance with the Local Code is reviewed as part of the Annual Review of Governance arrangements and informs the Annual Governance Statement. The Risk and Audit Scrutiny Committee considered and approved the updated Local Code at its meeting on 10 March 2026. 3 33
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3.4. The Council’s cross-service Good Governance Group undertakes an annual review of the Council’s governance arrangements through a programme of peer reviews and evaluations to share learning, best practice and ensure consistency in approach (where relevant) across Resources. At the end of the review period, an evaluation of the governance process is completed, and arrangements revised (where relevant) in preparation for the next review. 3.5. Based on good practice highlighted by CIPFA in relation to the publication of Annual Governance Statements, a Good Governance page which provides links to relevant reports and documents is available on the Council’s website. 3.6. The purpose of this report is to provide the Committee with the Annual Governance Statement, which is due to be included within the Council’s 2025/2026 Annual Report and Statement of Accounts and an update on progress against the actions highlighted as significant governance areas in the 2024/2025 Annual Governance Statement. 4. Annual Governance Statement 2025/2026 4.1. The Annual Governance Statement for 2025/2026 is attached in Appendix 2. 4.2. The CIPFA guidance, which was provided via a webinar that took place in February 2021, set out the impacts on governance arrangements which were to be considered when drafting the 2020/2021 statement. This is kept under review each year, and where relevant other factors are considered in the drafting of the Annual Governance Statement. 4.3. The internal assurance opinions, which are also set out in Section 6 of the Governance Statement are as follows:- it is the opinion of the Council’s Internal Audit Manager that, based on the work undertaken during 2025/2026, the Council has established adequate and effective arrangements for governance, risk management and internal control for the year ending 31 March 2026. it is the opinion of the Council’s Risk Management Service that a good level of assurance can be placed on the Council’s strategic risk control environment, and a good level of assurance can be placed on the Council’s operational risk control environment. 4.4. Section 7 of the Annual Governance Statement highlights “Significant Governance Areas” which were identified through the Horizon Scanning process, the Directors’ Statements of Assurance, including the above commentary and a review of the Council’s top-rated risks, and the key actions that are being taken to address these during 2026/2027. The Committee is asked to consider those areas, as briefly summarised below, further detail being included in Section 7 together with the lead Resource. The proposed Significant Governance Areas are all carried forward from the previous statement (originating in different financial years), there being no new ones:- Significant Governance Areas identified in 2025/2026 Comments Information Governance Compliance with statutory and Council performance targets. Carried forward from 2025/2026. 34
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Cyber resilience Compliance with legislative and regulatory policy. Carried forward from 2022/2023 Digital Modernisation Deliver the implementation of new digital solutions that will support the wider transformation of the Council, including the more efficient and effective delivery of internal and external services. Carried forward from 2023/2024 Financial Challenges Reduction in real terms Council funding, resulting in difficulties maintaining front line services and taking forward new initiatives. Carried forward from 2022/2023 Homelessness Whilst there has been an 13.8% decrease in presentations since 2023/2024 to 2025/2026, the demands which continue to be placed upon services remain at levels unprecedented prior to the surge in demand for statutory homelessness services including the need for temporary accommodation. The Service has breached the Unsuitable Accommodation Order in 2025/2026. Presentations levels during 2025/2026 were still high, placing significant pressure on the service and the general services fund. Other factors, such as Prisoner Early Release programmes, increased asylum and refugee levels, the continuing impact of the removal of local connection and the new ‘Ask and Act’ duty within the new Housing (Scotland) Act 2025 could have consequences for the service. Carried forward from 2023/2024 Sustainable Development and Climate Change Deliver the Sustainable Development and Climate Change Strategy. Carried forward from 2022/2023 Economic Strategy Deliver the Economic, ‘Response, Recovery and Renewal’ Strategy. Carried forward from 2022/2023 35
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South Lanarkshire Leisure and Culture (SLLC) Work in partnership with SLLC to develop relationship, in particular around commissioning, use of assets and financial sustainability. Carried forward from 2023/2024 Recruitment and Retention Challenges Delivery of the workforce strategy and plans for 2025 to 2027 and a recruitment strategy to provide a framework of improved recruitment actions and standards. In addition, a strategic review of maximising attendance and enhanced employee support arrangements are in place and well developed. Carried forward from 2022/2023 4.5. The Committee is asked to note that the content of the Annual Governance Statement is subject to scrutiny by the External Auditor and, therefore, may change after approval by the Risk and Audit Scrutiny Committee. However, the final Governance Statement will be resubmitted for approval with the final Annual Accounts. 5. Governance Areas 5.1. Progress on the significant governance areas highlighted within the Annual Governance Statement 2024/2025 is attached at Appendix 3. 5.2. The preparation of the Annual Governance Statement follows completion of the Executive Directors' Statements of Assurance supported by the Resource checklists. 5.3. The Good Governance Group evaluated the governance review process during 2025/2026 and will continue to seek improvements in preparation for the 2026/2027 annual review of governance arrangements. 6. Employee Implications 6.1. Officers will continue to attend the Good Governance Group and will commit time to review and monitor governance and assurance arrangements. 6.2. Officers will be assigned to lead in areas identified as improvement areas. 7. Financial Implications 7.1. There are no financial implications directly associated with this report. 8. Climate Change, Sustainability and Environmental Implications 8.1. There are no significant implications for climate change or sustainability in terms of the information contained in this report. 9. Risk and Other Implications 9.1. The Annual Governance Statement will be subject to review by Audit Scotland as part of their consideration of the council’s Annual Report. 9.2. There are no significant issues in terms of risk associated with this report. 36
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10. Integrated Impact Assessment and Consultation Requirements 10.1. All Resources, through senior officers, participate in the progress, monitoring and review of governance arrangements and the preparation of the Annual Governance. Statement. 10.2. This report does not introduce a new policy, function or strategy or recommend a change to an existing policy, function, or strategy and, therefore, no impact assessment is required. Jackie Taylor Executive Director (Finance and Corporate Resources) 3 June 2026 Link(s) to Council Values/Priorities/Outcomes Values Focused on people and their needs Working with and respecting others Accountable, effective, efficient and transparent Ambitious, self-aware and improving Fair, open and sustainable Excellent employer Priorities We will work to put people first and reduce inequality We will work towards a sustainable future in sustainable places We will work to recover, progress and improve Outcomes Our children and young people thrive Good quality, suitable and sustainable places to live Thriving business, fair jobs and vibrant town centres Caring, connected, sustainable communities People live the healthiest lives possible Inspiring learners, transforming learning, strengthening partnerships Previous References Risk and Audit Scrutiny Committee – 25 June 2025 (Annual Governance Statement 2022/2023 and Quarter 4 Progress Report) Risk and Audit Scrutiny Committee – 10 March 2026 (Good Governance Update) List of Background Papers None Contact for Further Information If you would like to inspect the background papers or want further information, please contact:- Iain Strachan, Head of Administration and Legal Services Ext: 4658 (Tel: 01698 454658) E-mail: iain.strachan@southlanarkshire.gov.uk 37
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Annual Accounts 2026 (1) Good Governance Resource Self-Assessment Draft Statement Final Governance Statement Risk and Audit Scrutiny Committee (RASC) Corporate Management Team (CMT) (11) Group Assurances (8) External Reviews/ Regulation and Inspection Reports (7) Risk Register Monitoring/Reporting (6) Sample checks on Director’s Self-Assessment (4) Complaints/ Comments/ SPSO feedback (3) Executive Directors’ and CMT Statements of Assurance (2) Internal Audit Reports/Annual Assurance Report (17) ALEO Good Governance Self-Assessment and Statement of Assurance (16) Information Governance Self- Assessment and Statement of Assurance (15) Community Planning Partnership – Community Plan Progress Report (14) Connect, Resource and Service Plan Progress Reports (other performance reports) (13) Benchmarking Results (12) Performance, Review and Scrutiny Forum Reporting (18) Equality Duty Reporting Reporting Schedule: RASC – 23 June 2026 (19) Self-Assessment Activity (10) Governance Improvement Plan (9) External Audit Reports (20) Annual Report and Public Performance Reports Good Governance Group Minutes (5) Assessment of compliance with the Local Code of Corporate Governance Appendix 1 38
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Appendix 2 South Lanarkshire Council Annual Governance Statement 2025/2026 1. Scope of responsibility The residents of South Lanarkshire expect the Council to conduct its business in a lawful and transparent way. In particular, the Council has a duty to safeguard public money and account for it; and to continuously review and improve how its functions are discharged, focussing on the priorities of economy, efficiency, and effectiveness. The Council is responsible for putting in place proper arrangements for the governance of its activities, facilitating the effective exercise of its functions including clear arrangements for the management of risk. A Local Code of Corporate Governance (referred to as the “Code” from here on) has been approved and adopted. The Code is reviewed and updated annually and is consistent with the seven core principles of the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Society of Local Authority Chief Executives (SOLACE) framework entitled ‘Delivering Good Governance in Local Government’. This statement explains how the Council has complied with the Code during 2024/2025 and meets legislative requirements to include the Annual Governance Statement within the Annual Accounts. 2. The purpose of the council The Council Plan 2022-2027 - South Lanarkshire Council sets out the Council’s vision, values and objectives and what difference this will make to the residents and communities of South Lanarkshire. The Council Plan which was informed by the views of South Lanarkshire residents and information from many other sources including local community plans, face to face discussions, online feedback, feedback from Community Groups, Community events and surveys was approved by Council in June 2022. The Council Plan was the subject of a Mid Term review, approved by the Executive Committee in April 2025. The Council is also a statutory Community Planning Partner and the Community Plan 2022- 2032 (Community Planning) provides a common vision for the South Lanarkshire Community Planning Partnership and sets out how the partners aim to achieve that vision. The Council has set the framework for strong corporate governance by having a clear vision and values which are outlined below: - Our vision is to improve the lives and prospects of everyone in South Lanarkshire. Our priorities are: • People – we will work to put people first and reduce inequality. • Progress – we will work to recover, progress and improve. • Planet – we will work towards a sustainable future in sustainable places. 39
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Our outcomes will be: • Communities and environment - Caring, connected, sustainable communities. • Education and learning - Inspiring learners, transforming learning, strengthening partnerships. • Health and wellbeing - People live the healthiest lives possible. • Children and young people - Our children and young people thrive. • Housing and land - Good quality, suitable and sustainable places to live. • Our economy - Thriving business, fair jobs and vibrant town centres. Our values are: • Focused on people and their needs • Working with and respecting others • Accountable, effective, efficient and transparent • Ambitious, self-aware and improving • Fair, open and sustainable • Excellent employer 3. The purpose of the Council’s governance framework The governance framework comprises of the culture, values, systems, and processes by which the council is directed and controlled. It describes the way the Council is accountable to communities. It enables the Council to monitor the achievement of its strategic objectives and consider whether these objectives have led to the delivery of appropriate and cost- effective services. The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It is based on an ongoing process designed to identify and prioritise the risks to the achievement of the council’s aims and objectives by evaluating the likelihood and potential impact of those risks being realised. This enables the Council to manage risk efficiently, effectively, and economically. The governance framework has been in place at South Lanarkshire Council for the year ended 31 March 2026 and up to the date of approval of the Annual Report and Accounts. 4. How the Council monitors and evaluates the effectiveness of its governance arrangements? The Council is required to maintain an effective internal audit function which provides independent and objective assurance on the adequacy and effectiveness of governance, risk management and internal control arrangements. The internal audit service operates in conformance with the Global Internal Audit Standards and the CIPFA Code of Practice for the Governance of Internal Audit in UK Local Government. The Council annually reviews the effectiveness of its governance arrangements. The key sources of assurance that inform this review and underpin the statements made within this document are shown in the diagram below. 40
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2025/2026 Annual Governance Assurance Framework 5. Key elements of the Council’s governance assurance framework The Council aims to achieve good standards of governance by adhering to the seven national principles below, which form the basis of the Council’s Code. These principles are used each year to evaluate governance arrangements and identify areas for improvement. The following tables demonstrates how the council has complied with these principles and provides assurance as to how they are met. Significant elements of the systems and processes that comprise the council’s governance arrangements and important changes/ developments are described. Links to the key Council documents referred to below can be found in Section 2 of the Code. Principle A: Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law Links to Council’s values: • Accountable, effective, efficient, and transparent; Working with and respecting others How we do this: • The Council’s values and objectives provide clear direction to councillors and employees and are embedded in all policies and processes. • Standards of conduct and integrity were promoted through the national Code of Conduct for Councillors and by the Standards and Procedures Advisory Forum. This is supplemented by role profiles which have a core accountability to maintain the highest standards of conduct. • The employee Code of Conduct outlines standards of conduct and integrity. All breaches including reported cases of suspected unethical behaviour and non-compliance with the 41
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law/policy were investigated through the employee disciplinary process and the recommended actions taken. • Professional Codes of Conduct ensured that ethical standards were maintained, and all breaches were investigated by the governing body. • To support integrity in decision making, the Council has a number of Committee procedural documents including decision making protocols known as the Scheme of Delegation, terms of reference documents, standing orders on procedures and contracts and financial regulations. • To ensure openness and transparency agendas and Committee reports are published to the council website at least five working days ahead of the scheduled meeting dates and any minutes of decisions taken by the Chief Executive during any period when committee meetings are suspended are publicised on the Council website. Committee meetings are live streamed to the Council’s YouTube channel. • To ensure openness and transparency in decision making processes, all declarations of interest made by councillors at meetings were recorded and made available online. • There are a range of policies such as the Counter Fraud, Bribery and Corruption Policy Statement and Strategy. These continue to be updated to reflect best practice and support a culture of ethical behaviour amongst employees and councillors. • Health and Safety compliance during 2025/2026 was assessed as being within the top rating band of “good”. • Legal Services maintained an overview of legislation and regulations and worked with services to ensure compliance. 42
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Principle B: Ensuring openness and comprehensive stakeholder engagement Links to Council’s values: Accountable, effective, efficient, and transparent; Fair, open, and sustainable; Focused on people and their needs; Working with and respecting others How we do this: • To ensure transparency and openness in decision making processes, all agendas, reports, and decisions were published on the Council’s website and printed copies were available for public inspection for all Committee and Forum meetings (except the Standards and Procedures Advisory Forum). From April 2021 all Committee meetings were live streamed to the Council’s YouTube channel http://bit.ly/SL_Committees. From August 2021 all Forum meetings have been live streamed. From Summer 2025 Area Committees were held on a hybrid basis from the relevant locality, to encourage local resident attendance. • The Committee Management Information System allows members of the public to register and be notified when Committee and forum papers are published. The system also facilitates the creation of online petitions to increase the potential reach of signatories. • The work of the Council and key information from our partners is communicated regularly using a range of communication channels. The South Lanarkshire View pages on the Council website provide a dedicated source of local information and news for communities. A variety of social media channels are used to communicate updates and share information. • A ‘Let’s Talk South Lanarkshire’ campaign was established to engage local people in an initial discussion about their experiences of the pandemic and the ‘Let’s Talk’ brand continues to be used for ongoing dialogue with communities on both the Council and community planning priorities. • The Community Planning Partnership published and completed its first Community Engagement and Participation Strategy 2020-2025 which is also available online in BSL and the Council has produced an online course for employees to complement this. The Strategy established the following community engagement structures: • The Council’s Community Engagement Team worked to increase stakeholder engagement and involvement in decision making processes through the development of new Community Planning Partnership Neighbourhood Plans since 2022 which are aimed at improving outcomes and reducing inequalities. • Community Partnerships were also established in each of South Lanarkshire’s four localities as a resident and community space to raise and act on common issues. These partnerships are a community only space, supported by a Community Planning Partnership Development Officer who ensures there is a report from each locality on every Community Planning Partnership Board meeting Agenda. Each Community Partnership has a community chair which has a seat on the Community Planning Board. • A new participation and engagement strategy is in development to ensure that these structures have the interaction and the voice with all partners that they were set up for. 43
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• The Council carried out circa 50 surveys and engagement activities with residents, employees, and partners, and through the council’s Citizens Panel to inform policy and service delivery. Further information on our surveys is published on the Council’s website. • To ensure inclusivity and help shape service delivery, the Council co-ordinates regular engagement with targeted groups of people such as young people, older people, people with disabilities, unpaid carers, black and ethnic minorities, etc. Groups considered items such as the budget consultation, rent setting and performance reporting. • The Participation Requests and Community Asset Transfer processes continue to support communities to engage with the Council to improve local outcomes. • The Council’s performance Spotlights summarise what the Council has achieved and the Public Performance Reports provide a comprehensive overview of service performance. These, along with the council’s Benchmarking report demonstrate the Council’s commitment to continuous improvement and achieving Best Value; summarise the progress that the council has made in meeting its priorities and how it is performing locally and nationally. • The Council’s Digital Strategy 2022 to 2027 sets out the overall approach to digital for the Council. A key objective within the strategy is to assist those people who are unable to get online to access services digitally. The Council also leads on the Digital Inclusion Sub Group, which reports into the Community Planning Partnership. • A comprehensive range of information on how the Council operates is available on the website. The Freedom of Information Publication Scheme ensures that key information about how the council works is accessible to the public. 44
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Principle C: Defining outcomes in terms of sustainable, economic, social, and environmental benefits Links to Council’s values: Accountable, effective, efficient, and transparent; Fair, open, and sustainable; Focused on people and their needs How we do this: • The Council has a Capital Strategy that has a long-term ambition on future capital investment with approved projects up to 2029/2030 and a capital programme agreed for 2025/2026. This document is underpinned by a suite of Asset Management Plans which are aligned with the council’s objectives and focus on creating an efficient, fit-for-purpose and sustainable core estate that delivers best value in terms of investment, running costs and environmental impact. • The Council Plan 2022 to 2027 and Community Plan 2022 to 2032 have clearly defined economic, social, and environmental outcomes to be delivered during the period. • A Community Wealth Building Strategy setting out the Council’s ambitions in relation to spending, workforce, land and property, finance and building the generative economy was approved in March 2021. A Community Wealth Building Commission was established to oversee the implementation of the Strategy, with the Commission receiving an annual report on progress. A Community Wealth Building Progress Group has been set up to ensure that timescales within the action plan are met. • The CWB Strategy is supported by an action plan which is reviewed annually, with progress reported to the Commission at Q2 and Q4 via the council’s Improve system. • Annual Resource Plans which deliver the objectives of the Council Plan were reviewed and updated. These plans outline the outcomes and actions to be achieved within the year and reference linkages with other key strategic plans of the Council and partnership plans. • The Sustainable Development and Climate Change Strategy 2022-27 was approved by the Council in June 2022 and which sets out the Council’s strategic vision ,themes and priorities in terms of the Council, environment and communities for sustainable development and climate change during the period was developed using the principles of the United Nation’s Sustainable Development Goals and to reduce the council’s contribution to global warming. • The Council’s Climate Change and Sustainability Committee oversees the delivery of the Sustainable Development and Climate Change Strategy 2022-2027,the Council’s transition to carbon neutrality and climate resilience. • The Council’s Procurement Strategy 2023-28 which is complemented by an annual action plan, sets out how value for money, national and local priorities will be delivered. It also demonstrates how the Council will deliver the wider social, economic, and environmental aims of procurement as required by the sustainable procurement duty. • Sustainability principles are embedded in procurement processes and in recognition of the importance of our suppliers in achieving the Council’s aim to become more sustainable. • Strategic Environmental Assessments (SEAs) were completed for all relevant Council led policies, plans and strategies developed during 2025/2026. 45
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• The South Lanarkshire Local Development Plan 2 was adopted by the Council on 9 April 2021. The spatial strategy of the plan is to encourage sustainable economic growth and regeneration, a move towards a low carbon economy, protect the natural and historic environment and mitigate against the impacts of climate change. • Integrated Impact Assessments and a summary of findings from Equality Impact Assessments of the Council’s key decisions on service users, communities and businesses have been published on the Council’s website. • Strategic decisions of the Council have been subject to a Fairer Scotland Impact Assessment which considers how inequalities of outcome can be reduced. 46
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Principle D: Determining the interventions necessary to optimise the achievement of the intended outcomes Links to Council’s values: Accountable, effective, efficient, and transparent; Ambitious, self-aware, and improving; Focused on people and their needs; Working with and respecting others How we do this: • There has been a programme of transformational reviews undertaken over recent years to identify savings and help manage balancing the Council’s budget. This programme is overseen by the Corporate Management Team with individual reviews led by Head of Service and sponsored by Executive Directors. Frameworks are in place for holding discussions with key stakeholders. Savings achievements are monitored monthly and reported to the Corporate Management Team quarterly. • The Financial Strategy which is aligned with the Council’s objectives was updated during the year to reflect the latest internal and external influences. This plan sets out the assumptions in terms of commitments, grant funding and efficiency requirement and demonstrates sound financial management and the ability to address projected funding gaps. • The annual budget setting consultations took place with members of the public, groups and the Council’s partners and the output is provided to Members i to inform the budget process. The annual budget is open to scrutiny and amendment by councillors until the approval of the final budget. • The Council’s Performance Management Framework has ensured that progress against intended outcomes has been regularly reported to Management Teams; Committees; and the Performance and Review Scrutiny Forum. Decisions and actions to address performance issues have been taken and monitored to ensure that they have been effective. • The Council has complied with its statutory and regulatory reporting requirements during the year. • The Public Bodies (Joint Working) (Scotland) Act 2014 sets out those Adult Care Services that are delegated to the Integration Joint Board (IJB) as set out in the South Lanarkshire Health & Social Care Integration Scheme. These services continue to be operationally delivered by the Council in line with the strategic direction set out in the Strategic Commissioning Plan and IJB Directions. • The Council considers the specification and achievement of community benefits, which focus on the health, economic, social, and environmental wellbeing of the South Lanarkshire area, when awarding contracts. • To improve efficiency and effectiveness, the Council is the lead authority for a range of collaborative projects and services delivered through the Clyde Valley Learning and Development Group. We also work closely with, and share services with partners including SLLC, IJB and Seemis. 47
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Principle E: Developing the entity’s capacity, including the capability of its leadership and the individuals within it Links to Council’s values: Accountable, effective, efficient, and transparent; Ambitious, self-aware, and improving; Excellent employer; Focused on people and their needs; Working with and respecting others How we do this: • Leadership Challenge Programme, which is linked to succession planning, is in place. • Learning and Development programmes were revised and employees at all levels can now access optional accredited management qualifications. • Training requirements were identified and online learning and development opportunities including webinars and e-briefings were developed and offered to all councillors. • A review of the approach to agile working has completed, and new guidance has been approved by the Executive Committee, implemented from November 2025. • A range of policies and activities are in place to support the Health and Wellbeing of employees including physical and mental health and these have been regularly communicated. Online wellbeing events were held in response to the new ways of working. • The Council recognises that skilled and motivated employees are a key asset. All employees have an annual performance appraisal which links to the Council values and a Personal Development Plan. The Council offers a range of training interventions to support employee development. • The Council has a comprehensive and coordinated approach to workforce planning which also supports succession planning. Each Resource reviews their workforce plan and related action plan to better understand workforce capacity issues, further challenges, and opportunities to ensure that resources are in the right place, at the right time and people have the right skills. The Council Workforce Strategy and Planning process provides the framework for workforce planning in the Council. The Strategy and Plans are aligned to current and future Council service needs and details the approach by the Council to ensure that the workforce required is in place to meet those needs. • Senior Managers have overseen the annual scrutiny of the Council’s assets through the review of a suite of Asset Management Plans. Service Asset Management Plans have been developed in line with CIPFA guidance and these feed into the Corporate Asset Management Plan which outlines priorities and provides an overview of how the Council has performed in this area. • The Council’s Scheme of Delegation, Financial Regulations, Standing Orders on Contracts and Terms of Reference ensured that Committees, officers, and statutory officers were clear on the decisions that could be made within their area of authority. A Mid-Term Review of these arrangements was concluded in 2024, and these are kept under review by officers with minor adjustments being made as considered appropriate. This is supplemented by councillor’s role profiles which outline the key purpose, specific and core accountabilities for each role. • The Council continues to work with a range of public sector, business, and academic partners to improve outcomes for those living and working in South Lanarkshire. Strategic 48
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Partnerships include the Community Planning Partnership and the Glasgow City Region City Deal. • Local Government Benchmarking Framework (LGBF) results continue to be reported to the Performance Review and Scrutiny Forum, containing all LGBF indicators. As other reporting arrangements mature, the scale of this report may be reduced and the strategic suite of indicators aligned to Council Plan outcomes are featured in an appendix to the Council Plan Q4 report, giving an opportunity to assess the Council’s performance over time and comparative performance in the context of the Council Plan priorities. • Further LGBF indicators will feature in the Council’s public performance reporting, both in the Annual Performance Spotlights and in the PPR pages on the website. These are topic- based and place the LGBF information in a richer context than is possible in the annual LGBF report. The results are analysed and an action plan developed which will be monitored by the Senior Management Team. • To complement this work, an LGBF dashboard has been developed to provide easy access to the LGBF indicators and the narrative that sits alongside them. The dashboard shows time trends for each of the strategic indicators aligned with the council plan outcomes and provides charts comparing SLC performance with both the Scottish and the family group average. • The Council takes a risk-based approach to self-assessment which is used to review and redesign services with a focus on fundamental change. Progress and the impact of improvement activity was reported to the Senior Management Team and the Performance and Review Scrutiny Forum. • The Council has a robust complaints process which is underpinned by national complaints handling standards. Complaints performance was regularly reported to Senior Management and Committee and learning from complaints which is integral to this process is also published on the Council’s website. Complaint handling procedures have been updated in line with national changes and communicated to all employees. 49
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Principle F: Managing risks and performance through robust internal control and strong public financial management Links to Council’s values: Accountable, effective, efficient, and transparent; Ambitious, self-aware, and improving How we do this: • The Council, in partnership with Trade Unions, ensured that safe systems of work were in place through a robust risk assessment process, changes to working methods and supply of personal protective equipment. • The Council has put in place comprehensive arrangements for identifying, evaluating, and controlling significant risks which threaten the council’s ability to meet its objectives to deliver services to the public. There is also a robust process in place for compliance monitoring of the Council’s Risk Management Strategy, Resource Risk Registers and Control Plans. • The annual end of year compliance statement evidenced that all Resources were compliant with Risk Management Strategic requirements. • The Council’s Internal Audit Service which complies with the Global Internal Audit Standards completed an annual programme of risk-based audits with an objective of providing an opinion on the adequacy and effectiveness of the Council’s governance, risk management, and internal control arrangements. Where improvements were required, action plans were developed and monitored and where necessary follow-up audit work completed. • In response to changes in working practices and the introduction of new systems, Internal Audit has advised on key internal controls that should be maintained. • The Information Governance Board is reasonably satisfied that Resources have followed the Information Governance operational arrangements to promote effective arrangements for the safe collection, storage, use and sharing of data, including processes to safeguard personal data, but this will be the subject of further work in 2026/27, including to work through an action plan approved by the Corporate Management Team and the Information Governance Board. • Information security incidents have continued to be monitored and considered for notification to the Information Commissioner’s Office and are reported to the Corporate Management Team on a quarterly basis and to the Council’s Senior Information Risk Officer (the Executive Director of Finance and Corporate Resources) upon internal notification. Throughout the period, the Council’s Data Protection Officer provided advice and assistance to Resources in relation to meeting their obligations under UK General Data Protection Regulations (GDPR). • The system of internal financial control is based upon the Financial Regulations which set out the rules to ensure robust internal control over the council’s finances. Control is maintained through regular management information, management supervision and a structure of delegation and accountability. • External Audit of the Council’s accounts is robust and a “clean audit certificate” was issued for 2024/2025. • Through a well-established Performance Management Framework, the Council has clearly defined processes in place for the identification, monitoring, and reporting of its objectives to ensure continued effectiveness and the achievement of Best Value. Progress is 50
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monitored and reported regularly to both managers and councillors. This includes areas of under-performance and the related improvement actions. • Trustees of the South Lanarkshire Charitable and Educational Trusts received independent legal training setting out their duties and responsibilities in ensuring that the trusts operate in a manner designed to benefit communities. • The Executive Director of Finance and Corporate Resources is a member of the Council’s Senior Management Team and as such, is integral in all major decisions taken by the Council, and in material matters which are submitted to councillors for decision. This involvement fulfils the expectation of CIPFA in terms of the role of the Chief Financial Officer. • The Council’s existing financial management controls and measures continue to provide comfort on the Council’s financial management and resilience. This includes the preparation of a medium-term strategy presented to members regularly as part of the annual budget process, providing members with the information required to assist budget planning. A report on the Council’s Financial Resilience was presented to the Risk and Audit Scrutiny Committee during 2025/2026. 51
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Principle G: Fair, Open and Sustainable; Implementing good practices in transparency, reporting, and audit to deliver effective accountability Links to Council’s values: Accountable, effective, efficient, and transparent; Ambitious, self-aware, and improving; Working with and respecting others How we do this: • The Good Governance Group has completed the annual review of governance arrangements at resource level and in line with the CIPFA/SOLACE Delivering Good Governance Framework, this review having been reported to the Corporate Management Team and some changes to the previous arrangement having been agreed. Governance improvement actions have also been identified and are included in Resource/Service Action Plans. Progress against actions including those highlighted as significant governance areas for action will be reported to the Senior Management Team and Committee. • In the 2024/2025 annual audit report, the external auditor reported that the Council had in place appropriate arrangements to support good governance and accountability, and they were of the view that governance arrangements remained effective in 2024/25. • All Directors completed their annual Statement of Assurance and relevant assurances have been provided. • The Council prepares and publishes an Annual Governance Statement which is aligned with national guidance and reflects on the adequacy and effectiveness of the Council’s governance arrangements. This is independently considered by External Audit and published with the Annual Accounts and separately on a dedicated governance web page. • The annual review of governance arrangements for the Council’s at Arm’s Length External Organisations (ALEOs) and key external service providers has not highlighted any compliance issues. • The annual review of the Local Code of Corporate Governance was completed, and the revised Code was approved by Committee on 10 March 2026 and re-published on the Council’s website. • All agendas, reports and decisions continue to be published (except those exempt under the Local Government (Scotland) Act 1973) on the Council’s website. All Committee and Forum meetings are livestreamed to the Council’s YouTube page http://bit.ly/SL_Committees. • The Risk and Audit Scrutiny Committee considered the adequacy and effectiveness of the Council’s governance arrangements and internal control environment and approved the Annual Governance Statement and Accounts. • Internal Audit provided independent assurance on the effectiveness of internal control, risk management and governance arrangements. The service was delivered in accordance with the Global Internal Audit Standards, ensuring professional objectivity, independence and consistency with recognised best practice. Internal Audit activity has continued to be reported to the Senior Management Team and to the Risk and Audit Scrutiny Committee during 2025/2026. • Outcomes from external audit and inspection activity was reported to the appropriate Committee and action plans were developed for implementation where required. 52
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6. Review of Effectiveness The review of the effectiveness of the Council’s governance arrangements is informed by a range of assurance sources, including the annual opinion of the Internal Audit Manager. This opinion is delivered in accordance with the Global Internal Audit Standards, supported by an internal quality assurance and improvement programme. The review of governance arrangements for 2025/2026 has also considered the following assurance outcomes: - Group Assurances In respect of the Joint Boards, Charities and Companies that fall within the Council’s group boundary, the review of their internal financial control systems is informed by: - • Annual Governance Statements included in the respective financial statements of the Joint Boards. • Assurances from company directors and/or other senior company officials; and • The work of the relevant body’s respective external auditors (and where relevant internal auditors) and other interim reports. The Executive Director of Finance and Corporate Resources, the Council’s Chief Financial Officer, has considered the effectiveness of the group’s internal financial control system for the year ended 31 March 2026. It is the Executive Director of Finance and Corporate Resources’ opinion that reasonable assurance can be placed on its effectiveness. Internal Assurance It is the opinion of the Council’s Risk Management Service that a good level of assurance can be placed on the Council’s strategic risk control environment and a good level of assurance can be placed on the Council’s operational risk control environment. It is the opinion of the Council’s Internal Audit Manager that, based on the work undertaken during 2025/2026, the Council has established adequate and effective arrangements for governance, risk management and internal control for the year ending 31 March 2026. 7. Significant Governance Areas The 2024/2025 Annual Governance Statement identified 9 significant governance areas that the Council were working to address. Progress updates can be found on the Council’s website; see the Significant Governance Areas Quarter 4 update 2024-2025. All 9 of these areas remain as significant areas of action for the Council moving forward into 2026/2027and will continue to be monitored as such. Through the 2025/2026 annual governance review, the following areas, which include an outline of the actions being taken to address them, have been identified as significant areas of work for the Council during 2026/2027: - No. Areas identified in 2025/2026 Actions Lead Officer 1 Information Governance Continue to closely monitor performance on information governance including FOI requests and Subject Access requests Executive Director (Finance and 53
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No. Areas identified in 2025/2026 Actions Lead Officer Compliance with statutory and Council performance targets. and data breaches. Review the guidance provided to staff regarding the safe use of emails and sharing of data supported by regular staff communication. Corporate Resources) 2 Cyber Resilience Compliance with legislative and regulatory policy A programme of actions to maintain cyber security and resilience in 2026/2027 will include: • Refresh/retiral of legacy systems, network equipment and end user devices (mobile phones, PCs) • Programme of security patching of all systems • Compliance with PSN and Cyber Essentials schemes • Incident response exercising and onboarding of Cyber Incident Response partner • Officer training and awareness (e.g., phishing, passwords) • Data security reviews as part of new system installation and security monitoring • Ensure cyber resilience factored into Resource/service area business continuity planning Executive Director (Finance and Corporate Resources) 3 Digital Modernisation Deliver the implementation of new digital solutions that will support the wider transformation of the Council, including the more efficient and effective delivery of services, to internal and external service users. This will include existing implementation of Liquidlogic (Social Work) and HOME Phase 2 (Housing and Technical Resources), adoption of a policy framework for the Council’s use of artificial intelligence, refresh of the Council website and solutions to deliver the outputs of the Customer Engagement and Digital Transformation Reviews, and Executive Director (Finance and Corporate Resources) 54
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No. Areas identified in 2025/2026 Actions Lead Officer a review of recent such implementations to identify areas for improvement. 4 Financial Challenges Exceptional increase in costs, reduction in council funding, resulting in difficulties maintaining front line services The Council continues to face a challenging situation in the medium to long-term because of reduced funding in real terms, rising costs and an increase in demand. The Council has developed a medium- term strategy which identifies budget pressures, future risks and uncertainties, and projects budget gaps to 2027/2028. The Budget Strategy for 2027/2028 and 2028/2029 will be updated and presented to councillors in 2026. The Longer Term Financial Strategy will also be reviewed during 2026/2027. Chief Executive Executive Director (Finance and Corporate Resources) 5 Homelessness The Homelessness Strategic Action Plan approved at H&TR Committee on 26 February 2025, set out the mitigations that the Service would progress in 2025/26. A key focus of these related to actions to help improve the ability to provide appropriate temporary accommodation and avoid breaching statutory requirements on the use of unsuitable accommodation. This involved working in partnership to establish a new Supported Accommodation project at Harriet Street in Rutherglen, which comprises of 15 self-contained units with a community Hub and a new First Stop Emergency accommodation project, Willow Gate at Clydesdale Street in Hamilton. These additions will mitigate the need for unsuitable accommodation, and the Temporary Accommodation Strategic Plan will continue to be reviewed during 2026/27. The strategic action plan details a number of other actions to prevent homelessness and address key issues, such as the Prisoner Early Release programme, increased asylum and Executive Director (Housing and Technical Resources) 55
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No. Areas identified in 2025/2026 Actions Lead Officer refugee levels and removal of local connection. In relation to the new Housing (Scotland) Act 2025, work is being progressed to prepare for the introduction of the new ”Ask and Act “ duty across public bodies which will have implications for the service. 6 Sustainable Development and Climate Change A new Strategy for 2022 to 2027 was approved by the Council in June 2022 together with the Council Plan and Community Plan. An Action Plan was developed as part of the Strategy, and this continues to be implemented and reviewed annually with progress updates being reported to the Climate Change and Sustainability Committee on a 6 monthly basis. Following a period of public consultation, the Council approved in June 2024 its first Local Heat and Energy Efficiency Strategy (LHEES) for the period 2024 to 2028. The LHEES will be a key component of a long-term strategy to reduce of carbon emissions and reduce fuel poverty. Executive Director (Community and Enterprise Resources) 7 Economic Strategy A new Economic Strategy 2022 to 2027 was approved by Council in June 2022 as part of a suite of documents accompanying the draft Council Plan and Community Plan. The vision within the Strategy is “to make South Lanarkshire a flourishing, green, dynamic and equitable place for communities, visitors, businesses and investors”. The Strategy is framed around the 3 themes of sustainable, inclusive, economic development- People, Place and Business. Progress on the delivery of the Action Plan will be measured 6-monthly with the results being reported annually to the relevant committees. The Council continues to lead on local economic growth supporting South Executive Director (Community and Enterprise Resources) 56
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No. Areas identified in 2025/2026 Actions Lead Officer Lanarkshire businesses and promoting inward investment. The Council has prepared masterplans to support the regeneration of Hamilton and East Kilbride and is now working on the delivery of various projects and liaising with a number of external parties. This is the final year of the current strategy, and work has begun on refreshed Economic Strategy with a view to reporting to Committee in Autumn 2026. 8 South Lanarkshire Leisure and Culture Continue to work in partnership with SLLC to develop relationship, in particular around commissioning, use of assets and financial sustainability Executive Director (Community and Enterprise Resources) 9 Recruitment and Retention Challenges The labour market has tightened, and employees have more mobility through agile working which is not necessarily tied to a geographical location. In addition, some older workers have reassessed priorities and taken up an option for partial or full retiral earlier than they would have done previously. As a result, there are a number of skills in short supply nationally and this is putting pressure on local government services. Examples of this include planners, environmental health officers, procurement, Social Care and Education posts. South Lanarkshire Council has experienced these issues and is taking the following actions: - • Workforce Strategy and Plans for 2025 to 2027 • A recruitment strategy to provide a framework of improved recruitment actions and standards. • A strategic review of maximising attendance Chief Executive and all Executive Directors 57
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No. Areas identified in 2025/2026 Actions Lead Officer • Enhanced employee support arrangements are in place and well developed 8. Summary The annual review of governance arrangements across the Council and overall compliance with the Council’s Code demonstrate sufficient evidence that the Code’s principles of Delivering Good Governance in Local Government operated effectively, and that the Council complies with its Code. During 2026/2027 steps will be taken to address the significant governance areas highlighted in this statement to further strengthen the council’s governance arrangements and evidence our commitment to continuous improvement. Councillor Maureen Devlin Leader of the Council Signature: Date: Paul Manning Chief Executive Signature: Date 58
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Appendix 3 Annual Governance Statement 2025/2026 – Significant Governance Areas Quarter 4 Update No. Areas identified in 20252026 Actions Lead Officer Q4 Progress Update 1 Information Governance Compliance with statutory and Council performance targets. Continue to closely monitor performance on information governance including FOI requests and Subject Access requests and data breaches. Review the guidance provided to staff regarding the safe use of emails and sharing of data supported by regular staff communication. Executive Director of Finance and Corporate Resources Information Governance performance is reported quarterly to the Corporate Management Team, including on information and subject access requests and information security incidents. In the 2025/26 FY 96% of FOIs were responded to on time; In the 2025/26 FY 96.3% of EIRs were responded to on time; In the 2025/26 FY 71.98% of Subject Access requests were responded to on time; The cross service Information Governance Board meets regularly, and has received refresher training on information governance. The importance of information governance compliance is promoted regularly within Resources, and also corporately. 59
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No. Areas identified in 20252026 Actions Lead Officer Q4 Progress Update The Council’s RIPSA policy has been updated, reported to this Committee in September, and cascaded to managers. 2 Cyber Resilience Compliance with legislative and regulatory policy A programme of actions to maintain cyber security and resilience in 2025/2026 will include: • Refresh/retiral of legacy systems, network equipment and end user devices (mobile phones, PCs) • Programme of security patching of all systems • Compliance with PSN and Cyber Essentials schemes • Incident response • Officer training and awareness (e.g., phishing) • Data security reviews as part of new system installation and security monitoring Executive Director of Finance and Corporate Resources Refresh programme is ongoing, retiral of legacy systems is monitored and reported on by the IT Security team on a fortnightly basis and to the IT SMT monthly. Enhancements to patching processes continue to follow best practice and provide protections to ever changing threats. Council is aligned to PSN and Cyber Essentials Plus standards. Incident response processes and supply chain is reviewed by the IT management team on an annual basis working with the Resilience team. Ongoing staff awareness driven by regular campaigns such as Cyber Scotland week and posts. Whole organisation Phishing Exercise undertaken and being assessed. Security reviews are embedded into the onboarding of new systems and an enhanced Change Control process 60
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No. Areas identified in 20252026 Actions Lead Officer Q4 Progress Update is followed. 3 Digital Modernisation Deliver the implementation of new digital solutions that will support the wider transformation of the Council, including the more efficient and effective delivery of services, to internal and external service users. This will include the implementation of Liquidlogic (Social Work) and HOME (Housing & Technical Resources) and solutions to deliver the outputs of the Customer Engagement and Digital Transformation Reviews. Executive Director of Finance and Corporate Resources Major system upgrades progressing. Work continues on LiquidLogic with go-live in 2026/27. The Home project went partially live, for Housing in January with the remaining modules due to go live in 2026/27. Formal Project Review Boards are in place for all major projects planned or underway. A Critical Friend Review of major system implementations commenced in Q4 2025/26. Digital Transformation programme continues to develop with governance now established. Project to refresh the Council public website and subsites now underway with go-live in 2026/27, as is Microsoft Copilot Accelerator project, which concludes phase one in in Q4 2025/26. Data maturity assessment completed in Q3 25/26 with the overall Scottish Government development programme concluding in Q4 2025/26. Work to transform Customer Engagement continues business case for a new Customer Experience platform being developed. 61
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No. Areas identified in 20252026 Actions Lead Officer Q4 Progress Update 4 Financial Challenges Cost increases, real terms reduction in council funding, resulting in difficulties maintaining front line services The Council continues to face a challenging financial situation in the medium to long-term because of reduced funding in real terms, rising costs and an increase in demand. The Council has developed a long-term strategy which identifies budget pressures, future risks and uncertainties, and projects budget gaps to 2027/2028 with a high level projection to 2032/2033. The Budget Strategy for 2027/2028 and beyond will be updated and presented to councillors in 2026. This will include the Longer Term Outlook. Chief Executive Director of Finance and Corporate Resources Reports on the Council’s financial position and challenges are regularly presented to the Executive Committee and / Council. Throughout the year, the Budget position for the next 2 years has been reported to elected members in detail, with the first report titled 2026/2027 to 2027/2028 Revenue Budget Strategy presented to the Executive Committee in June 2025. That report focussed on the financial outlook for the next 2 years, highlighting a Budget Gap of £42.000 million. An update to Committee on 5 November 2025 noted that the budget gap had been reduced to £36.315 million across 2026/2027 and 2027/2028, with the shortfall for 2026/2027 specifically totalling £14.146 million. The Council’s Budget Working Group reformed in January 2026 with cross party membership to support preparations for the Council Budget setting in February 2026. Following receipt of the Local Government Settlement, on 25 February 2026, the Council was presented with a report which 62
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No. Areas identified in 20252026 Actions Lead Officer Q4 Progress Update presented a balanced budget for 2026/2027. An amendment to that Budget was approved which allowed the Council to set a Council Tax rate for the coming year, as well as a balanced budget and a list of investments. The implications from setting that Budget on future years was noted at the meeting with the medium-term outlook continuing to be challenging, noting a budget gap of £41.7 million across 2027/2028 and 2028/2029 before savings and Council Tax. The next step is to provide members with a refreshed Medium Term Budget Strategy early in 2026/2027. 5 Homelessness The Council has seen unprecedented need and demand for statutory homelessness services including the need for temporary accommodation. Presentations levels since 2023/24 remain significantly above levels previously experienced, placing significant pressure on the service and the general services fund. A range of mitigation measures was approved by the Housing and Technical Resources Committee in February 2023. These measures have continued to be Director of Housing and Technical Resources The operating context in relation to homelessness continues to be extremely challenging. The prevailing socio-economic conditions adversely impacted upon the ability to prevent homelessness during 2025/2026. This trend has been mirrored nationally. Whilst there has been an 13.8% decrease in presentations since 2023/24 to 2025/26, the demands which continue to be placed upon services remain at levels 63
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No. Areas identified in 20252026 Actions Lead Officer Q4 Progress Update implemented and further refined and developed, with appropriate arrangements established for ongoing monitoring and reporting. Temporary accommodation solutions continue to be explored to minimise breaches of the unsuitable accommodation order and costs incurred through the use of B&B. Other factors, such as Prisoner Early Release programmes, increased asylum and refugee levels, the continuing impact of the removal of local connection and the new ‘Ask & Act’ duty within the new Housing (Scotland) Act 2025 could have consequences for the service. unprecedented prior to the surge in demand. The Homelessness Strategic Action Plan continues to provide the focus for action to help alleviate the pressures The plan has been shared with both the Scottish Housing Regulator and the Scottish Government. The Council continues to engage with the Scottish Government to discuss work being progressed and issues encountered in addressing the Housing Emergency. These actions agreed by committee will continue to be monitored closely, with progress updates provided to committee on a regular basis. 6 Sustainable Development and Climate Change The Sustainable Development and Climate Change Strategy for 2022 to 2027 was developed and presented to Council in June 2022 for approval together with the Council Plan and Community Plan. An Action Plan is developed for each year of the Strategy with progress updates being reported to the Climate Change and Sustainability Committee on a 6 monthly basis. Following a period of public consultation, the council will introduce its first Local Director of Community and Enterprise Resources The Council’s Sustainable Development and Climate Change (SDCC) Strategy 2022 to 2027 and its accompanying 5-year action plan was developed in 2022. An annual Action Plan sitting under the 5-year Plan is produced each year and reported biannually at the Climate Change and Sustainability Committee (CCS). Delivery of the SDCC action plan provides the main focus for the Council’s sustainable development 64
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No. Areas identified in 20252026 Actions Lead Officer Q4 Progress Update Heat & Energy Efficiency Strategy (LHEES) in June 2024. Subject to the availability of finance and taking account of the need to address inequalities and just transition, the introduction of the LHEES will be a key component of a long-term strategy to reduce of carbon emissions, and reduce fuel poverty. activity and incorporates actions from across all five Resources. The 2025/2026 Q2 progress report for the SDCC Strategy was presented at CCS Committee on 11 February 2026 and the Q4 report will be presented at the 17 June 2026 Committee. The Action Plan for 2026/2027 was approved by CCS Committee on 29 April 2026. The action plan assigns each action a thematic focus aligning with the three statutory duties for public bodies: mitigation, adaptation, and acting, better enabling the Council to track action against each duty. A mid-point review for the 5-year SDCCS Action Plan was prepared and presented to CCS Committee in February 2026. Refreshed statutory guidance from the Scottish Government on public bodies climate change duties was published on 6 March 2026. This new guidance will inform action in this area, and the sustainability team are beginning to plan how the Council’s future climate change work beyond SDCCS 2022-27 can best incorporate any new statutory guidance. 65
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No. Areas identified in 20252026 Actions Lead Officer Q4 Progress Update South Lanarkshire Council published its first Local Heat & Energy Efficiency Strategy (LHEES) in July 2024. Housing and Technical Resources have delivered a range of projects in line with the 2025/26 Delivery Plan Actions, including: completion of feasibility studies for potential heat networks in Bothwell Road/Almada Street, Hamilton, and in Carluke and East Kilbride; options appraisal for the decarbonisation of 3 multi-storey blocks; installation of smart load switches in flats in 2 multi-storey blocks; completion of a net zero pathways for social housing; and completion of an Energy and Advice and Retrofit project which included a supplier engagement event, various in-person events, and engagement across retrofit service delivery. 7 Economic Strategy A new Economic Strategy 2022 to 2027 was approved by Council in June 2022 as part of a suite of documents accompanying the draft Council Plan and Community Plan. The vision within the Strategy is “to make South Lanarkshire a flourishing, green, dynamic and equitable place for communities, visitors, businesses and investors”. The Strategy Director of Community and Enterprise Resources There have been number of positive economic indicators through the last financial year, with the investment of the Council a key factor in driving these. There are a number of multi-year projects that underpin the Economic Strategy including the following: 66
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No. Areas identified in 20252026 Actions Lead Officer Q4 Progress Update is framed around the 3 themes of sustainable, inclusive, economic development- People, Place and Business. Progress on the delivery of the Action Plan will be measured 6-monthly with the results being reported annually to the relevant committees. The Council continues to lead on local economic growth supporting South Lanarkshire businesses and promoting inward investment. The Council has prepared masterplans to support the regeneration of Hamilton and Est Kilbride and is now working on the delivery of various projects and liaising with a number of external parties. Work on the masterplans in both East Kilbride and Hamilton is continuing at pace with significant funding for both masterplans now in place. Discussions and agreements with key partners continue and it is clear that the investment by the Council in the masterplans has been fundamental to the progress made. The sale of sites in East Kilbride to third parties shows the strength of the industrial land in terms of stimulating market confidence in South Lanarkshire. The delivery of City Region projects continues in line with programme particularly around the school estate, roads improvement projects and the design development of the Larkhall Leisure Centre replacement project. There has been significant market interest in a number of business use sites which again points to the success of these projects and improving market. There has also been success in securing external funding including the Enabling Business Space fund through the City Region and Regeneration Capital Grant Funding for business space. These are all key indicators that the Council and 67
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No. Areas identified in 20252026 Actions Lead Officer Q4 Progress Update partners have a strong economic base to continue to build from. This is the final year of the current strategy, and work has begun on refreshed Economic Strategy with a view to reporting to Committee in Autumn 2026. 8 South Lanarkshire Leisure and Culture (SLLC) Continue to work in partnership with SLLC to develop relationship, in particular around commissioning, use of assets and financial sustainability. Director of Community and Enterprise Resources A Commissioning Plan for Services Delivered by SLLC was approved at Executive Committee on 25 June 2025. The Commissioning Plan defines the strategic ask of SLLC over the medium to long term, in support of the Council’s own priorities and outcomes. An exercise is now being undertaken to review, update and streamline the legal documentation that underpins the Council and SLLC relationship. Officers are also developing a performance framework to enable SLLC to demonstrate to the Council that they are responding to the ‘ask’ with the Commissioning Plan. A report setting out the proposals was presented to Executive Committee in December 2025. 9 Recruitment and Retention Challenges The labour market has tightened and employees have more mobility through agile working which is not necessarily tied to a geographical location. In addition some older workers have Chief Executive and all Directors The Council Workforce Strategy and Planning process provides the framework for workforce planning in the Council. The Strategy and Plans are aligned to current and future 68
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No. Areas identified in 20252026 Actions Lead Officer Q4 Progress Update reassessed priorities and taken up an option for partial or full retiral earlier than they would have done previously. As a result there are a number of skills in short supply nationally and this is putting pressure on local government services. Examples of this include planners, environmental health officers, procurement, Social Care and Education posts. South Lanarkshire Council has experienced these issues and is taking the following actions:- • Workforce Strategy and Plans for 2025 – 27 • A recruitment strategy to provide a framework of improved recruitment actions and standards. • A strategic review of maximising attendance • Enhanced employee support arrangements are in place and well developed Council service needs and details the approach by the Council to ensure that the workforce required is in place to meet those needs. The Council Workforce Strategy and Plan was approved at Executive Committee, 28 May 2025. Resource workforce plans detail: • The key areas of focus for Resources for 2025 – 27, • The current resource workforce profiles, the key workforce challenges and Actions identified to address challenges. Resource Workforce Plans were approved at committee in September 2025/26. The strategic review of Maximising Attendance has been completed and an action plan to implement the recommendations is progressing. Additional officer and assistants to support maximising attendance have been recruited to the Personnel team. 69
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Report Agenda Item Report to: Risk and Audit Scrutiny Committee Date of Meeting: 23 June 2026 Report by: Executive Director (Finance and Corporate Resources) Subject: Unaudited Annual Accounts 2025/2026 1. Purpose of Report 1.1. The purpose of the report is to:- [purpose] advise members of the requirement to consider the unaudited Annual Accounts of the Council and related Charitable Trusts [1purpose] 2. Recommendation(s) 2.1. The Committee is asked to approve the following recommendation(s):- (1) that the unaudited Annual Accounts of the Council and related Charitable Trust are presented to Members of this Committee for their consideration, and that they will be submitted to Audit Scotland by the deadline of 30 June 2026, be noted. 3. Background 3.1. The Local Authority Accounts (Scotland) Regulations 2014 require the unaudited Accounts to be submitted to the External Auditor no later than 30 June. The Regulations also require elected members to consider the unaudited accounts at a meeting to be held no later than 31 August. 3.2. The Council’s Terms of Reference deems that the Risk and Audit Scrutiny Committee will formally consider the unaudited Accounts prior to submitting them to the External Auditor and making them available for public inspection. 3.3. This report provides the Council’s unaudited Accounts for Members’ consideration, (Section 4), as well as the related Charitable Accounts (Section 5). 4. Unaudited Accounts – South Lanarkshire Council 4.1. The Council’s unaudited Accounts for 2025/2026 are a statutory document which detail key information on the Council’s expenditure and income for the financial year ended 31 March each year. The Annual Accounts show a number of statements including a Comprehensive Income and Expenditure Statement, Balance Sheet, Movement in Reserves, Cash Flow and supplementary notes. They will also include the Annual Statement of Governance which is presented separately to this Committee. 4.2. The Council’s unaudited Accounts 2026 are included as Appendix 1 to this report for consideration. It is noted that the Accounts also contain the Council’s Group Account position. 4 71
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4.3. These unaudited Accounts will be available for public inspection between 1 July 2026 and 22 July 2026, as prescribed by the Local Authority Accounts (Scotland) Regulations 2014. They will be available on the Council’s website and can also be provided to any member of the public upon request. Arrangements will be made to provide any information requested as part of this public consultation. The unaudited Accounts will be on the Council’s website from 1 July 2026 until the date the audited Accounts are published. 4.4. Following the audit of the Accounts across the summer months, the audited Annual Accounts will be brought back to this Committee. The scheduled date for the Committee to approve the audited Accounts is 29 September 2026. 4.5. A copy of the unaudited Accounts will be circulated to all elected members for information following submission of the Accounts to the External Auditor by 30 June 2026. 4.6. Restatement of Monitoring Figures Reported: The Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Accounting Practice (the Code) introduced an Expenditure and Funding Analysis, which must be prepared as part of the main Accounts. The purpose of the statement is to reconcile the monitoring position which will be reported to the Council’s Executive Committee, to the figures reported in the Comprehensive Income and Expenditure Statement, which are presented on an accounting basis. 4.7. A monitoring report on the year-end position of the Council’s Revenue Budget will be presented to the Executive Committee on 24 June 2026. The Executive Committee position shows an additional year-end Revenue Budget surplus of £3.131 million. The report proposes that the Committee approve Transfers to Reserves for a number of spend areas: £1.000 million to support the Health and IJB contributions towards the cost of taking forwards activity to progress Marmot findings, £0.030 million for commitments in Youth, Family and Community Learning Services in 2026/2027, £1.000 million to fund the Local Government Elections into 2027/2028 and that the remainder (£1.101 million) is transferred to Reserves to support future year’s budget strategies. 4.8. This Executive Committee report on the year-end position also seeks approval to transfer funds to reserves to meet future Resource and Corporate commitments. The information contained in the unaudited Accounts takes into account the year-end position reported in the Executive Committee report, with the requested Transfers to Reserves being subject to the approval of the Executive Committee. If these proposed Transfers are not approved, the Accounts will be amended. 4.9. The position shown in Appendix 2 to this report reflects all of the Transfers to Reserves subject to approval at the Executive Committee (24 June 2026), resulting in an overall breakeven position for the year. 4.10. Appendix 2 provides a reconciliation of this final breakeven position, as will be reported to the Council’s Executive Committee (24 June 2026), to the figures included in the Council’s Accounts 2026 (in the Expenditure and Funding Analysis Statement and the Comprehensive Income and Expenditure Account) and include the application of accounting entries in line with the CIPFA Code of Practice. 72
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5. Unaudited Accounts – Charitable Trusts 5.1. In addition to the unaudited Accounts for the Council, this Committee is also required to consider the accounts of the South Lanarkshire Council Charitable Trust. These accounts are attached in Appendix 3 for consideration and will be emailed to all elected members following submission to the External Audit before 30 June 2026. They will also be available on the Council’s website on 1 July 2026 for public inspection. 5.2. These audited Accounts will also be brought back for approval and signature in Autumn 2026, along with the External Audit Members’ report. 6. Employee Implications 6.1. There are no direct employee implications from this report. 7. Financial Implications 7.1. The financial implications are detailed in section 4.7 and the relevant appendices. 8. Climate Change, Sustainability and Environmental Implications 8.1. There are no implications for climate change, sustainability or the environment in terms of the information contained in this report. 9. Risk and Other Implications 9.1. The main risk associated with the Council and Charitable Annual Accounts is a qualified audit report. The risk has been assessed as low due to the detailed preparation in relation to the year-end process, technical training undertaken by key finance staff and the roll out of this to Resource finance staff as appropriate. Finance and Resources work together to achieve key deadlines and actions set in timetables. 9.2. There are no implications for sustainability in terms of the information contained in this report. 10. Integrated Impact Assessment and Consultation Requirements 10.1. This report does not introduce a new policy, function or strategy or recommend a change to existing policy, function, or strategy and therefore no impact assessment is required. 10.2. There was also no requirement to undertake any consultation in terms of the information contained in this report. Jackie Taylor Executive Director (Finance and Corporate Resources) 5 June 2026 Link(s) to Council Values/Priorities/Outcomes Accountable, effective, efficient and transparent Previous References None 73
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List of Background Papers South Lanarkshire Council Annual Accounts 2025/2026 Charitable Trusts’ Annual Accounts 2025/2026 Financial Ledger 2025/2026 and associated working papers Contact for Further Information If you would like to inspect the background papers or want further information, please contact:- Lorraine O'Hagan, Head of Finance (Strategy) Ext: 2601 (Tel: 01698 452601) E-mail:- lorraine.o'hagan@southlanarkshire.gov.uk 74
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1 tors Appendix 1 4 75
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2 Contents Contents Introduction by Chief Executive and Council Leader 3 Management Commentary 4 Annual Governance Statement 25 Statement of Responsibilities 36 Remuneration Report 37 Comprehensive Income and Expenditure Statement 51 Balance Sheet 52 Movement in Reserves Statement 53 Cash Flow Statement 55 Notes to the Financial Statements Note 1 - Accounting Standards Issued but Not Yet Adopted 56 Note 2 - Material items and Expenditure and Income 56 Note 3 - Expenditure and Funding Analysis Note 4 - Reconciliation of Adjustments Between Funding and Accounting Basis Shown in the Expenditure Funding Analysis (EFA) to Those Shown in the Movement in Reserves Statement (MIRS) 57 59 Note 5 - Expenditure and Income Analysed by Nature 60 Note 6 - Revenue From Contracts with Service Recipients 61 Note 7 - Adjustments Permitted Under Accounting Standards and Between Accounting Basis and Funding Basis Under Regulations 61 Note 8 - Financing and Investment Income and Expenditure 65 Note 9 - Taxation and Non Specific Grant Income and Expenditure 65 Note 10 - Movement in Usable Reserves 66 Note 11 - Balance Sheet – Unusable Reserves 68 Note 12 - Members Allowances 71 Note 13 - External Audit Costs 71 Note 14 - Related Parties 71 Note 15 – Leases 73 Note 16 - Grant Income 75 Note 17 - Events After the Balance Sheet Date 75 Note 18 - Property, Plant and Equipment 76 Note 19 - Other Assets - Intangible, Heritage and Assets Held For Sale 81 Note 20 - Capital Expenditure and Capital Financing 82 Note 21 - Short Term Debtors 82 Note 22 - Debtors For Local Taxation 83 Note 23 - Short Term Creditors 83 Note 24 – Provisions 83 Note 25 - Receipts in Advance 84 Note 26 - Public Private Partnerships and Similar Contracts 84 Note 27 - Pension Schemes Accounted for As Defined Contribution Schemes 85 Note 28 - Defined Benefit Pension Scheme 86 Note 29 - Contingent Assets and Liabilities 91 Note 30 - Financial Instruments 92 Note 31 - Disclosure of Nature and Extent of Risks Arising from Financial Instruments 95 Note 32 - Cash Flow Statement Non-Cash Movements 99 Note 33 - Cash Flow Statement Operating Activities – Items Included in Net Surplus / (Deficit) on the Provision of Services That are Investing and Financing Activities 99 Note 34 - Cash Flow Statement Investing Activities 99 Note 35 - Cash Flow Statement Financing Activities 99 Note 36 - Cash Flow Statement Cash and Cash Equivalents 99 Note 37 - Common Good 100 Note 38 - Trust Funds 101 Note 39 - Accounting Policies 102 Note 40 - Critical Judgments in Applying Accounting Policies 109 Note 41 - Assumptions Made About the Future and Other Major Sources of Uncertainty 109 Supplementary Statements Statement 1 - Housing Revenue Account Income and Expenditure Statement 111 Statement 2 - National Non-Domestic Rates Income and Expenditure Statement 113 Statement 3 - Council Tax Income and Expenditure Statement 114 Group Comprehensive Income and Expenditure Statement 115 Group Balance Sheet 116 Group Movement in Reserves Statement 117 Group Cash Flow Statement 119 Notes to Group Accounts 121 Audit Arrangements 128 Glossary of Terms 129 76
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3 Joint Introduction by Chief Executive and Council Leader Welcome to the annual accounts for South Lanarkshire Council, covering the financial year 2025–2026. This key document fulfils two central purposes: it demonstrates how the council has met its statutory obligation to deliver a balanced budget; and it shows how we continue to secure best value in how we spend and invest the public funds entrusted to us. Achieving both objectives continues to be challenging. While there have been signs of improvement in the wider financial position, local government continues to operate under sustained financial pressure, with increasing demand for services and rising costs across all areas of delivery. Despite this, the council agreed and delivered a balanced and responsible budget for 2025–2026. Our total revenue budget for the year was more than £1 billion, supporting the delivery of vital frontline services. In addition, the council approved a general services capital programme of £60.216m and a housing capital programme of £77.303m, ensuring continued investment in infrastructure, housing and community assets. Education continued to account for the largest proportion of revenue expenditure, followed by Social Work services, reflecting the council’s commitment to supporting children, families and vulnerable residents. The remainder of our budget supported services delivered across Community and Enterprise, Housing and Technical Resources, and Finance and Corporate Resources. Alongside maintaining essential services during 2025-2026, as a consequence of decisions taken in setting that year’s budget the council also delivered a significant programme of targeted investment. Members agreed a package supporting £55 million of local improvements, investing in schools, buildings and roads, and progressing major regeneration activity including town centre masterplans for East Kilbride and Hamilton, alongside developments in communities such as Larkhall and Lanark. The agreed budget also allocated £24m to implement an estates review to improve community access to facilities and service delivery, and to work towards net zero. An additional £12m was allocated over three years to improve local roads, with further investments to keep streets and green areas tidy and clean, and to target fly-tipping. These commitments were delivered while maintaining the lowest council tax rates in Scotland, balancing the need for investment with affordability for residents. Council tax in South Lanarkshire remained the lowest in the country when the 2026-2027 budget was agreed in February 2026. The Budget for People and Place delivered nearly £40m in further investments, a mix of one-off and recurring sums targeted at communities, young people and their schools, and support for local businesses. These targeted investments mean South Lanarkshire continues to be a highly attractive place to live, learn and work, supported by strong communities, high-quality education provision and excellent connectivity. Our success is built on partnership. We work closely with our residents, communities and partners, including South Lanarkshire Leisure and Culture and the South Lanarkshire Health and Social Care Partnership, and most particularly with our dedicated workforce. Together, we remain committed to our shared vision: to improve the lives and prospects of everyone in South Lanarkshire. 77
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4 Management Commentary Background The Management Commentary will provide the reader with key messages in relation to the council’s year-end financial position for 2025/2026, as well as details on its performance for the year. As well as providing a summary of the most recent financial year, the commentary also looks forward and provides information relating to the council’s future financial strategy and the challenges, risks and uncertainties it faces in the next few years, while we continue to work hard to maintain service delivery and meet the needs of the people of South Lanarkshire. To set the scene, the first section of the commentary will provide a brief introduction to the council area and its functions, as well as its key ambitions and achievements. Introduction to South Lanarkshire Council The Area The South Lanarkshire area is both urban and rural and covers 686 square miles from the Cathkin Braes to the Pentlands and down through the Southern Uplands. The council faces the dual challenge of catering for the busy towns in the north west (East Kilbride, Hamilton, Cambuslang and Rutherglen), while meeting the needs of residents in Lanark and the rural Clydesdale area. The Council Structure The council provides a range of essential public services across the area through its five Resources, facilitated by the commitment, dedication and ability of our 15,674 employees. The council’s five Resources, their functions and number of employees is detailed below: Council Resource Functions Employees Community and Enterprise Resources Facilities, Waste and Grounds, Leisure and Culture Services, Planning and Regulatory Services, Enterprise and Sustainable Development, Roads Transportation and Fleet 3,363 Education Resources Early Years, Schools, Quality and Improvement 7,296 Finance and Corporate Resources Finance, Information Technology, Personnel, Administration, Legal and Licensing, Communications and Strategy, Audit. 815 Housing and Technical Resources Housing and Property Services 1,407 Social Work Resources Adults and Older People, Children and Families, Criminal Justice 2,793 The Council’s 5 Resources serve around 333,804 people. This population is expected to both grow and age with projections suggesting that this population will rise c34,032 in 2047, an increase of 10.2%. The projected 2047 figures show the largest decrease of 3% in the 65-74 age group and the largest increase of 61% in the 75+ age group. Source: National Records of Scotland The Council overall has the 5th highest population out of the 32 council areas in Scotland. This ranking is projected to continue to 2043. These changes in population in terms of both number and age profile, influence how the council and its partners shape future service design and delivery and feed into the Council Plan. 0 20000 40000 60000 80000 100000 120000 140000 0-17 18-44 45-64 65-74 75+ South Lanarkshire population projection by year and age group (Based on 2022) 2025 2047 78
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5 City Region City Deal The council is part of the Glasgow City Region City Deal partnership. The council’s capital programme, referred to later in this commentary, includes significant infrastructure projects which will bring economic benefit to the council area. Over recent years, the programme of works has included the completion of two significant roads projects (Cathkin Relief Road and the dualling of Greenhills Road in East Kilbride). It also includes numerous Community Growth Area (CGA) projects across the 4 CGAs: Hamilton, East Kilbride, Larkhall and Newton including some large-scale build projects such as a new Primary School and Nursery provision in Jackton and more recently, the Lanark Road Signalisation project in Larkhall and Hairmyres Park and Ride in East Kilbride. The Council Plan The Council Plan, Connect was originally approved by the Council on 15 June 2022, and a mid-term review approved in April 2025. The Council Plan and Community Plan were built using engagement to place residents’ views and aspirations front and centre, with more than 3,300 responses received, representing the largest consultation exercise ever carried out by the council. Connect is the key strategic document that shapes the work of the council. It sets out the key actions to be delivered over the five years from 2022 to 2027, and identifies a long-term vision supported by core values and priorities that influence how the council works. These in turn stretch out into all annual Resource Plans through what is known as the “golden thread”, and on further to Service Plans, and through personal development plans, on to the individual members of staff who are responsible for service delivery. Three cross-cutting themes emerged from the community responses and feedback, and these became the priorities for the new Plan. These were: People (in particular, the impact of poverty and inequalities), Progress (in particular, recovery from the pandemic) and Planet (in particular, sustainable development). Further analysis of what our residents and communities had told us they want, resulted in six outcomes being identified for the Council Plan and the Community Plan: Communities and Environment Caring, connected, sustainable communities Education and Learning Inspiring learners, transforming learning, strengthening partnerships Health and Wellbeing People live the healthiest lives possible Children and Young People Our children and young people thrive Housing and Land Good quality, suitable and sustainable places to live Our Economy Thriving business, fair jobs and vibrant town centres In 2024, with the Council Plan approaching the middle of its five year term, a mid-term review was undertaken to health-check the existing priorities and measures of success in light of the changing internal and external pressures impacting on the council. The mid-term review re-affirmed the council’s commitment to its vision and values. In view of current and future challenges, the priorities of the Plan were revised to acknowledge three themes: the financial challenges facing local government; messages around transformation and service redesign; tackling poverty and prevention as an overarching consideration in the work of the council – fairness and the need to support the most vulnerable Council Performance The council rates its performance using a number of measures which are aligned to the priorities and outcomes set out in the Council Plan. A total of 266 measures have been identified from the 2025-2026 Resource Plans. Of those, 64 (24%) have been nominated as key strategic measures for reporting progress against Connect The Connect 2022-27 Quarter 2 Progress Report 2025/2026 was reported to the Performance and Review Scrutiny Forum on 25 November 2025. The reported performance figures for 2025/2026 are shown below. Status of performance measures Definition Number of performance measures Blue Project complete 5 Green The timescale or target has been met as per expectations 41 Amber There has been minor slippage against timescale or minor shortfall against target 8 Red There has been major slippage against timescale or major shortfall against target 0 Report later/ contextual The information is not yet available or included for information only. 10 Total 64 79
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6 Status of council performance measures The council continues to remain an active participant in the Local Government Benchmarking Framework (LGBF). As well as allowing the council to self-assess its performance across years, the main benefit of the LGBF is the ability to compare performance with peers against an agreed suite of performance indicators, which will assist in achieving best practice and efficiencies. The latest results available (2024/2025, as at March 2026) show that across the 103 indicators in that year’s suite, the council’s performance improved against 47 (46%) indicators, remained the same against 4 (4%) indicators, and declined for 37 (36%) indicators. There are 15 (14%) indicators for which there are no results or trend information available for 2024/2025. This is summarised in the table overleaf. Council performance against 103 indicators (latest available results – 2024/2025) KEY: Number (%) of indicators 2022-23 2023-24 2024-25 South Lanarkshire performance ↑ improving performance in SLC 53 (52%) 51 (50%) 47 (46%) ↓ declining performance in SLC 36 (35%) 42 (41%) 37 (36%) ↔ No change in performance in SLC 4 (4%) 6 (6%) 4 (4%) --- Results/trends not available 9 (9%) 3 (3%) 15 (14%) Comparison with Scottish average ✓ SLC results better than Scottish average 51 (50%) 57 (56%) 53 (52%) X SLC results worse than Scottish average 40 (39%) 40 (39%) 34 (33%) ↔ SLC results same as Scottish average 2 (2%) 2 (2%) 1 (1%) -- Results not available 9 (9%) 3 (3%) 15 (14%) 2022-23 results as at August 2024; 2023-24 results as at September 2025; 2024-25 results as at March 2026 In terms of South Lanarkshire’s figures relative to the Scottish results, our performance was better than the Scottish average for 53 indicators (52%) and worse for 34 indicators (33%). IMPROVe Performance Blue Green Amber Red Report later/ contextual 80
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7 Key Achievements Communities and Environment 81
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8 Education & Learning 82
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9 Health and Wellbeing 83
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10 Children and Young People 84
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11 Housing and Land 85
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12 Our Economy 86
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13 Delivering the Plan and Achieving Best Value • Against an extremely challenging set of socio-economic circumstances, positive performance, against previous year, was achieved in relation to:- the percentage of rent collected which increased from 99.5% Quarter 4 (2023-24) to 100.2% in Quarter 4 (2024-2025); the percentage of gross rent arrears reduced over the same period from 8% Quarter 4 (2023-24) to 7.1% in Quarter 4 (2024-2025). • As part of the Glasgow City Region Smart and Connected Social Places (SCSP) 5G Innovation Fund, South Lanarkshire University Health and Social Care Partnership has engaged with Care Messenger Holdings Ltd to deliver an innovative project that provides commercial LG Smart TV products to residents living within David Walker Gardens care home for older people. Residents who wish to participate in the project can communicate directly via text message or video call with care home staff, their families, befrienders or other professionals, via their TV. Initially 20 TVs were installed within residents' rooms, and this has since been offered to all 50 residents across the whole care home. Early evaluation indicates a positive impact on social isolation and loneliness. • The audited Accounts for 2023-24 were produced and received a clean audit certificate. These were approved for signature by the Risk and Audit Scrutiny Committee before the submission date of 30 September 2024. • With assistance from the Improvement Service, the council developed an SLC-focused Local Government Benchmarking Framework (LGBF) dashboard reflecting the council's strategic priorities as set out in the Council Plan, Connect. Following presentation at the PRSF on 28 May 2024, the dashboard was made available to the public via a link on the performance pages of the council's website. • Year two of the three-year Frontline First Fund (totalling £3.5 million) is fully implemented. Major improvements include refurbishment of Carluke marketplace, Blantyre miner’s monument, ongoing repair of Lanark Loch walkways and shrub bed removal at Westwoodhill, East Kilbride. The council successfully implemented a new financial system at the start of the 2024/25, Oracle’s cloud-based Human Resources (HR) and Finance solution. This was a significant change programme affecting the whole workforce, with a focus on delivering significant improvements to processes, workflow, support agile working, employee self-service and engagement as well as greater levels of automation and improved management information. The council will capture the efficiency improvements to support the council’s financial position. This change project will also provide a platform for continuing service improvements and efficiencies. Financial Performance General Fund Position at end 2025/2026 The council’s General Fund budget for 2025/2026 was approved by the Council on 25 February 2026. This is the operational budget of the Council. At the end of 2025/2026, the Council’s budget was showing an underspend position of £27.115 million. After making a number of agreed Transfers to Reserves totalling £27.115 million, the final position was a breakeven position. The full position for the council’s Resources is detailed in the Revenue Budget Outturn 2025/2026 reported to the Executive Committee on 24 June 2026. This position takes account of the achievement of £6.221 million of the £6.485 million of approved savings for the year, with the remainder being pursued into 2026/2027. The split of the spend across the individual Resources is shown below. This reflects the council’s spend based on its operational structure (including transfers to reserves), with the biggest Resource being Education Resources. The budget is monitored internally on the basis of the five Resources. Council spend across its five Resources (£m) is noted in the diagram and table overleaf. 0 50 100 150 200 250 300 350 400 450 500 550 Community and Enterprise Resource Education Resource Finance and Corporate Resource Housing and Technical Resource Social Work Resource Spend £m Council Spend Across its Five Resources (£m) 87
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14 Council Resource Spend (After Transfers to Reserves) £m Community and Enterprise Resources 131.278 Education Resources 503.799 Finance and Corporate Resources 43.624 Housing and Technical Resources 21.383 Social Work Resources 252.444 This spend against budget is shown in the South Lanarkshire Performance Section of the table below, which shows the Resources’ final outturn position before any transfers were made to reserves for specific funding or commitments. The main variances are explained as: • Community and Enterprise Resources: an underspend of £2.556 million partially offset by monies carried forward into 2026/2027 for committed spend as a result of underspends across the Resource. The resultant position was an underspend of £0.347 million. • Education Resources: an underspend of £1.667 million before transfers to reserves. The resultant position was a breakeven position after transfers to reserves. • Finance and Corporate Resources: an underspend of £0.974 million before transfers to reserves. The resultant position was an underspend of £0.578 million after transfers to reserves. • Housing and Technical Resources: an underspend of £0.123 million before transfers to reserves. The resultant position was a breakeven position after transfers to reserves. • Social Work Resources: an underspend of £5.392 million before transfers to reserves. The resultant position was a breakeven position after transfers to reserves. • Loan Charges: an underspend of £4.364 million before transfers to reserves. The resultant position was an underspend of £4.006 million after transfers to reserves. • Corporate Items: an underspend of £11.725 million before carrying forward monies relating to Service Concessions, Pay Award and multi-year Investments. The resultant position was an underspend of £1.673 million after transfers to reserves. • Council Tax/Council Tax Reduction Scheme (over-recovery of £0.314 million) mainly as a result of the impact of additional houses added in-year. After income from Second Homes transferred to HRA reserves (£0.208 million), the resultant position was an over recovery of £0.106 million. The Comprehensive Income and Expenditure Statement of the Accounts (page 51) sets out the council’s year-end position on expenditure and income, in accordance with accounting requirements. This is different to the way that the council reports its financial monitoring internally as we are required to make a number of accounting adjustments. The Expenditure and Funding Analysis (EFA) on page 57 provides a link between the council's internal financial monitoring reports, and the figures in the Comprehensive Income and Expenditure Statement. The table below shows the reader of the Accounts how to go from the internal Monitoring Report, through to the first column of the EFA (page 57). SLC Annual Budget (Col 1) SLC Actual Outturn (Col 2) SLC Outturn Variance (Col 3) Building the EFA Actual Outturn (Col 2 Data) Building the EFA Move / Remove items not included in Cost of Services Building the EFA Net Expenditure Chargeable to the General Fund and HRA Services £m £m £m £m £m £m Community and Enterprise 131.625 129.069 2.556 129.069 - 129.069 Education 503.799 502.132 1.667 502.132 - 502.133 Finance and Corporate 44.202 43.228 0.974 43.228 1.090 44.318 HRA - - - - 3.988 3.988 Housing and Technical 21.383 21.260 0.123 21.260 - 21.260 Social Work 252.444 247.052 5.392 247.052 - 247.052 88
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15 Joint Boards 1.635 1.635 0.000 1.635 - 1.635 Corporate Items (6.315) (18.040) 11.725 (18.040) - (18.040) Net Cost of Services 948.773 926.336 22.437 926.336 5.078 931.413 Other Income and Expenditure (948.773) (953.451) 4.678 (953.451) (7.210) (960.661) (Surplus) / Deficit on Provision of Services - (27.115) 27.115 (27.115) (2.132) (29.248) The council’s final reported outturn position for the year is a breakeven position (surplus of £27.115 million if you exclude the transfers to reserves at the end of the year – see col 2 above). However, as previously noted, this is not how the surplus is displayed in the various statements in the accounts due to accounting requirements to both exclude and include certain items for both the EFA and CIES, with the final entries being included as part of the Movement in Reserves Statement. The final column in the table shows a surplus of £29.248 million which corresponds to the figures in the first column on the Expenditure and Funding Analysis on page 57. To this, accounting regulations require us to add in other entries for items including pensions, holiday pay, capital financed from revenue and loans fund principal payments (column 2 on EFA page 57) to arrive at a surplus on the provision of services of £21.427 million. To this, we need to take into account accounting requirements to reverse some entries to the balance sheet and also transfers from reserves which were required to fund projects during the year and transfers to reserves at the end of the year which are required to fund commitments in future years. After taking into account all of these items, the final outturn position for the council was a breakeven position, as reported to the Executive Committee. The Movement in Reserves Statement on page 53 reconciles the financial position shown in the Comprehensive Income and Expenditure Statement (page 51) to the movement on the council’s Reserves (pages 53 to 54). During the year, the council drew money down from reserves, to meet current commitments or for agreed use in the 2025/2026 budget strategy, including Pupil Equity Fund for schools, Homelessness projects and funding for multi-year investments. In addition, the council made contributions to reserves for a variety of projects including multiyear investment plans, Marmot Initiative, Pupil Equity funding and to meet future commitments. Money was also set aside for future budget strategies. The balance on the council’s total General Fund Reserve is £153.706 million and includes commitments for future projects as well as elements earmarked for use in future budget strategies. The General Fund Reserve is one of the statutory reserves that the council is permitted to hold and is included in the total usable reserves on the Balance Sheet totalling £176.726 million. A summary of the councils’ total usable reserves is shown in the table below, with full details of all the council’s usable reserves, including transfers to / from each of these reserves in 2025/2026 are detailed in Note 10. £000 £000 Total Usable Reserves 176,726 Less: General Fund (committed inc. budget strategies) 140,666 Repairs and Renewals (inc. Winter Maintenance) 4,631 Capital Funds (inc. Capital Receipts Reserve) 10,704 Insurance Fund 1,022 Housing Revenue Account 6,660 Total Committed Usable Reserves 163,683 Uncommitted General Fund 13,043 Note 10 shows that the council’s General Fund reserve comprises an earmarked element (£140.666 million) and an unearmarked balance of £13.043 million. The council’s Reserves policy identifies that there is no prescribed minimum level of reserves which should be held by a council. The level of Uncommitted General Fund of £13.043 million currently reflects a suitable cushion to contribute towards any unanticipated pressures that the council may face Housing Revenue Account As well as running a General Fund account to deliver services, the council also manages a stock of housing. The annual expenditure on the council houses (£138.138 million in 2025/2026) and the total income received (£134.150m in 2025/2026), are held as a ring-fenced Housing Revenue Account (HRA). Any surplus funds are held in a Reserve on the council’s balance sheet and can be used in future years. The details are shown on pages 111-112. At the end of financial year 2025/2026, there was an overspend of £3.988 million on the Housing Revenue Account. This was funded from the Housing Revenue Account Reserve. The Reserve was also increased by £0.208 million for income received through Council Tax from owners of second homes. These transfers mean a decrease of £3.780 million in the Housing Revenue Reserve, taking its total to £6.660 million at the end of 2025/2026. These monies will be carried forward to future years to fund the increased volume and cost of repairs, implementation costs related to the new housing management I.T. system and the continuation of the housing investment programme, as well as maintaining a reasonable level of reserves. 89
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16 The council has a medium to long term financial business plan for the HRA. This ensures the affordability of the council’s approved Strategic Housing Investment Programme (SHIP), a key part of the Local Housing Strategy (LHS) process. The strategic outcomes identified in the LHS, guide investment priorities outlined within the SHIP, including the increase in supply of affordable housing in areas of housing pressure, as well as coping with the needs of an ageing population. The Balance Sheet Taking the year’s activity into account, the council’s balance sheet (page 52) shows the position as at 31 March 2026 and brings together the council’s year end balances including the assets owned, the monies owed to and by the council and the reserves available to the council for use in future years. The position at the end of March 2026 as well as the previous year for information, is shown overleaf. The main change year on year is the decrease in Property, Plant and Equipment within Long Term Assets. This mainly reflects the revaluation of Council Dwellings. In addition, there has also been an increase in Net Current Liabilities reflecting the amount of short term temporary borrowing undertaken during the financial year (which is offset by a reduction in long term borrowing) while current interest rates remain high. The Pension Liability is indicative of a broad position; however the reader should be aware that the council is meeting its pension costs on an annual basis. The council’s assets and liabilities are funded by an equivalent level of Reserves. These Reserves comprise Unusable Reserves of £2,351.0 million (maintained for accounting purposes only) and Usable Reserves of £176.8 million which as the name suggests, are those which the council can use to support service delivery through its Revenue and Capital budgets. The detail of these Reserves is noted in the Movement in Reserves Statement on page 53 with more detail provided in Note 10 (page 66) and the Accounting Policies (pages 102 to 108). It is expected that future revenue income, alongside the council’s budgeting and planning processes, will ensure management of future liabilities. It is therefore considered appropriate to adopt a going concern basis for the preparation of these financial statements. Capital Programme The council operates two distinct capital programmes: the General Services Capital Programme and the Housing Capital Programme. The spend across Resources and Housing is shown in the graphic (and the table) below. 90
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17 The General Services Capital Programme spend was £57.570 million in 2025/2026, equating to approximately 96% of the original capital budget approved at the start of the financial year. The underspend reflects a variation from the expected timing of spend across a number of projects within multi-year programmes. The main projects contributing to the underspend include the East Kilbride Town Centre Masterplan, Hamilton Junctions Improvement, Calderglen Pump Track, Clyde Walkway, SLC Industrial Infrastructure – Energy Efficiency (Cathcart Road) , Roads Investment Programme, Active Travel Infrastructure, Safe Routes, Larkhall Leisure Centre Secondary Schools, Prioritised Urgent Investment, Lifecycle Replacement Schools and Fire Alarm System Upgrades Project budgets have been carried forward into 2026/27 to complete these projects where appropriate. Significant project spend during the year has been incurred on several projects including: • Roads Investment Plan (£12.455m), • SLLC Leisure and Culture Transformation Fund (£8.121m), • Shawfield Remediation (£6.131m), • Hairmyres park and Ride (£2.023m), • Active Travel Infrastructure Fund (£2.255m), • East Kilbride Town Centre Masterplan (£1.675m), • Prioritise Urgent Investment Fund (£1.532m), • Education Digital Futures (£1.102m). 46.760 4.041 0.597 5.5490.623 85.782 Spend per Resource £m Community and Enterprise Resources Education Resources Finance and Corporate Resources Housing and Technical Resources Social Work Resources Housing Capital Programme Council Resource Spend £m Community and Enterprise Resources 46.760 Education Resources 4.041 Finance and Corporate Resources 0.597 Housing and Technical Resources 5.549 Social Work Resources 0.623 Housing Capital Programme 85.782 91
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18 The new Hairmyres Train Station Park and Ride is shown in the image below. Lanark Lifestyles Gym, as part of the Leisure and Culture Transformation Fund, is shown in the image below. 92
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19 The General Services Programme has been funded from a combination of grants from various funding bodies including Scottish Government and partner organisations (£32.228 million), borrowing (£10.288 million), Developer Contributions (3.534 million), capital receipts (£0.700 million), revenue contributions (£1.042 million) and specific reserves (£0.992 million). The Housing Capital Programme spent £85.782 million in 2025/2026, 98% of its revised budget target. The underspend on kitchens and heating projects partially offset by overspends in external fabrics, windows and doors and environmental works. The planned land settlement for the site on Almada Street (£0.720 million) could not be concluded by 31 March and settled in early April 2026 and as a result the expenditure has slipped into 2026/2027. The focus of Housing Capital Programme expenditure on council housing stock was on the provision of additional housing and improvement and environmental works. The Housing Programme is ring-fenced and funded by the Housing Revenue Account, Government Grant, Borrowing and house/land sales. The new build Eaglesham View site in East Kilbride is shown in the image below. The Capital Budget Monitoring Final Outturn – 2025/2026 for both Programmes was reported to the Executive Committee on 24 June 2026. The council is able to regulate its own capital spending limits within a Prudential Framework recommended by CIPFA and endorsed by the Scottish Government. As such, the repayment of borrowing, which falls as a future commitment against the council’s Revenue Budget, must be affordable. The repayments form part of the approved revenue budget, and the spend and debt repayments remain within the Prudential Framework limits approved by the council. The ratio of financing costs to the council’s Net Revenue Stream for 2025/2026 (Government Grant plus Council Tax Income) is 4.70%. Key Financial Ratios In order to monitor financial performance and to supplement the figures contained within the Annual Accounts, the council prepares a number of financial ratios as a result of best practice guidance contained within the Prudential Code for Capital Finance in Local Authorities. These relate to the borrowing the council undertakes. The following table provides information on these indicators: Financial Indicator and Commentary 2025/2026 Forecast £m 2025/2026 Outcome £m Debt/Long-term Borrowing Capital Financing Requirement (CFR) for the current year. External Debt Levels for the current year. (Excluding Accrued Interest) 1,630 1,357 1,617 1,338 93
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20 Gross Borrowing (External Debt Levels excluding PPP Finance Lease Liability) 1,033 1,012 Ratio of Financing Costs to Net Revenue Stream (as a %) which indicates how much of the council’s net revenue budget is used for servicing debt: • General Services • Housing Revenue Account 4.86% 10.81% 4.70% 11.42% The Capital Financing Requirement (CFR) shows how much the council needs to borrow in order to fund its capital expenditure. The actual CFR for the year is £13 million less than forecast mainly due to a reduction in borrowing required to fund the 2025/2026 capital programmes. This reflects the timing of spend across both capital programmes (General Services and HRA). The ratio of financing costs to net revenue stream for General Services shows what percentage of our income from Council Tax and Government Grant is used to pay for the costs of borrowing. For the Housing Revenue Account, the ratio shows how house rents have been used to pay for the cost of borrowing. For General Services the ratio is lower than forecast. This is mainly due to statutory charges for the repayment of leases and the PPP liability being lower than forecast. For the Housing Revenue Account, the ratio is higher than forecast due to income being lower than forecast. Financial Planning The council continues to face financial pressures as a result of pessimistic forecasts of government grant and continuing demand for services. Increasing cost burdens due to pay awards and above average contract inflation over recent years have continued to reduce the spending power of council budgets. Financial Planning is a key tool in managing these pressures. While the Council has Long Term Revenue and Capital Budget Strategies in place, a Revenue Budget Strategy is prepared in advance of the new financial year along with an annual report on the Prudential Indicators, the Treasury Management Strategy and the Annual Investment Strategy. This suite of reports lays out the position for the council across the coming years and identifies the key areas of financial risk and pressure. A new Capital programme is also approved each year, based on the Council’s ambitious Capital investment plans for the coming years included in the Capital Investment Strategy, but also taking account of any new areas of investment to be considered since the Strategy was drafted. A Medium-Term Revenue Financial Strategy covering 2027/2028 and 2028/2029 will be presented to the Executive Committee on 24 June 2026, including the refreshed Longer-Term strategy. Financial Outlook including Risks and Uncertainties Outlook The council approved its 2026/2027 revenue budget of £1,087 million on 25 February 2026. For the coming years, the outlook for Scottish Public Finances is not positive. Local government continues to face recurring pressures in excess of funding uplifts, such as inflation, annual pay deals and growing demand for services, and also deliver previously agreed national commitments. A report prepared by Audit Scotland and released by the Accounts Commission in May 2025 (Local government budgets 2025/26 | Audit Scotland), reaffirms that Scottish councils are facing a significant gap between the money needed to deliver local services and the money they have available. Together, all 32 councils were noted as having a gap of £647 million for 2025/2026 and a further £528 million for 2026/2027. The scale of the financial challenge remains significant. Given the magnitude of the national local government Budget Gap, it is acknowledged that there requires to be a fundamental re-think of what public services in Scotland can do to manage their budgets moving forward, including what councils can deliver by way of services to the public. At a local level, this means we are having to consider the things we do as a Council, how we do them and where we deliver them from. On 24 June 2026, a Revenue Budget Strategy covering the period 2027/2028 to 2028/2029 was presented to the Executive Committee, giving a medium term view on the financial position of the Council over the next 2 years. This included a Budget Gap over the next two years of over £26 million. In addition to looking at the Budget Strategy covering 2027/2028 and 2028/2029, it also considered a longer-term outlook and presented a picture of the potential Budget Gaps that the Council could be facing over the next 10 years including a number of high level assumptions in relation to key budget areas. The result of these assumptions shows a Budget Gap across the next 10 years of over £180 million. Given the magnitude of the Budget Gap, we had to manage for 2026/2027 and then the level we are facing for the coming years, the council has acknowledged that fundamental change is required. Difficult decisions will continue to be required to balance the Council’s budget. As an organisation, we know we will need to significantly change what we deliver over the coming years with the focus being on statutory services. There will likely be areas where we will need do consider whether we can continue to deliver services and if so, what those services will actually look like. 94
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21 One way of managing the Budget Gap is through Transformational Reviews ongoing across the Council. South Lanarkshire Council is already delivering a number of transformation programmes that have the potential to change how services are delivered and how the Council operates. These programmes span organisational redesign, estates, digital development, system modernisation and partnership working. Recent initiatives include participation in the Marmot programme, the Third Sector Review, Estates Review, systems developments and a programme of service reviews contributing towards efficiency and savings targets. Together, these programmes demonstrate a sustained commitment to improvement and transformation across the organisation. The progress of these reviews is reported regularly to the Performance and Review Scrutiny Forum, or to Committee specifically if a decision is required to allow the review to progress, to ensure visibility and buy-in from elected members. Risks and Uncertainties There are a number of other risks and uncertainties faced by the council. In looking at these areas, it is important to note the council’s governance arrangements. These are detailed in the Annual Governance Statement which sets out the proper arrangements for the governance of the council’s activities, facilitating the effective exercise of its functions and including clear arrangements for the management of risk. The Annual Governance Statement can be found on page 25. The council maintains a Risk Register which is updated on a regular basis by senior management and is presented to elected members. The latest reported version of the Risk Register was the Year-End Risk Management Report - 2024/2025 and Review of Council's Top Risks - 2025/2026 reported to committee in September 2025. The risk register is one of the key sources of assurance that inform the council’s annual review of its governance arrangements. The council’s Top Risks (Very High level) are provided below. 1. The Budget Gap that the Council faces across the medium term continues to be the biggest risk faced by the Council. The Budget Gap is the result of the cumulative real terms reductions in Government funding as well as the ongoing impact of increased demand, increased cost of services due to inflation, and increased staff costs resulting from pay awards. The potential of reduced fees/income being received by the Council would further add to budget pressures across Services. 2. Housing Emergency - inability of the Council to effectively provide accommodation and support to households who are homeless and people who arrive in South Lanarkshire as part of refugee resettlement and the asylum seeker dispersal programmes (including those for unaccompanied children) 3. The Council’s operations are affected by fraud, theft, organised crime and cyber attacks 4. Inability to take the necessary action due to funding constraints, to combat climate change, and work toward achieving net zero carbon emissions by 2045, thereby contributing to negative and irreversible environmental, social and economic impacts on the Council and its residents 5. The Council, in conjunction with its partners, is unable to provide the required support to reduce the overall impact of the cost-of- living crisis on households in South Lanarkshire, resulting in increasing levels of poverty, debt, and poorer outcomes for people These key risks as well as the remainder of the council’s high-level risks are shown in the list and graphic below: • Due to the fragility and lack of capacity of the third and private sector market, providers are potentially unable to sustain their business models, which could result in a deterioration of their service standards and/or provider failure. This could result in the Council seeking alternative service provision in a reduced marketplace to allow us to meet the demand for services. • Information governance not subject to adequate control • The Council fails to comply with or meet the expected standards of scrutiny and deliver the improvement actions identified by regulatory bodies • Inability of the Council to manage the impacts that increasing frequency and intensity of adverse weather events such as floods, storms, cold and freezing conditions and extreme heat, water shortages and wildfires has on Council services, budgets and our communities • Inability to ensure public protection and safety • The Council does not have the appropriate resilience measures, emergency or business continuity plans in place to respond efficiently as a Category 1 Responder to a civil emergency • Procurement activity is affected by supply chain issues; a lack of resources; non-compliance or legal challenge • The provision of Council services is disrupted because of industrial action • Lack of capacity and skills to meet increased service demands • Inability to maintain infrastructure, assets and properties in a well-maintained condition and difficulties achieving the objectives of asset and property reviews • Historic childhood abuse 95
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22 Taken together, these risks and external influences represent a fast-changing environment, bringing opportunities as well as challenges, and driving the requirement for the council and its services to be open to new ways of working, to innovation and continuous improvement. Sustainable Development and Climate Change Sustainable development and climate change action is governed through the council's Climate Change and Sustainability Committee which has decision making powers to help to accelerate the pace and scale of action needed in response to the climate emergency and meet challenging climate change national targets. Our commitment to sustainable development begins with integrating climate considerations into our policies, plans, and decision- making processes. Sustainable development and Climate Change is embedded within the Council Plan, Community Plan as well as other relevant plans, policies and strategies. The council's Sustainable Development and Climate Change Strategy (SDCCS) 2022 - 2027 sets out our overall approach to sustainable development and the challenges and opportunities of climate change. 96
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23 The Climate Change (Scotland) Act 2009 has set a 2045 target for net-zero emission of all greenhouse gases. As a public sector body, we have a legislative requirement to contribute to this target and are required to set and report on our own carbon reduction targets. We are committed to measuring, monitoring, and reporting our greenhouse gas emissions, as well as the progress we make in achieving our carbon reduction targets. The most recent carbon footprint, for 2024-25 shows that reductions of 70.6% have been achieved since the baseline year of 2005-06. In addition to mitigating our own impact, we understand the importance of adaptation to climate change. Failure to meet sustainable development and climate change objectives was identified as one of the council’s top risks - these risks relate to economic, social and cultural influencers. 97
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24 Supplementary Information Common Good and Trust Funds The council operates Common Good and Trust Fund accounts which record the financial transactions in relation to funds the council administers. These do not represent charges or income to Council Tax payers. These are shown in pages 100-101 of the Accounts. Our Group The council has adopted the recommendations of the Accounting Code of Practice in the United Kingdom 2025/2026 and has produced a full set of Group Accounts. These accounts incorporate any material balances from identified associates of the Council, and include a Group Movement in Reserves Statement, a Group Balance Sheet, a Group Expenditure Funding Analysis Statement, a Group Income and Expenditure Statement and a Group Cash Flow. By including the Group entities along with the council’s own Accounts, the effect on the Group Balance Sheet is an increase in both Reserves and Net Assets of £122.036 million. This represents the council’s share of the net assets in these entities. The Group Accounts, including details of associates are included in pages 115-127. There has been no change to the Group membership since 2024/2025. More Information Further information about South Lanarkshire Council can be obtained on the Council’s website www.southlanarkshire.gov.uk. Alternatively, contact Finance and Corporate Resources, Floor 4, Almada Street, Hamilton ML3 0AB Jackie Taylor Executive Director, Finance and Corporate Resources Paul Manning Chief Executive Councillor Maureen Devlin Leader of the Council 98
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25 South Lanarkshire Council Annual Governance Statement 2025/2026 1. Scope of responsibility The residents of South Lanarkshire expect the Council to conduct its business in a lawful and transparent way. In particular, the Council has a duty to safeguard public money and account for it; and to continuously review and improve how its functions are discharged, focussing on the priorities of economy, efficiency, and effectiveness. The Council is responsible for putting in place proper arrangements for the governance of its activities, facilitating the effective exercise of its functions including clear arrangements for the management of risk. A Local Code of Corporate Governance (referred to as the “Code” from here on) has been approved and adopted. The Code is reviewed and updated annually and is consistent with the seven core principles of the Chartered Institute of Public Finance and Ac- countancy (CIPFA) and the Society of Local Authority Chief Executives (SOLACE) framework entitled ‘Delivering Good Governance in Local Government’. This statement explains how the Council has complied with the Code during 2024/2025 and meets legislative requirements to include the Annual Governance Statement within the Annual Accounts. 2. The purpose of the council The Council Plan 2022-2027 - South Lanarkshire Council sets out the Council’s vision, values and objectives and what difference this will make to the residents and communities of South Lanarkshire. The Council Plan which was informed by the views of South Lanark- shire residents and information from many other sources including local community plans, face to face discussions, online feedback, feedback from Community Groups, Community events and surveys was approved by Council in June 2022. The Council Plan was the subject of a Mid Term review, approved by the Executive Committee in April 2025. The Council is also a statutory Community Planning Partner and the Community Plan 2022-2032 (Community Planning) provides a common vision for the South Lanarkshire Community Planning Partnership and sets out how the partners aim to achieve that vision. The Council has set the framework for strong corporate governance by having a clear vision and values which are outlined below: - Our vision is to improve the lives and prospects of everyone in South Lanarkshire. Our priorities are: • People – we will work to put people first and reduce inequality. • Progress – we will work to recover, progress and improve. • Planet – we will work towards a sustainable future in sustainable places. Our outcomes will be: • Communities and environment - Caring, connected, sustainable communities. • Education and learning - Inspiring learners, transforming learning, strengthening partnerships. • Health and wellbeing - People live the healthiest lives possible. • Children and young people - Our children and young people thrive. • Housing and land - Good quality, suitable and sustainable places to live. • Our economy - Thriving business, fair jobs and vibrant town centres. Our values are: • Focused on people and their needs • Working with and respecting others • Accountable, effective, efficient and transparent • Ambitious, self-aware and improving • Fair, open and sustainable • Excellent employer 99
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26 3. The purpose of the Council’s governance framework The governance framework comprises of the culture, values, systems, and processes by which the council is directed and controlled. It describes the way the Council is accountable to communities. It enables the Council to monitor the achievement of its strategic objectives and consider whether these objectives have led to the delivery of appropriate and cost-effective services. The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It is based on an ongoing process designed to identify and prioritise the risks to the achievement of the council’s aims and objectives by evaluating the likelihood and potential impact of those risks being realised. This enables the Council to manage risk efficiently, effectively, and economically. The governance framework has been in place at South Lanarkshire Council for the year ended 31 March 2026 and up to the date of approval of the Annual Report and Accounts. 4. How the Council monitors and evaluates the effectiveness of its governance arrangements? The Council is required to maintain an effective internal audit function which provides independent and objective assurance on the adequacy and effectiveness of governance, risk management and internal control arrangements. The internal audit service operates in conformance with the Global Internal Audit Standards and the CIPFA Code of Practice for the Governance of Internal Audit in UK Local Government. The Council annually reviews the effectiveness of its governance arrangements. The key sources of assurance that inform this review and underpin the statements made within this document are shown in the diagram below. Annual Accounts 2026 (1) Good Governance Resource Self-Assessment Draft Statement Final Governance Statement Risk and Audit Scrutiny Committee (RASC) Corporate Management Team (CMT) (11) Group Assurances (8) External Reviews/ Regulation and Inspection Reports (7) Risk Register Monitoring/Reporting (6) Sample checks on Director’s Self-Assessment (4) Complaints/ Comments/ SPSO feedback (3) Executive Directors’ and CMT Statements of Assurance (2) Internal Audit Reports/Annual Assurance Report (17) ALEO Good Governance Self-Assessment and Statement of Assurance (16) Information Governance Self- Assessment and Statement of Assurance (15) Community Planning Partnership – Community Plan Progress Report (14) Connect, Resource and Service Plan Progress Reports (other performance reports) (13) Benchmarking Results (12) Performance, Review and Scrutiny Forum Reporting (18) Equality Duty Reporting Reporting Schedule: RASC – 23 June 2026 (19) Self-Assessment Activity (10) Governance Improvement Plan (9) External Audit Reports (20) Annual Report and Public Performance Reports Good Governance Group Minutes (5) Assessment of compliance with the Local Code of Corporate Governance 100
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27 5. Key elements of the Council’s governance assurance framework The Council aims to achieve good standards of governance by adhering to the seven national principles below, which form the basis of the Council’s Code. These principles are used each year to evaluate governance arrangements and identify areas for improve- ment. The following tables demonstrates how the council has complied with these principles and provides assurance as to how they are met. Significant elements of the systems and processes that comprise the council’s governance arrangements and important changes/ developments are described. Links to the key Council documents referred to below can be found in Section 2 of the Code. Principle A: Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law Links to Council’s values: • Accountable, effective, efficient, and transparent; Working with and respecting others How we do this: • The Council’s values and objectives provide clear direction to councillors and employees and are embedded in all policies and processes. • Standards of conduct and integrity were promoted through the national Code of Conduct for Councillors and by the Stand- ards and Procedures Advisory Forum. This is supplemented by role profiles which have a core accountability to maintain the highest standards of conduct. • The employee Code of Conduct outlines standards of conduct and integrity. All breaches including reported cases of suspected unethical behaviour and non-compliance with the law/policy were investigated through the employee disciplinary process and the recommended actions taken. • Professional Codes of Conduct ensured that ethical standards were maintained, and all breaches were investigated by the governing body. • To support integrity in decision making, the Council has a number of Committee procedural documents including decision making protocols known as the Scheme of Delegation, terms of reference documents, standing orders on procedures and contracts and financial regulations. • To ensure openness and transparency agendas and Committee reports are published to the council website at least five working days ahead of the scheduled meeting dates and any minutes of decisions taken by the Chief Executive during any period when committee meetings are suspended are publicised on the Council website. Committee meetings are live streamed to the Council’s YouTube channel. • To ensure openness and transparency in decision making processes, all declarations of interest made by councillors at meetings were recorded and made available online. • There are a range of policies such as the Counter Fraud, Bribery and Corruption Policy Statement and Strategy. These continue to be updated to reflect best practice and support a culture of ethical behaviour amongst employees and council- lors. 101
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28 • Health and Safety compliance during 2025/2026 was assessed as being within the top rating band of “good”. • Legal Services maintained an overview of legislation and regulations and worked with services to ensure compliance. Principle B: Ensuring openness and comprehensive stakeholder engagement Links to Council’s values: Accountable, effective, efficient, and transparent; Fair, open, and sustainable; Focused on people and their needs; Working with and respecting others How we do this: • To ensure transparency and openness in decision making processes, all agendas, reports, and decisions were published on the Council’s website and printed copies were available for public inspection for all Committee and Forum meetings (except the Standards and Procedures Advisory Forum). From April 2021 all Committee meetings were live streamed to the Council’s YouTube channel http://bit.ly/SL_Committees. From August 2021 all Forum meetings have been live streamed. From Summer 2025 Area Committees were held on a hybrid basis from the relevant locality, to encourage local resident attendance. • The Committee Management Information System allows members of the public to register and be notified when Committee and forum papers are published. The system also facilitates the creation of online petitions to increase the potential reach of signatories. • The work of the Council and key information from our partners is communicated regularly using a range of communication channels. The South Lanarkshire View pages on the Council website provide a dedicated source of local information and news for communities. A variety of social media channels are used to communicate updates and share information. • A ‘Let’s Talk South Lanarkshire’ campaign was established to engage local people in an initial discussion about their experiences of the pandemic and the ‘Let’s Talk’ brand continues to be used for ongoing dialogue with communities on both the Council and community planning priorities. • The Community Planning Partnership published and completed its first Community Engagement and Participation Strategy 2020-2025 which is also available online in BSL and the Council has produced an online course for employees to com- plement this. The Strategy established the following community engagement structures: • The Council’s Community Engagement Team worked to increase stakeholder engagement and involvement in decision making processes through the development of new Community Planning Partnership Neighbourhood Plans since 2022 which are aimed at improving outcomes and reducing inequalities. • Community Partnerships were also established in each of South Lanarkshire’s four localities as a resident and community space to raise and act on common issues. These partnerships are a community only space, supported by a Community Planning Partnership Development Officer who ensures there is a report from each locality on every Community Planning Partnership Board meeting Agenda. Each Community Partnership has a community chair which has a seat on the Com- munity Planning Board. • A new participation and engagement strategy is in development to ensure that these structures have the interaction and the voice with all partners that they were set up for. • The Council carried out circa 50 surveys and engagement activities with residents, employees, and partners, and through the council’s Citizens Panel to inform policy and service delivery. Further information on our surveys is published on the Council’s website. • To ensure inclusivity and help shape service delivery, the Council co-ordinates regular engagement with targeted groups of people such as young people, older people, people with disabilities, unpaid carers, black and ethnic minorities, etc. Groups considered items such as the budget consultation, rent setting and performance reporting. • The Participation Requests and Community Asset Transfer processes continue to support communities to engage with the Council to improve local outcomes. • The Council’s performance Spotlights summarise what the Council has achieved and the Public Performance Reports provide a comprehensive overview of service performance. These, along with the council’s Benchmarking report demon- strate the Council’s commitment to continuous improvement and achieving Best Value; summarise the progress that the council has made in meeting its priorities and how it is performing locally and nationally. • The Council’s Digital Strategy 2022 to 2027 sets out the overall approach to digital for the Council. A key objective within the strategy is to assist those people who are unable to get online to access services digitally. The Council also leads on the Digital Inclusion Sub Group, which reports into the Community Planning Partnership. • A comprehensive range of information on how the Council operates is available on the website. The Freedom of Infor- mation Publication Scheme ensures that key information about how the council works is accessible to the public. 102
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29 Principle C: Defining outcomes in terms of sustainable, economic, social, and environmental benefits Links to Council’s values: Accountable, effective, efficient, and transparent; Fair, open, and sustainable; Focused on people and their needs How we do this: • The Council has a Capital Strategy that has a long-term ambition on future capital investment with approved projects up to 2029/2030 and a capital programme agreed for 2025/2026. This document is underpinned by a suite of Asset Manage- ment Plans which are aligned with the council’s objectives and focus on creating an efficient, fit-for-purpose and sustainable core estate that delivers best value in terms of investment, running costs and environmental impact. • The Council Plan 2022 to 2027 and Community Plan 2022 to 2032 have clearly defined economic, social, and environ- mental outcomes to be delivered during the period. • A Community Wealth Building Strategy setting out the Council’s ambitions in relation to spending, workforce, land and property, finance and building the generative economy was approved in March 2021. A Community Wealth Building Com- mission was established to oversee the implementation of the Strategy, with the Commission receiving an annual report on progress. A Community Wealth Building Progress Group has been set up to ensure that timescales within the action plan are met. • The CWB Strategy is supported by an action plan which is reviewed annually, with progress reported to the Commission at Q2 and Q4 via the council’s Improve system. • Annual Resource Plans which deliver the objectives of the Council Plan were reviewed and updated. These plans outline the outcomes and actions to be achieved within the year and reference linkages with other key strategic plans of the Council and partnership plans. • The Sustainable Development and Climate Change Strategy 2022-27 was approved by the Council in June 2022 and which sets out the Council’s strategic vision ,themes and priorities in terms of the Council, environment and communities for sustainable development and climate change during the period was developed using the principles of the United Na- tion’s Sustainable Development Goals and to reduce the council’s contribution to global warming. • The Council’s Climate Change and Sustainability Committee oversees the delivery of the Sustainable Development and Climate Change Strategy 2022-2027,the Council’s transition to carbon neutrality and climate resilience. • The Council’s Procurement Strategy 2023-28 which is complemented by an annual action plan, sets out how value for money, national and local priorities will be delivered. It also demonstrates how the Council will deliver the wider social, economic, and environmental aims of procurement as required by the sustainable procurement duty. • Sustainability principles are embedded in procurement processes and in recognition of the importance of our suppliers in achieving the Council’s aim to become more sustainable. • Strategic Environmental Assessments (SEAs) were completed for all relevant Council led policies, plans and strategies developed during 2025/2026. • The South Lanarkshire Local Development Plan 2 was adopted by the Council on 9 April 2021. The spatial strategy of the plan is to encourage sustainable economic growth and regeneration, a move towards a low carbon economy, protect the natural and historic environment and mitigate against the impacts of climate change. • Integrated Impact Assessments and a summary of findings from Equality Impact Assessments of the Council’s key deci- sions on service users, communities and businesses have been published on the Council’s website. • Strategic decisions of the Council have been subject to a Fairer Scotland Impact Assessment which considers how ine- qualities of outcome can be reduced. Principle D: Determining the interventions necessary to optimise the achievement of the intended outcomes Links to Council’s values: Accountable, effective, efficient, and transparent; Ambitious, self-aware, and improving; Focused on people and their needs; Working with and respecting others How we do this: • There has been a programme of transformational reviews undertaken over recent years to identify savings and help man- age balancing the Council’s budget. This programme is overseen by the Corporate Management Team with individual reviews led by Head of Service and sponsored by Executive Directors. Frameworks are in place for holding discussions with key stakeholders. Savings achievements are monitored monthly and reported to the Corporate Management Team quarterly. • The Financial Strategy which is aligned with the Council’s objectives was updated during the year to reflect the latest internal and external influences. This plan sets out the assumptions in terms of commitments, grant funding and efficiency requirement and demonstrates sound financial management and the ability to address projected funding gaps. • The annual budget setting consultations took place with members of the public, groups and the Council’s partners and the output is provided to Members i to inform the budget process. The annual budget is open to scrutiny and amendment by councillors until the approval of the final budget. • The Council’s Performance Management Framework has ensured that progress against intended outcomes has been regularly reported to Management Teams; Committees; and the Performance and Review Scrutiny Forum. Decisions and actions to address performance issues have been taken and monitored to ensure that they have been effective. • The Council has complied with its statutory and regulatory reporting requirements during the year. 103
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30 • The Public Bodies (Joint Working) (Scotland) Act 2014 sets out those Adult Care Services that are delegated to the Inte- gration Joint Board (IJB) as set out in the South Lanarkshire Health & Social Care Integration Scheme. These services continue to be operationally delivered by the Council in line with the strategic direction set out in the Strategic Commis- sioning Plan and IJB Directions. • The Council considers the specification and achievement of community benefits, which focus on the health, economic, social, and environmental wellbeing of the South Lanarkshire area, when awarding contracts. • To improve efficiency and effectiveness, the Council is the lead authority for a range of collaborative projects and services delivered through the Clyde Valley Learning and Development Group. We also work closely with, and share services with partners including SLLC, IJB and Seemis. Principle E: Developing the entity’s capacity, including the capability of its leadership and the individuals within it Links to Council’s values: Accountable, effective, efficient, and transparent; Ambitious, self-aware, and improving; Excellent employer; Focused on people and their needs; Working with and respecting others How we do this: • Leadership Challenge Programme, which is linked to succession planning, is in place. • Learning and Development programmes were revised and employees at all levels can now access optional accredited management qualifications. • Training requirements were identified and online learning and development opportunities including webinars and e-brief- ings were developed and offered to all councillors. • A review of the approach to agile working has completed, and new guidance has been approved by the Executive Com- mittee, implemented from November 2025. • A range of policies and activities are in place to support the Health and Wellbeing of employees including physical and mental health and these have been regularly communicated. Online wellbeing events were held in response to the new ways of working. • The Council recognises that skilled and motivated employees are a key asset. All employees have an annual performance appraisal which links to the Council values and a Personal Development Plan. The council offers a range of training interventions to support employee development. • The Council has a comprehensive and coordinated approach to workforce planning which also supports succession plan- ning. Each Resource reviews their workforce plan and related action plan to better understand workforce capacity issues, further challenges, and opportunities to ensure that resources are in the right place, at the right time and people have the right skills. The Council Workforce Strategy and Planning process provides the framework for workforce planning in the Council. The Strategy and Plans are aligned to current and future Council service needs and details the approach by the Council to ensure that the workforce required is in place to meet those needs. • Senior Managers have overseen the annual scrutiny of the Council’s assets through the review of a suite of Asset Man- agement Plans. Service Asset Management Plans have been developed in line with CIPFA guidance and these feed into the Corporate Asset Management Plan which outlines priorities and provides an overview of how the Council has performed in this area. • The Council’s Scheme of Delegation, Financial Regulations, Standing Orders on Contracts and Terms of Reference en- sured that Committees, officers, and statutory officers were clear on the decisions that could be made within their area of authority. A Mid-Term Review of these arrangements was concluded in 2024, and these are kept under review by officers with minor adjustments being made as considered appropriate. This is supplemented by councillor’s role profiles which outline the key purpose, specific and core accountabilities for each role. • The Council continues to work with a range of public sector, business, and academic partners to improve outcomes for those living and working in South Lanarkshire. Strategic Partnerships include the Community Planning Partnership and the Glasgow City Region City Deal. • Local Government Benchmarking Framework (LGBF) results continue to be reported to the Performance Review and Scrutiny Forum, containing all LGBF indicators. As other reporting arrangements mature, the scale of this report may be reduced and the strategic suite of indicators aligned to Council Plan outcomes are featured in an appendix to the Council Plan Q4 report, giving an opportunity to assess the Council’s performance over time and comparative performance in the context of the Council Plan priorities. • Further LGBF indicators will feature in the Council’s public performance reporting, both in the Annual Performance Spot- lights and in the PPR pages on the website. These are topic-based and place the LGBF information in a richer context than is possible in the annual LGBF report. The results are analysed and an action plan developed which will be monitored by the Senior Management Team. • To complement this work, an LGBF dashboard has been developed to provide easy access to the LGBF indicators and the narrative that sits alongside them. The dashboard shows time trends for each of the strategic indicators aligned with the council plan outcomes and provides charts comparing SLC performance with both the Scottish and the family group average. • The Council takes a risk-based approach to self-assessment which is used to review and redesign services with a focus on fundamental change. Progress and the impact of improvement activity was reported to the Senior Management Team and the Performance and Review Scrutiny Forum. • The Council has a robust complaints process which is underpinned by national complaints handling standards. Complaints performance was regularly reported to Senior Management and Committee and learning from complaints which is integral 104
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31 to this process is also published on the Council’s website. Complaint handling procedures have been updated in line with national changes and communicated to all employees. Principle F: Managing risks and performance through robust internal control and strong public financial management Links to Council’s values: Accountable, effective, efficient, and transparent; Ambitious, self-aware, and improving How we do this: • The Council, in partnership with Trade Unions, ensured that safe systems of work were in place through a robust risk assessment process, changes to working methods and supply of personal protective equipment. • The Council has put in place comprehensive arrangements for identifying, evaluating, and controlling significant risks which threaten the council’s ability to meet its objectives to deliver services to the public. There is also a robust process in place for compliance monitoring of the Council’s Risk Management Strategy, Resource Risk Registers and Control Plans. • The annual end of year compliance statement evidenced that all Resources were compliant with Risk Management Stra- tegic requirements. • The Council’s Internal Audit Service which complies with the Global Internal Audit Standards completed an annual pro- gramme of risk-based audits with an objective of providing an opinion on the adequacy and effectiveness of the Council’s governance, risk management, and internal control arrangements. Where improvements were required, action plans were developed and monitored and where necessary follow-up audit work completed. • In response to changes in working practices and the introduction of new systems, Internal Audit has advised on key internal controls that should be maintained. • The Information Governance Board is reasonably satisfied that Resources have followed the Information Governance operational arrangements to promote effective arrangements for the safe collection, storage, use and sharing of data, including processes to safeguard personal data, but this will be the subject of further work in 2026/27, including to work through an action plan approved by the Corporate Management Team and the Information Governance Board. • Information security incidents have continued to be monitored and considered for notification to the Information Commis- sioner’s Office and are reported to the Corporate Management Team on a quarterly basis and to the Council’s Senior Information Risk Officer (the Executive Director of Finance and Corporate Resources) upon internal notification. Through- out the period, the Council’s Data Protection Officer provided advice and assistance to Resources in relation to meeting their obligations under UK General Data Protection Regulations (GDPR). • The system of internal financial control is based upon the Financial Regulations which set out the rules to ensure robust internal control over the council’s finances. Control is maintained through regular management information, management supervision and a structure of delegation and accountability. • External Audit of the Council’s accounts is robust and a “clean audit certificate” was issued for 2024/2025. • Through a well-established Performance Management Framework, the Council has clearly defined processes in place for the identification, monitoring, and reporting of its objectives to ensure continued effectiveness and the achievement of Best Value. Progress is monitored and reported regularly to both managers and councillors. This includes areas of under- performance and the related improvement actions. • Trustees of the South Lanarkshire Charitable and Educational Trusts received independent legal training setting out their duties and responsibilities in ensuring that the trusts operate in a manner designed to benefit communities. • The Executive Director of Finance and Corporate Resources is a member of the Council’s Senior Management Team and as such, is integral in all major decisions taken by the Council, and in material matters which are submitted to councillors for decision. This involvement fulfils the expectation of CIPFA in terms of the role of the Chief Financial Officer. • The Council’s existing financial management controls and measures continue to provide comfort on the Council’s financial management and resilience. This includes the preparation of a medium-term strategy presented to members regularly as part of the annual budget process, providing members with the information required to assist budget planning. A report on the Council’s Financial Resilience was presented to the Risk and Audit Scrutiny Committee during 2025/2026. Principle G: Fair, Open and Sustainable; Implementing good practices in transparency, reporting, and audit to deliver effec- tive accountability Links to Council’s values: Accountable, effective, efficient, and transparent; Ambitious, self-aware, and improving; Working with and respecting others How we do this: • The Good Governance Group has completed the annual review of governance arrangements at resource level and in line with the CIPFA/SOLACE Delivering Good Governance Framework, this review having been reported to the Corporate Management Team and some changes to the previous arrangement having been agreed. Governance improvement ac- tions have also been identified and are included in Resource/Service Action Plans. Progress against actions including those highlighted as significant governance areas for action will be reported to the Senior Management Team and Com- mittee. • In the 2024/2025 annual audit report, the external auditor reported that the Council had in place appropriate arrangements to support good governance and accountability, and they were of the view that governance arrangements remained effec- tive in 2024/25. • All Directors completed their annual Statement of Assurance and relevant assurances have been provided. 105
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32 • The Council prepares and publishes an Annual Governance Statement which is aligned with national guidance and reflects on the adequacy and effectiveness of the Council’s governance arrangements. This is independently considered by Ex- ternal Audit and published with the Annual Accounts and separately on a dedicated governance web page. • The annual review of governance arrangements for the Council’s at Arm’s Length External Organisations (ALEOs) and key external service providers has not highlighted any compliance issues. • The annual review of the Local Code of Corporate Governance was completed, and the revised Code was approved by Committee on 10 March 2026 and re-published on the Council’s website. • All agendas, reports and decisions continue to be published (except those exempt under the Local Government (Scotland) Act 1973) on the Council’s website. All Committee and Forum meetings are livestreamed to the Council’s YouTube page http://bit.ly/SL_Committees. • The Risk and Audit Scrutiny Committee considered the adequacy and effectiveness of the Council’s governance arrange- ments and internal control environment and approved the Annual Governance Statement and Accounts. • Internal Audit provided independent assurance on the effectiveness of internal control, risk management and governance arrangements. The service was delivered in accordance with the Global Internal Audit Standards, ensuring professional objectivity, independence and consistency with recognised best practice. Internal Audit activity has continued to be re- ported to the Senior Management Team and to the Risk and Audit Scrutiny Committee during 2025/2026. • Outcomes from external audit and inspection activity was reported to the appropriate Committee and action plans were developed for implementation where required. 6. Review of Effectiveness The review of the effectiveness of the Council’s governance arrangements is informed by a range of assurance sources, including the annual opinion of the Internal Audit Manager. This opinion is delivered in accordance with the Global Internal Audit Standards, sup- ported by an internal quality assurance and improvement programme. The review of governance arrangements for 2025/2026 has also considered the following assurance outcomes: - Group Assurances In respect of the Joint Boards, Charities and Companies that fall within the Council’s group boundary, the review of their internal financial control systems is informed by: - • Annual Governance Statements included in the respective financial statements of the Joint Boards. • Assurances from company directors and/or other senior company officials; and • The work of the relevant body’s respective external auditors (and where relevant internal auditors) and other interim reports. The Executive Director of Finance and Corporate Resources, the Council’s Chief Financial Officer, has considered the effectiveness of the group’s internal financial control system for the year ended 31 March 2026. It is the Executive Director of Finance and Corporate Resources’ opinion that reasonable assurance can be placed on its effectiveness. Internal Assurance It is the opinion of the Council’s Risk Management Service that a good level of assurance can be placed on the Council’s strategic risk control environment and a good level of assurance can be placed on the Council’s operational risk control environment. It is the opinion of the Council’s Internal Audit Manager that, based on the work undertaken during 2025/2026, the Council has estab- lished adequate and effective arrangements for governance, risk management and internal control for the year ending 31 March 2026. 7. Significant Governance Areas The 2024/2025 Annual Governance Statement identified 9 significant governance areas that the Council were working to address. Progress updates can be found on the Council’s website; see the Significant Governance Areas Quarter 4 update 2024-2025. All 9 of these areas remain as significant areas of action for the Council moving forward into 2026/2027and will continue to be monitored as such. Through the 2025/2026 annual governance review, the following areas, which include an outline of the actions being taken to address them, have been identified as significant areas of work for the Council during 2026/2027: - No. Areas identified in 2025/2026 Actions Lead Officer 1 Information Governance Compliance with statutory and Council performance targets. Continue to closely monitor performance on information governance including FOI requests and Subject Access requests and data breaches. Review the guidance pro- vided to staff regarding the safe use of emails and sharing of data supported by regular staff communica- tion. Executive Director (Finance and Cor- porate Resources) 106
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33 No. Areas identified in 2025/2026 Actions Lead Officer 2 Cyber Resilience Compliance with legislative and regulatory policy A programme of actions to maintain cyber security and resilience in 2026/2027 will include: • Refresh/retiral of legacy systems, network equipment and end user devices (mobile phones, PCs) • Programme of security patching of all systems • Compliance with PSN and Cyber Essentials schemes • Incident response exercising and onboarding of Cyber Incident Response partner • Officer training and awareness (e.g., phishing, passwords) • Data security reviews as part of new system installation and security monitoring • Ensure cyber resilience factored into Re- source/service area business continuity plan- ning Executive Director (Finance and Cor- porate Resources) 3 Digital Modernisation Deliver the implementation of new digital solutions that will support the wider transformation of the Council, in- cluding the more efficient and effective delivery of ser- vices, to internal and external service users. This will include existing implementation of Liquidlogic (Social Work) and HOME Phase 2 (Housing and Technical Re- sources), adoption of a policy framework for the Coun- cil’s use of artificial intelligence, refresh of the Council website and solutions to deliver the outputs of the Cus- tomer Engagement and Digital Transformation Re- views, and a review of recent such implementations to identify areas for improvement. Executive Director (Finance and Cor- porate Resources) 4 Financial Challenges Exceptional increase in costs, re- duction in council funding, result- ing in difficulties maintaining front line services The Council continues to face a challenging situation in the medium to long-term because of reduced funding in real terms, rising costs and an increase in demand. The Council has developed a medium-term strategy which identifies budget pressures, future risks and un- certainties, and projects budget gaps to 2027/2028. The Budget Strategy for 2027/2028 and 2028/2029 will be updated and presented to councillors in 2026. The Longer Term Financial Strategy will also be reviewed during 2026/2027. Chief Executive Executive Director (Finance and Cor- porate Resources) 5 Homelessness The Homelessness Strategic Action Plan approved at Housing and Technical Resource Committee on 26 February 2025, set out the mitigations that the Service would progress in 2025/26. A key focus of these related to actions to help improve the ability to provide appropriate temporary accommo- dation and avoid breaching statutory requirements on the use of unsuitable accommodation. This involved working in partnership to establish two new First Stop accommodation projects at Harriet Street in Ruther- glen, and Willowgate in Hamilton, which work will be built upon in 2026/27. The strategic action plan details a number of other ac- tions to prevent homelessness and address key issues, such as the Prisoner Early Release programme, in- creased asylum and refugee levels and removal of lo- cal connection. Executive Director (Housing and Technical Re- sources) 107
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34 No. Areas identified in 2025/2026 Actions Lead Officer In relation to the new Housing (Scotland) Act 2025, work is being progressed to prepare for the intro- duction of the new ”Ask and Act“ duty across public bodies which will have implications for the service. 6 Sustainable Development and Climate Change A new Strategy for 2022 to 2027 was approved by the Council in June 2022 together with the Council Plan and Community Plan. An Action Plan was developed as part of the Strategy, and this continues to be imple- mented and reviewed annually with progress updates being reported to the Climate Change and Sustainabil- ity Committee on a 6 monthly basis. Following a period of public consultation, the Council approved in June 2024 its first Local Heat and Energy Efficiency Strategy (LHEES) for the period 2024 to 2028. The LHEES will be a key component of a long- term strategy to reduce of carbon emissions and re- duce fuel poverty. Executive Director (Community and Enterprise Re- sources) 7 Economic Strategy A new Economic Strategy 2022 to 2027 was approved by Council in June 2022 as part of a suite of documents accompanying the draft Council Plan and Community Plan. The vision within the Strategy is “to make South Lanarkshire a flourishing, green, dynamic and equitable place for communities, visitors, businesses and inves- tors”. The Strategy is framed around the 3 themes of sustainable, inclusive, economic development- People, Place and Business. Progress on the delivery of the Action Plan will be measured 6-monthly with the results being reported an- nually to the relevant committees. The Council continues to lead on local economic growth supporting South Lanarkshire businesses and promoting inward investment. The Council has prepared masterplans to support the regeneration of Hamilton and East Kilbride and is now working on the delivery of various projects and liaising with a number of external parties. This is the final year of the current strategy, and work has begun on refreshed Economic Strategy with a view to reporting to Committee in Autumn 2026. Executive Director (Community and Enterprise Re- sources) 8 South Lanarkshire Leisure and Culture Continue to work in partnership with SLLC to develop relationship, in particular around commissioning, use of assets and financial sustainability Executive Director (Community and Enterprise Re- sources) 9 Recruitment and Retention Challenges The labour market has tightened, and employees have more mobility through agile working which is not neces- sarily tied to a geographical location. In addition, some older workers have reassessed priorities and taken up an option for partial or full retiral earlier than they would have done previously. As a result, there are a number of skills in short supply nationally and this is putting pressure on local govern- ment services. Examples of this include planners, envi- ronmental health officers, procurement, Social Care and Education posts. South Lanarkshire Council has experienced these is- sues and is taking the following actions: - Chief Executive and all Executive Directors 108
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35 No. Areas identified in 2025/2026 Actions Lead Officer • Workforce Strategy and Plans for 2025 to 2027 • A recruitment strategy to provide a framework of improved recruitment actions and stand- ards. • A strategic review of maximising attendance • Enhanced employee support arrangements are in place and well developed 8. Summary The annual review of governance arrangements across the Council and overall compliance with the Council’s Code demonstrate suf- ficient evidence that the Code’s principles of Delivering Good Governance in Local Government operated effectively, and that the Council complies with its Code. During 2026/2027 steps will be taken to address the significant governance areas highlighted in this statement to further strengthen the council’s governance arrangements and evidence our commitment to continuous improvement. Councillor Maureen Devlin Leader of the Council Signature: Date: Paul Manning Chief Executive Signature: Date: 109
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36 Statement of Responsibilities The Authority’s responsibilities: ▪ Make arrangements for the proper administration of its financial affairs and to secure that the proper officer has responsibility for the administration of those affairs (section 95 of the Local Government (Scotland) Act 1973). South Lanarkshire Council has designated the Executive director of Finance and Corporate Resources as the officer with these responsibilities. ▪ Manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets. ▪ Ensure the Annual Accounts are prepared in accordance with legislation (The Local Authority Accounts (Scotland) Regulations 2014), and so far as is compatible with that legislation, in accordance with proper accounting practices (section 12 of the Local Government in Scotland Act 2003). ▪ The Risk and Audit Scrutiny Committee approve the Annual Accounts for signature. I confirm that these annual accounts were approved for issue by the Risk and Audit Scrutiny Committee at its meeting on 23 June 2026. Councillor Maureen Devlin Leader of the Council Executive Director of Finance and Corporate Resources’ responsibilities The Executive Director of Finance and Corporate Resources is responsible for the preparation of the council’s Annual Accounts in accordance with proper practices as required by legislation and as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom (the Accounting Code). In preparing the Annual Accounts, the Executive Director of Finance and Corporate Resources has: ▪ selected suitable accounting policies and then applied them consistently. ▪ made judgements and estimates that were reasonable and prudent. ▪ complied with legislation. ▪ complied with the local authority Accounting Code (in so far as it is compatible with legislation) The Executive Director of Finance and Corporate Resources has also: ▪ kept proper accounting records which were up-to-date. ▪ taken reasonable steps for the prevention and detection of fraud and other irregularities. Annual Accounts I certify that the financial statements give a true and fair view of the financial position of the council (and its group) at the reporting date and the transactions of the council (and its group) for the year ended 31 March 2026. Jackie Taylor Executive Director (Finance and Corporate Resources) South Lanarkshire Council 110
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37 Remuneration Report Remuneration Policy Senior Employees The salary of senior employees is set by reference to national arrangements. The Scottish Joint Negotiating Committee (SJNC) for Local Authority Services sets the salaries for the Chief Officers of Scottish local authorities. COSLA Industrial Relations Circular 10 24b sets the amount of salary for Chief Officers and the Chief Executive of South Lanarkshire Council for 2025/2026. Senior Councillors The remuneration of councillors is regulated by the Local Governance (Scotland) Act 2004 (Remuneration) Regulations 2007 (SSI No. 2007/183) as amended most recently by The Local Governance (Scotland) Act 2004 (Remuneration) Amendment Regulations 2025 (SSI 2025/8). The Regulations provide for the grading of councillors for the purposes of remuneration arrangements, as either the Leader of the Council, the Civic Head (or Provost), Senior Councillors or Councillors. The Leader of the Council and the Civic head (or Provost) cannot be the same person for the purposes of payment of remuneration. A Senior Councillor is a Councillor who holds a significant position of responsibility in the Council’s political management structure. The salary that is to be paid to the Leader of the Council is set out in the Regulations. For 2025/2026 the salary for the Leader of the Council is £60,791. The Regulations permit the Council to remunerate one Civic Head or Provost. The regulations set out the maximum salary that may be paid to that Civic Head. The Council follows the regulations and pays a salary of £45,594 to the Provost. The Regulations also set out the remuneration that may be paid to Senior Councillors and the total number of Senior Councillors the Council may have. The maximum yearly amount that may be paid to a Senior Councillor is £45,594 as set out in The Local Governance (Scotland) Act 2004 (Remuneration) Amendment Regulations 2025 (SSI 2025/8). The total yearly amount payable by the Council for remuneration of all of its Senior Councillors shall not exceed £679,965 (excluding the Leader and Provost). The Council is able to exercise local flexibility in the determination of the precise number of Senior Councillors up to a maximum of 19 and their salary within these maximum limits. In 2025/2026, the Council had 19 Senior Councillors and the salary paid to these councillors totalled £678,536 which is less than the threshold. The Regulations also permit the Council to pay contributions or other payments as required to the Local Government Pension Scheme in respect of those Councillors who elect to become Councillor members of the pension scheme. In addition to the Senior Councillors of the Council the Regulations also set out the remuneration payable to Councillors with the responsibility of a Convenor or a Vice-Convenor of a Joint Board. The Regulations require the remuneration to be paid by the Council of which the Convenor or Vice-Convenor is a member. The Council is also required to pay any pension contributions arising from the Convenor or Vice-Convenor being a member of the Local Government Pension Scheme. The Council is reimbursed by the Joint Board for any additional remuneration paid to the member from being a Convenor or Vice-Convenor of a Joint Board. Audit Arrangements All information disclosed in the tables numbered 1 to 7 in this Remuneration Report will be audited by the Council’s auditors, Audit Scotland. The other sections of the Remuneration Report will be reviewed by Audit Scotland to ensure that they are consistent with the financial statements. Note 12 to the Accounts contains total payments made to all Councillors and will be audited as part of the audit of the Financial Statements and supplementary Notes to the Accounts. 111
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38 Table 1 – General Pay Band Disclosure for Senior Employees Annual Remuneration 2025/26 Number of Employees 2024/25 Number of Employees 50,000 - 54,999 1,729 541 55,000 - 59,999 418 381 60,000 - 64,999 235 228 65,000 - 69,999 188 206 70,000 - 74,999 173 139 75,000 - 79,999 139 84 80,000 - 84,999 45 37 85,000 - 89,999 27 5 90,000 - 94,999 4 6 95,000 - 99,999 1 3 100,000 - 104,999 2 3 105,000 - 109,999 6 6 110,000 - 114,999 6 3 115,000 – 119,999 5 13 120,000 – 124,999 10 1 125,000 – 129,999 4 2 130,000 – 134,999 - - 135,000 – 139,999 1 - 140,000 - 144,999 1 - 145,000 - 149,999 - - 150,000 - 154,999 - - 155,000 - 159,999 - 2 160,000 – 164,999 - 2 165,000 – 169,999 1 1 170,000 – 174,999 1 - 175,000 – 179,999 1 180,000 – 194,999 (Note 1) - - 195,000 – 199,999 - 1 200,000 – 204,999 - - 205,000 – 209,999 1 - Note 1: These are merged pay bands covering more than £5,000 due to the fact that no employees fell into these bands in either financial year. Disclosure of Exit Packages There were no exit packages agreed by the Council in 2025/2026, therefore the total cost of exit packages for 2025/2026 is nil. No provisions have been made as there are no known exit packages that relate to employees who will leave the Council in the coming year (2025/2026). 112
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39 Disclosure of Remuneration The tables below provide details of the remuneration paid to the Council’s Senior Employees and Senior Councillors and to the Chief Executive or most senior manager of subsidiary bodies (South Lanarkshire Leisure and Culture Ltd and Routes to Work South). Comparative figures for 2024/2025 have been shown if they were in post at that time. We have also disclosed the remuneration of Councillors who hold Convenor and Vice-Convenor roles with Joint Boards. The Council pays the Councillor on behalf of the Joint Board for their role and recovers these charges from the Joint Board. The annual return of Councillors’ remuneration for 2025/2026 is available on the Council’s website (www.southlanarkshire.gov.uk). Table 2 – Senior Officers Post Salary / fees £ Taxable Expenses £ Compensation for Loss of Office £ Any Other Remuneration £ 2025/26 Total £ 2024/25 Total £ P Manning Chief Executive 207,049 - - - 207,049 195,065 D Booth Executive Director of Community and Enterprise Resources (To 01 February 2026) 142,032 (Full Year Equivalent 169,272) - - - 142,032 (Full Year Equivalent 169,272) 162,560 K Carr Executive Director of Community and Enterprise Resources (From 02 February 2026) 26,495 (Full Year Equivalent 164,649) - - - 26,495 (Full Year Equivalent 164,649) - A Donaldson Interim Executive Director of Education Resources (To 03 August 2025) 56,145 (Full Year Equivalent 164,649) - - - 56,145 (Full Year Equivalent 164,649) 53,983 (Full Year Equivalent 158,126 L McRoberts Executive Director of Education Resources (From 04 August 2025) 108,504 (Full Year Equivalent 164,649) - - - 108,504 (Full Year Equivalent 164,649) - J Taylor Executive Director of Finance and Corporate Resources 173,078 - - - 173,078 158,126 S Sengupta Executive Director of Health and Social Care 170,969 - - - 170,969 162,560 S Gibson Executive Director of Housing and Technical Resources 169,272 - - - 169,272 160,350 113
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40 Post Salary / fees £ Taxable Expenses £ Compensation for Loss of Office £ Any Other Remuneration £ 2025/26 Total £ 2024/25 Total £ L Purdie Chief Social Work Officer (To 30 November 2025) 85,114 (Full Year Equivalent 127,671) - - - 85,114 (Full Year Equivalent 127,671) 122,615 A McCrae Chief Social Work Officer (From 01 December 2025) 41,016 (Full Year Equivalent 123,048) - - - 41,016 (Full Year Equivalent 123,048) - Total 1,179,674 - - - 1,179,674 1,015,259 The senior employees included in the table include any local authority employee: • Who has responsibility for management of the local authority to the extent that the person has power to direct or control the major activities of the authority (including activities involving the expenditure of money), during the year to which the Report relates, whether solely or collectively with other persons. • Who holds a post that is politically restricted by reason of section 2(1) (a), (b) or (c) of the Local Government and Housing Act 1989; or • Whose annual remuneration, including any remuneration from a local authority subsidiary body, is £150,000 or more. The total remuneration includes Returning Officer (RO) fees. An RO is the person responsible for administering an election. These duties are separate from any duties undertaken as a local government employee. The total RO fee for a UK Parliamentary Election is set by legislation for the election in question. The RO can appoint one or more persons to discharge any or all of the functions of the post but cannot delegate personal responsibility for delivering the election. Paul Manning was the RO appointed by South Lanarkshire Council during the financial year 2024/2025 and carried out his duties as RO for the 2024 United Kingdom General Election held on 4 July 2024. Note 1 While the Executive Director of Health and Social Care is contractually employed by the Council, a proportion of their total remuneration is funded by the South Lanarkshire Health and Social Care Partnership in respect of their role as Chief Officer of the Partnership. Table 3 - Senior Employees of the Council’s Subsidiary Bodies Name and Post Salary/fees Taxable Expenses £ Compensation for Loss of office £ Any other Remuneration £ 2025/26 Total £ 2024/25 Total £ K Morrison Chief Executive of South Lanarkshire Leisure and Culture Ltd To 4 July 2025 31,685 (Full Year Equivalent 119,851) - - - 31,685 (Full Year Equivalent 119,851) 115,115 114
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41 Name and Post Salary/fees Taxable Expenses £ Compensation for Loss of office £ Any other Remuneration £ 2025/26 Total £ 2024/25 Total £ N Lansdell Chief Executive of South Lanarkshire Leisure and Culture Ltd From 5 July 2025 84,856 (Full Year Equivalent 115,351) 18 - - 84,874 (Full Year Equivalent 115,369) - S Barr Chief Executive of Routes to Work South 89,629 - - - 89,629 85,398 Total 206,170 18 - - 206,188 200,513 Table 4 - Remuneration of Senior Councillors and Convenors and Vice-Convenors of Joint Boards The table below shows the full year remuneration for all senior councillors in 2025/2026. This includes senior councillors who started or ended their role during the year. Name and Post Salary £ Taxable Expenses £ Compensation for Loss of Office £ Any Other Remuneration £ 2025/26 Total £ 2024/25 Total £ A Allison Opposition Leader – Second Opposition 34,381 - - - 34,381 28,251 R Brown Community and Enterprise Resources Committee Chair 38,230 - - - 38,230 31,413 A Buchanan East Kilbride Area Committee Chair 31,021 - - - 31,021 25,490 A Carmichael Licensing Committee Chair 31,021 - - - 31,021 25,490 M Chalmers Depute Leader of the Opposition (To 11 August 2025) Opposition Leader – First Opposition (From (12 August 2025) 12,528 (Full Year Equivalent 34,381) 25,062 (Full Year Equivalent 39,430) - - - 12,528 (Full Year Equivalent 34,381) 25,062 (Full Year Equivalent 39,430) 28,251 - 115
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42 Name and Post Salary £ Taxable Expenses £ Compensation for Loss of Office £ Any Other Remuneration £ 2025/26 Total £ 2024/25 Total £ R Clark Depute Leader of the Opposition (From 12 August 25) 21,853 (Full Year Equivalent 34,381) - - - 21,853 (Full Year Equivalent 34,381) - G Convery Depute Leader of the Council 39,430 - - - 39,430 32,399 M Cooper Provost 45,594 - - - 45,594 37,360 M Devlin Business Manager Ruling Group 39,430 - - - 39,430 32,399 J Fagan Leader of the Council 60,791 - - - 60,791 49,810 A Falconer Hamilton Area Committee Chair 31,021 - - - 31,021 25,490 L Hamilton Education Resources Committee Chair (To 27 April 25) (From 12 January 2026) 11,102 (Full Year Equivalent 38,230) - - - 11,102 (Full Year Equivalent 38,230) 31,413 G Keatt Education Resources Committee Chair (From 28 April 2025 – 11 January 2026) 27,128 (Full Year Equivalent 38,230) - - - 27,128 (Full Year Equivalent 38,230) - C McClymont Clydesdale Area Committee Chair 31,021 - - - 31,021 25,490 L McDonald Finance and Corporate Resources Committee Chair 38,230 - - - 38,230 31,413 D McLachlan Housing and Technical Resources Committee Chair 38,230 - - - 38,230 31,413 116
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43 Name and Post Salary £ Taxable Expenses £ Compensation for Loss of Office £ Any Other Remuneration £ 2025/26 Total £ 2024/25 Total £ R Nelson Planning Committee Chair 38,230 - - - 38,230 31,413 C Nugent Cambuslang and Rutherglen Area Committee Chair 31,021 - - - 31,021 25,490 N Rae Climate Change Committee Chair (From 12 September 2024) 38,230 - - - 38,230 17,299 (Full Year Equivalent 31,413) J Ross Opposition Leader – First Opposition (To 11 August 2025) 14,368 (Full Year Equivalent 39,430) - - - 14,368 (Full Year Equivalent 39,430) 32,399 D Shearer Business Manager - Opposition 31,021 - - - 31,021 25,490 G Thomson Depute Provost 37,748 - - - 37,748 31,017 M Walker Social Work Resources Committee Chair 38,230 - - - 38,230 31,413 Total 784,921 - - - 784,921 630,603 Councillors with Joint Board Responsibilities W Brogan Convenor Lanarkshire Valuation Joint Board 28,207 - - - 28,207 26,686 Total 28,207 - - - 28,207 26,686 The Council is reimbursed by Lanarkshire Valuation Joint Board for the additional remuneration that the Council paid to the member for being a Convenor of the Joint Board. The following recharges were made to Joint Boards for South Lanarkshire Council Councillors holding Convenor/Depute Convenor roles: • Recharge to Lanarkshire Valuation Joint Board in 2025/2026 - £2,225 (2024/2025 - £5,341) 117
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44 Pension Rights Pension benefits for councillors and local government employees are provided through the Local Government Pension Scheme (LGPS). Councillors’ pension benefits are based on career average pay. The councillor’s pay for each year or part year ending 31 March (other than the pay in the final year commencing 1 April) is increased by the increase in the cost of living, as measured by the appropriate index (or indices) between the end of that year and the last day of the month in which their membership of the scheme ends. The total of the revalued pay is then divided by the period of membership to calculate the career average pay. This is the value used to calculate the pension benefits. Local government employees had a final salary pension scheme prior to 1 April 2015. This means that pension benefits are based on the final year’s pay and the number of years that person has been a member of the scheme. As of 1 April 2015, local government employees are now part of a defined benefit pension scheme worked out on a career average basis. Benefits built up are calculated using pensionable pay each scheme year, rather than final salary. All benefits built up prior to this date are protected. From 1 April 2009, a five-tier contribution system was introduced with contributions from scheme members based on how much pay falls into each tier. This is designed to give more equality between the costs and benefits of scheme membership. Under The Local Government Pension Scheme (Scotland) Regulations 2014, the earnings ranges used to determine annual contribution rates are to be increased each year by any increase applied to pensions under the Pensions (Increase) Act 1971. In accordance with this the salary bands for 2022/2023 were uprated by the Consumer Prices Index (CPI) increase for 2023/2024. The member contribution rates and tiers for 2024/2025 are shown below along with those that applied in 2023/2024: Pensionable Pay Contribution rate 2025/26 Pensionable Pay Contribution rate 2024/25 On earnings up to and including £27,500 5.50% On earnings up to an including £27,000 5.50% On earnings above £27,500 and up to £33,600 7.25% On earnings above £27,000 and up to £33,000 7.25% On earnings above £33,600 and up to £46,100 8.50% On earnings above £33,000 and up to £45,300 8.50% On earnings above £46,100 and up to £61,400 9.50% On earnings above £45,300 and up to £60,400 9.50% On earnings above £61,400 12.00% On earnings above £60,400 12.00% From April 2015, if a person works part-time their contribution is based on their part-time pay. Prior to this, if a person worked part-time, their contribution rate was worked out on the whole- time pay rate for the job, with actual contributions paid on actual pay earned. There is no automatic entitlement to a lump sum. Members may opt to give up (commute) pension for lump sum up to the limit set by the Finance Act 2004. From 1 April 2015, benefits are calculated on the basis of a revalued annual pension built up of 1/49th of pensionable pay each year, plus inflation to keep up with the cost of living. Prior to this date, the accrual rate guaranteed a pension based on 1/60th of final pensionable salary and years of pensionable service and prior to 2009 the accrual rate guaranteed a pension based on 1/80th and a lump sum based on 3/80th of final pensionable salary and years of pensionable service. The value of the benefits has been calculated without exercising any option to commute pension entitlement into a lump sum and without any adjustment for the effects of future inflation. In those cases where members have transferred pension entitlements from previous employments, the pension figures shown relate to the benefits that the person has accrued as a consequence of their total local government service, and not just their current appointment. It also reflects both employer and employee contributions. 118
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45 Table 5 – Pension Benefits: Senior Employees The Pension entitlement of Senior Employees for the year to 31 March 2026 are shown in the table below, together with the contribution made by the council to each senior employees’ pension during the year. The accrued pension benefit reflects both the employer and the employee contributions. Name and Post Title Accrued Pension Benefits to 31 March 2026 £000 Movement in Accrued pension Benefits since 31 March 2025 £000 Pension Contribution Made by the Council 2025/26 £ Pension Contribution Made by the Council 2024/25 £ P Manning Chief Executive Pension Lump Sum 108 134 13 15 13,075 12,167 D Booth Executive Director of Community and Enterprise Resources (To 01 February 2026) Pension Lump Sum 76 107 3 4 9,232 10,566 K Carr Executive Director of Community and Enterprise Resources (From 02 February 2026) Pension Lump Sum 54 37 n/a n/a 1,722 - A Donaldson Interim Executive Director of Education Resources (To 03 August 2025) Pension Lump Sum 46 18 2 - 3,649 3,509 L McRoberts Executive Director of Education Resources (From 04 August 2025) Pension Lump Sum 11 - n/a n/a 7,053 - J Taylor Executive Director of Finance and Corporate Resources Pension Lump Sum 68 64 7 3 11,192 10,278 S Sengupta Executive Director of Health and Social Care Pension Lump Sum 17 - 5 - 11,113 10,566 S Gibson Executive Director of Housing and Technical Resources Pension Lump Sum 17 - 4 - 11,003 10,423 L Purdie Chief Social Work Officer Pension Lump Sum 71 89 6 3 5,532 7,970 119
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46 Name and Post Title Accrued Pension Benefits to 31 March 2026 £000 Movement in Accrued pension Benefits since 31 March 2025 £000 Pension Contribution Made by the Council 2025/26 £ Pension Contribution Made by the Council 2024/25 £ A McCrae Chief Social Work Officer (From 01 December 2025) Pension Lump Sum 32 4 n/a n/a 2,666 - Total 76,237 65,479 All senior employees shown in the table above are members of the Local Government Pension Scheme (LGPS). Where employees have joined the council but not transferred previous employment pension benefits into the Strathclyde Pension Fund the pension figures shown relate only to their current appointment, otherwise the figures shown relate to the benefits that the pension has accrued as a consequence of their total local government service including payments for election duties. Table 6 – Pension Benefits: Senior Employees of the Council’s Subsidiary Bodies Name and Post Title Accrued Pension Benefits to 31 March 2026 £000 Movement in Accrued pension Benefits since 31 March 2025 £000 Pension Contribution 2025/26 £ Pension Contribution 2024/25 £ K Morrison Chief Executive of South Lanarkshire Leisure and Culture Ltd (To 4 July 2025) Pension Lump Sum 28 19 4 1 2,060 7,482 N Lansdell Chief Executive of South Lanarkshire Leisure and Culture Ltd (From 5 July 2025) Pension Lump Sum 44 45 n/a n/a 5,516 - S Barr Chief Executive of Routes to Work South Pension Lump Sum - - - - 7,170 6,832 Total 14,746 14.314 Routes to Work South operates a defined contributions scheme for its employees. Accordingly, the only information to be provided in respect of its senior employees is the amount of any pension contributions made to that scheme by the subsidiary body. 120
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47 Table 7 – Pension Benefits: Senior Councillors The Pension entitlement of Senior Councillors for the year to 31 March 2020 are shown in the table below, together with the contribution made by the council to each Senior Councillors’ pension during the year. The accrued pension benefit reflects both the employer and the employee contributions. Name and Post Title Accrued Pension Benefits to 31 March 2026 £000 Movement in Accrued pension Benefits since 31 March 2025 £000 Pension Contribution Made by the Council 2025/26 £ Pension Contribution Made by the Council 2024/25 £ A Allison Opposition Leader – Second Opposition Pension Lump Sum 6 - 1 - 2,235 1,808 A Buchanan East Kilbride Area Committee Chair Pension Lump Sum 10 2 1 2 2,016 1,631 M Chalmers Depute Opposition Leader (To 11 August 2025) Opposition Leader – First Opposition (From 12 August 2025) Pension Lump Sum 6 - 1 - 814 1,629 1,808 n/a R Clark Depute Leader of the Opposition (From 12 August 25) Pension Lump Sum 2 - n/a n/a 1,420 n/a G Convery Depute Leader of the Council Pension Lump Sum 2 - - - 393 2,074 M Cooper Provost Pension Lump Sum 8 - 1 - 2,964 2,391 M Devlin Business Manager Ruling Group Pension Lump Sum 8 - 1 - 2,563 2,074 J Fagan Leader of the Council Pension Lump Sum 8 - 2 - 3,951 3,188 121
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48 Name and Post Title Accrued Pension Benefits to 31 March 2026 £000 Movement in Accrued pension Benefits since 31 March 2025 £000 Pension Contribution Made by the Council 2025/26 £ Pension Contribution Made by the Council 2024/25 £ A Falconer Hamilton Area Committee Chair Pension Lump Sum 7 - 1 - 2,016 1,631 L Hamilton Education Resources Committee Chair (To 27 April 25) (From 12 January 2026) Pension Lump Sum 8 - 1 - 722 2,010 G Keatt Education Resources Committee Chair (From 28 April 2025 – 11 January 2026) Pension Lump Sum 2 - n/a n/a 1,763 n/a C McClymont Clydesdale Area Committee Chair Pension Lump Sum 7 - 1 - 2,016 1,631 L McDonald Finance and Corporate Resources Committee Chair Pension Lump Sum 3 - 1 - 2,485 2,010 D McLachlan Housing and Technical Resources Committee Chair Pension Lump Sum 10 - 1 - 2,485 2,010 N Rae Climate Change Committee Chair Pension Lump Sum 2 - - - 2,485 1,107 R Nelson Community and Enterprise Resources Committee Chair Pension Lump Sum 5 - 2 - 2,485 2,010 D Shearer Business Manager – Opposition Pension Lump Sum 10 2 1 - 2,016 1,631 G Thomson Depute Provost Pension Lump Sum 3 - 1 - 2,454 1,985 122
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49 Name and Post Title Accrued Pension Benefits to 31 March 2026 £000 Movement in Accrued pension Benefits since 31 March 2025 £000 Pension Contribution Made by the Council 2025/26 £ Pension Contribution Made by the Council 2024/25 £ M Walker Social Work Resources Committee Chair Pension Lump Sum 5 - 1 - 2,485 2,010 Total 33,494 Councillors with Joint Board Responsibilities W Brogan Convenor Lanarkshire Valuation Joint Board Pension Lump Sum 10 2 1 - 1,708 1,708 Total 1,708 All Senior Councillors shown in the table above are members of the Local Government Pension Scheme (LGPS). The pension figures shown relate to the benefits that the pension has accrued as a consequence of their total local government service and not just their current appointment. The council is reimbursed by the Joint Board for the additional pension contributions paid by the council for the Convenor. The following recharges were made to Joint Boards for South Lanarkshire Council Councillors holding Convenor roles: Recharge to Lanarkshire Valuation Joint Board in 2025/2026 - £145 (2024/2025 - £347) Trade Union Facility Time In addition to the regulation governing Senior Employees and Councillors, the Trade Union (Facility Time Publication Requirements) Regulations 2017, which apply from 1 April 2017, require public sector employers to collect and publish a range of information on trade union facility time in respect of their employees who are Trade Union Representatives. The figures below cover the period 1 April 2025 to 31 March 2026 and include employees of South Lanarkshire Council, South Lanarkshire Leisure and Culture, SEEMIS and Lanarkshire Valuation Joint Board. Relevant Trade Union Officials Number of employees who were relevant union officials during the relevant period 215 FTE Employee Number 177.28 123
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50 Percentage of Time Spent on Facility Time % Time Number of Representatives 0% 76 1% - 50% 131 51% - 99% 3 100% 5 Percentage of Pay Bill Spent on Facility Time Total cost of facility time £624,633 Total pay bill £667,770,016 Percentage of the total pay bill spent on facility time 0.09% Paid Trade Union Activities Time spent on paid Trade Union activities as a percentage of total paid facility time hours 7.44% Councillor Maureen Devlin Leader of the Council Paul Manning Chief Executive 124
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51 Comprehensive Income and Expenditure Statement The Comprehensive Income and Expenditure Statement shows the accounting cost in the year of providing services in accordance with the CIPFA Accounting Code of Practice, rather than the amount to be funded from taxation. The council raises taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Expenditure and Funding Analysis and Movement in Reserves Statements. 2024/25 2025/26 Gross Expenditure £000 Gross Income £000 Net Expenditure / (Income) £000 Gross Expenditure £000 Gross Income £000 Net Expenditure / (Income) £000 213,111 57,036 156,075 Community and Enterprise Resources 223,132 65,114 158,018 513,697 20,327 493,370 Education Resources 524,046 20,177 503,869 111,383 66,110 45,273 Finance and Corporate Resources 105,464 53,220 52,244 Housing and Technical Resources 113,953 114,283 (330) - Housing Revenue Account 128,644 122,522 6,122 75,047 52,904 22,143 - Housing Other 77,616 50,970 26,646 509,487 265,185 244,302 Social Work Resources 531,519 276,791 254,728 1,864 - 1,864 Joint Board 1,635 0 1,635 987 509 478 Corporate Items (6,871) 1,637 (8,508) 105 - 105 Corporate and Democratic Core (HRA) 201 0 201 1,539,634 576,354 963,280 Net Cost of Services 1,585,386 590,431 994,955 (7,268) (7,268) Other Operating Expenditure - Gains) / losses on the disposal of non-current assets 4,973 4,973 72,597 12,287 60,310 Financing and Investment (Income) and Expenditure (Note 8) 61,832 (300) 62,132 989,521 (989,521) Taxation and Non-Specific Grant Income (Note 9) 1,083,487 (1,083,487) 1,604,963 1,578,162 26,801 (Surplus) / Deficit on Provision of Services 1,652,191 1,673,618 (21,427) (209,253) (Surplus) / Deficit on Revaluation of Fixed Assets 81,551 (53,043) Remeasurement of Pension Liability / (Asset) (29,657) (262,296) Other Comprehensive (Income) and Expenditure 51,894 (235,495) Total Comprehensive (Income) and Expenditure 30,467 . 125
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52 Balance Sheet The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the council. The net assets of the council (assets less liabilities) are matched by the reserves held by the council. Reserves are reported in two categories. ■ The first category of reserves are usable reserves, that is those reserves that the council may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use (for example the Capital Receipts Reserve that may only be used to fund capital expenditure or repay debt). ■ The second category of reserves is those that the council is not able to use to provide services. This category of reserves includes reserves that hold unrealised gains and losses (for example the Revaluation Reserve), where amounts would only become available to provide services if the assets are sold; and reserves that hold timing differences shown in the Movement in Reserves Statement line ‘Adjustments between accounting basis and funding basis under regulations. 31 March 2025 £000 Note 31 March 2026 £000 4,113,384 Property, Plant and Equipment 18 4,077,338 3,853 Heritage Assets 19 3,853 10,059 Intangible Assets 19 8,897 1,910 Long Term Debtors 1,794 - Other Long-Term Assets (Pension) - 4,129,206 Non-Current Assets 4,091,882 - Short Term Investments - 4,179 Inventories 4,257 100,106 Short Term Debtors 21 79,801 168 Assets Held for Sale 19 2,086 25,031 Cash and Cash Equivalents (see cash flow notes) 54,038 129,484 Current Assets 140,182 (179,224) Short Term Borrowing 31 (281,468) (235,287) Short Term Creditors 23 (260,401) (17,142) Other Short-Term Liabilities (PPP / Finance Leases) 15 (20,673) (608) Provisions 24 (144) (3,476) Receipts in Advance 25 (1,376) (435,737) Current Liabilities (564,062) - Long Term Provisions 24 - (860,609) Long Term Borrowing 31 (739,437) (306,113) Other Long-Term Liabilities (PPP / Finance Lease) 15 (305,336) (97,992) Other Long-Term Liabilities (Unfunded Pension Liability) 27 (95,457) (1,264,714) Long Term Liabilities (1,140,230) 2,558,239 Net Assets 2,527,772 147,568 Usable Reserves 176,726 2,410,671 Unusable Reserves 2,351,046 2,558,239 Total Reserves 2,527,772 The notes on pages 56 to 110 form part of the financial statements. The unaudited accounts were authorised for issue on 23 June 2026. Jackie Taylor Executive Director (Finance and Corporate Resources) 126
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53 Movement in Reserves Statement This statement shows the movement in the year on the different reserves held by the council, analysed into ‘usable reserves’ (those that can be applied to fund expenditure or reduce local taxation) and other reserves. The Surplus or (Deficit) on the Provision of Services line shows the true economic cost of providing the council’s services, more details of which are shown in the Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund Balance and the Housing Revenue Account for council tax setting and dwellings rent setting purposes. The Net Increase / Decrease before Transfers to Earmarked Reserves line shows the statutory General Fund Balance and Housing Revenue Account Balance before any discretionary transfers to or from earmarked reserves undertaken by the council. Revenue Statutory Fund Revenue Statutory Fund General Fund Balance £000 Housing Revenue Account £000 Repairs and Renewals Fund £000 Insurance Fund £000 Capital Statutory Fund £000 Capital Receipts Reserve £000 Total Usable Reserves £000 (Note 11) Unusable Reserves £000 Total Council Reserves £000 Balance at 1 April 2025 118,997 10,440 5,123 1,812 3,784 7,412 147,568 2,410,671 2,558,239 Movement in reserves during 2025/26 Total Comprehensive Expenditure and Income (6,759) 28,186 - - - - 21,427 (51,894) (30,467) Adjustments to usable reserves permitted by accounting standards (note 7) 15,041 17,494 - - - - 32,535 (32,535) - Adjustments between accounting basis and funding basis under regulations (note 7) 24,954 (49,668) - - - (90) (24,804) 24,804 - Net Increase / (Decrease) before Transfers to Reserves 33,236 (3,988) - - - 29,158 (59,625) (30,467) Transfers to/ (from) Reserves 1,474 208 (491) (790) (401) - - - - Increase / (Decrease) in Year 34,710 (3,780) (491) (790) (401) (90) 29,158 (59,625) (30,467) Balance at 31 March 2026 carried forward 153,707 6,660 4,632 1,022 3,383 7,322 176,726 2,351,046 2,527,772 127
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54 Revenue Statutory Fund Revenue Statutory Fund General Fund Balance £000 Housing Revenue Account £000 Repairs and Renewals Fund £000 Insurance Fund £000 Capital Statutory Fund £000 Capital Receipts Reserve £000 Total Usable Reserves £000 (Note 11) Unusable Reserves £000 Total Council Reserves £000 Balance at 1 April 2024 109,772 13,221 5,346 195 3,975 1,178 133,688 2,189,055 2,322,743 Movement in reserves during 2025/25 Total Comprehensive Expenditure and Income (37,682) 10,881 - - - - (26,801) 262,296 235,495 Adjustments to usable reserves permitted by accounting standards (note 7) 15,113 17,810 - - - - 32,923 (32,923) - Adjustments between accounting basis and funding basis under regulations (note 7) 33,196 (31,672) - - - 6,233 7,757 (7,757) - Net Increase / (Decrease) before Transfers to Reserves 10,627 (2,981) - - - 6,233 13,879 221,616 235,495 Transfers to/ (from) Reserves (1,402) 200 (224) 1,617 (191) - - - - Increase / (Decrease) in Year 9,225 (2,781) (224) 1,617 (191) 6,233 13,879 221,616 235,495 Balance at 31 March 2024 carried forward 118,997 10,440 5,123 1,812 3,784 7,412 147,568 2,410,671 2,558,239 128
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55 Cash Flow Statement The Cash Flow Statement shows the changes in cash and cash equivalents of the council during the reporting period. The statement shows how the council generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of the extent to which the operations of the council are funded by way of taxation and grant income or from the recipients of services provided by the council. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the council’s future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (that is borrowing) to the council. Further analysis of movements is provided in the cash flow notes following the statement. 2024/25 £000 2025/26 £000 (26,801) Net surplus / (deficit) on the provision of services 21,427 175,115 Adjust net surplus / deficit on the provision of services for non-cash movements Note 32 184,832 (58,626) Adjust for items included in the net surplus / deficit on the provision of services that are investing and financing activities Note 33 (88,517) 89,688 Net cash flows from Operating Activities 117,742 (56,553) Investing Activities Note 34 (51,063) (20,345) Financing Activities Note 35 (37,672) 12,790 Net increase / (decrease) in cash and cash equivalents 29,007 12,241 Cash and cash equivalents at the beginning of the reporting period 25,031 25,031 Cash and cash equivalents at the end of the reporting period Note 36 54,038 129
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56 Notes to the Financial Statements Note 1 Accounting Standards Issued but Not Adopted The Accounting Code of Practice requires the Council to disclose information relating to the impact of an accounting change that is required by a new standard that has been issued but not yet adopted. At the balance sheet date, the following new standards and amendments to existing standards have been published but not yet adopted by The Code: • Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (Amendments to Heritage assets) • Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7) • Annual improvements to IFRS accounting standards – Volume 11 • Contracts Referencing Nature-dependent Electricity (Amendments to IFRS 9 and IFRS 7) The above are not expected to have a material impact on the financial statements. Note 2 Material Items of Expenditure and Income Where material items of expenditure and income are not disclosed on the face of the Comprehensive Income and Expenditure Statement, or contained within other notes, the Code requires disclosure of the nature and amounts of these items. Material items of expenditure and income are detailed below: Item Nature Amount £000 Housing Benefit / Discretionary Housing Payment Paid Benefit paid to support customers on low income with Housing rent costs 49,694 Housing Benefit / Discretionary Housing Benefit Received Benefit received to support customers on low income with Housing rent costs 44,264 130
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57 Note 3 Expenditure and Funding Analysis The objective of the Expenditure and Funding Analysis is to demonstrate to council tax and rent payers how the funding available to the council (i.e. government grants, rents, fees and charges, council tax and business rates) for the year has been used in providing services in comparison with those resources consumed or earned by the council in accordance with the CIPFA Accounting Code of Practice. The Expenditure and Funding Analysis also shows how this expenditure is allocated for decision making purposes between the council’s services. Income and expenditure accounted for under generally accepted accounting practices is presented more fully in the Comprehensive Income and Expenditure Statement on page 51. The segmental analysis in the Expenditure and Funding Analysis reflects the council's management structure, as reported to the relevant Committees during the financial year. 2024/25 2025/26 Net Expenditure Chargeable To the General Fund And HRA Balance £000 (Note 3) Adjustments between the Funding and Accounting Basis £000 Net Expenditure in the Comprehensive Income and Expenditure Statement £000 Net Expenditure Chargeable To the General Fund And HRA Balance £000 (Note 3) Adjustments between the Funding and Accounting Basis £000 Net Expenditure in the Comprehensive Income and Expenditure Statement £000 128,701 27,374 156,075 Community and Enterprise Resources 129,069 28,949 158,018 482,703 10,667 493,370 Education Resources 502,133 1,736 503,869 40,136 5,137 45,273 Finance and Corporate Resources 44,318 7,926 52,244 Housing and Technical Resources 2,981 (3,311) (330) - Housing Revenue Account 3,988 2,134 6,122 15,972 6,171 22,143 - Housing Other 21,259 5,387 26,646 235,309 8,993 244,302 Social Work Resources 247,052 7,676 254,728 1,864 - 1,864 Joint Board 1,635 0 1,635 (8,870) 9,348 478 Corporate Items (18,041) 9,533 (8,508) - 105 105 Corporate and Democratic Core (HRA) - 201 201 - - - Non-Distributed Costs – Non-Operational Assets (HRA) - - - 898,796 64,484 963,280 Net Cost of Services 931,413 63,542 994,955 (906,444) (30,035) (936,479) Other (Income) and Expenditure (960,661) (55,721) (1,016,382) (7,648) 34,449 26,801 (Surplus) or Deficit (29,248) 7,821 (21,427) General Fund HRA Total General Fund and HRA General Fund HRA Total General Fund and HRA (109,772) (13,221) (122,993) Opening General Fund and HRA Balance (118,997) (10,440) (129,437) (10,627) 2,981 (7,646) Less/plus (Surplus) or Deficit on General Fund (33,236) 3,988 (29,248) 1,402 (200) 1,202 Transfers to/from Other Reserves (1,474) (208) (1,682) (118,997) (10,440) (129,437) Closing General Fund and HRA Balance (153,707) (6,660) (160,367) 131
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58 Adjustments from General Fund to arrive at the Comprehensive Income and Expenditure Statement 2025/26 Adjustments for Capital Purposes (Note a) £000 Net change for the Pensions Adjustments (Note b) £000 Other Differences (Note c) £000 Total Adjustments between Funding and Accounting Basis £000 Community and Enterprise Resources 25,056 3,641 252 28,949 Education Resources 25,585 6,010 (29,859) 1,736 Finance and Corporate Resources 2,466 5,260 200 7,926 Housing and Technical Resources - Housing Revenue Account 11,205 605 (9,676) 2,134 - Housing Other 3,432 1,741 214 5,387 Social Work Resources 3,947 3,632 97 7,676 Joint Board - - - - Corporate Items - - 9,533 9,533 Corporate and Democratic Core (HRA) - - 201 201 Non-Distributed Costs – Non-Operational Assets (HRA) - - - - Net Cost of Services 71,691 20,889 (29,038) 63,542 Other Income and Expenditure from the Expenditure and Funding Analysis (87,740) 6,233 25,786 (55,721) Difference between General Fund surplus or deficit and Comprehensive Income and Expenditure Statement Surplus or Deficit on the Provision of Services (16,049) 27,122 (3,252) 7,821 2024/25 Adjustments for Capital Purposes (Note a) £000 Net change for the Pensions Adjustments (Note b) £000 Other Differences (Note c) £000 Total Adjustments between Funding and Accounting Basis £000 Community and Enterprise Resources 21,085 6,437 (148) 27,374 Education Resources 28,423 11,012 (28,768) 10,667 Finance and Corporate Resources 1,876 3,174 87 5,137 Housing and Technical Resources - Housing Revenue Account 6,219 1,061 (10,591) (3,311) - Housing Other 928 3,157 2,086 6,171 Social Work Resources 4,859 6,243 (2,109) 8,993 Joint Board - - - - Corporate Items - - 9,348 9,348 Corporate and Democratic Core (HRA) - - 105 105 Non-Distributed Costs – Non-Operational Assets (HRA) - - - - Net Cost of Services 63,390 31,084 (29,990) 64,484 Other Income and Expenditure from the Expenditure and Funding Analysis (62,239) 6,285 25,919 (30,035) Difference between General Fund surplus or deficit and Comprehensive Income and Expenditure Statement Surplus or Deficit on the Provision of Services 1,151 37,369 (4,071) 34,449 132
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59 Note a – Adjustments for Capital Purposes This column adds in depreciation and impairment and revaluation gains and losses in the services line, and for: ■ Other Operating Expenditure – adjusts for capital disposals with a transfer of income on disposal of assets and the amounts written off for those assets. ■ Financing and Investment Income and Expenditure – the statutory charges for capital financing and other contributions are deducted from other income and expenditure as these are not chargeable under generally accepted accounting practices. ■ Taxation and Non-Specific Grant Income and Expenditure – capital grants are adjusted for income not chargeable under generally accepted accounting practices. Revenue grants are adjusted from those that are receivable in the year, to those that are receivable without conditions or for which conditions were satisfied throughout the year. The Taxation and Non-Specific Grant Income and Expenditure line is credited with capital grants receivable in the year without conditions or for which conditions were satisfied in the year. Note b – Net Change for the Pensions Adjustment Net change for the removal of pension contributions and the addition of IAS19 Employee Benefits pension related expenditure and income: ■ For Services this represents the removal of the employer pension contributions made by the council as allowed by statute and the replacement with current service costs and past service costs. ■ For Financing and Investment Income and Expenditure – the net interest on the defined benefit liability is charged to the Comprehensive Income and Expenditure Statement. Note c – Other Differences Other differences between amounts debited/credited to the Comprehensive Income and Expenditure Statement and amounts payable /receivable to be recognised under statute: ■ For Services, this represents the accrual made for the cost of holiday leave entitlements earned by employees but not taken before the year end which employees can carry into the next financial year. These require to be included in the Net Cost of Services under generally accepted accounting practices, however, are not chargeable to the General Fund. ■ For Financing and Investment Income and Expenditure the other differences column recognises adjustments to the General Fund for the timing differences for premiums and discounts. Note 4 Reconciliation of Adjustments Between Funding and Accounting Basis Shown in the Expenditure and Funding Analysis (EFA) to Those Shown In the Movement in Reserves Statement (MIRS) 2024/25 2025/26 £000 £000 34,449 Adjustments between Funding and Accounting Basis as per EFA 7,821 7,774 Transfer of non-current asset sale proceeds from revenue to Capital Receipts Reserve (Note 7) 610 (1,542) Use of Capital Receipts Reserve to finance capital expenditure (Note 7) (700) 40,681 Adjustments between Funding and Accounting Basis as per MIRS 7,731 133
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60 Note 5 Expenditure and Income Analysed by Nature The council’s expenditure and income are analysed as follows: Community and Enterprise £000 Education £000 Finance and Corporate £000 Housing Revenue Account £000 Housing and Technical £000 Social Work £000 Joint Boards £000 Corporate Items £000 Other Non- Resource Lines £000 2025/26 Total £000 2024/25 Total £000 Expenditure Employee Benefits Expenses 104,939 373,873 41,255 9,908 48,210 121,047 - (9,544) - 689,688 672,150 Other Services Expenditure 92,901 192,437 61,743 77,312 25,661 406,526 1,635 2,673 201 861,089 770,033 Support Services Recharges - - - - - - - - - - - Depreciation, Amortisation, Impairment 25,293 (42,264) 2,466 41,424 3,745 3,946 - - - 34,610 97,451 Interest Payment - - - - - - - - 55,644 55,644 68,065 Pension Net Interest Expense - - - - - - - - 6,233 6,233 6,285 Impairment on Financial Instruments - - - - - - - - (45) (45) (1,752) Loss on the Disposal of Assets - - - - - - - - 4,973 4,973 (7,268) Total Expenditure 223,133 524,046 105,464 128,644 77,616 531,519 1,635 (6,871) 67,006 1,652,192 1,604,964 Income Fees and Charges and Other Service Income 51,360 5,634 7,288 122,522 48,067 216,925 - 1,637 - 453,433 420,540 Interest and Investment Income - - - - - - - - 1 1 13,188 Impairment on Financial Instruments - - - - - - - - (301) (301) (899) Gain on the Disposal of Assets - - - - - - - - - - - Income from Council Tax - - - - - - - - 172,137 172,137 161,060 Government Grants and Contributions 13,755 14,543 45,932 - 2,903 59,866 - - 911,350 1,048,349 984,274 Total Income 65,115 20,177 53,220 122,522 50,970 276,791 0 1,637 1,083,187 1,673,619 1,578,163 (Surplus) or Deficit on the Provision of Services 158,018 503,869 52,244 6,122 26,646 254,728 1,635 (8,508) (1,016,181) (21,427) 26,801 134
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61 Note 6 Revenue from Contracts with Service Recipients Amounts included in the Comprehensive Income and Expenditure Statement for contracts with service recipients. 2024/25 £000 2025/26 £000 44,925 Revenue from contracts with service recipients 74,716 - Impairment of receivables or contract assets - 44,925 Total included in Comprehensive Income and Expenditure Statement 74,716 Amounts included in Balance Sheet for contracts with service recipients. 2024/25 £000 2025/26 £000 - Receivables which are included in debtors (note 21) - - Contract Assets - - Contract Liabilities - - Total Included in Net Assets - Specific changes in the contract assets and the contract liabilities balances during the period are as follows: 2024/25 2024/25 2025/26 2025/26 Contract Asset £000 Contract Liability £000 Contract Asset £000 Contract Liability £000 - - Contract assets and liabilities at the beginning of the year - - - - Increases / decreases due to cash received (paid) - - - - Transfers from contract assets / (liabilities) recognised at the beginning of the period to receivables (payables) - - - - Changes as a result of changes in the measure of progress - - - - Contract assets and liabilities at the end of the year - - Note 7 Adjustments Permitted Under Accounting Standards and Between Accounting Basis and Funding Basis Under Regulations This note details the adjustments that are made to the total comprehensive income and expenditure recognised by the council in the year in accordance with proper accounting practice to arrive at the resources that are specified by statutory provisions as being available to the council to meet future capital and revenue expenditure. The following sets out a description of the reserves that the adjustments are made against. General Fund The General Fund is the statutory fund into which all the receipts of the council are required to be paid and out of which all liabilities of the council are to be met, except to the extent that statutory rules might provide otherwise. These rules can also specify the financial year in which liabilities and payments should impact on the General Fund, which is not necessarily in accordance with proper accounting practice. The General Fund balance therefore summarises the resources that the council is statutorily empowered to spend on its services or on capital investment (or the deficit of resources that the council is required to recover) at the end of the financial year. Housing Revenue Account The Housing Revenue Account balance reflects the statutory obligation to maintain a revenue account for local authority housing in accordance with the Local Government and Housing (Scotland) Act 1987. It contains the balance of income and expenditure as defined by the 1987 Act that is available to fund future expenditure in connection with the council’s landlord function. Repairs and Renewals Fund The Repairs and Renewals Fund comprises a combination of balances brought forward from previous years adjusted for any utilisation of funds and contributions to the Fund in year. The funds will be used to deal with repairing or renewing council assets. 135
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62 Insurance Fund The Insurance Fund is held as a provision against unpaid claims. Council Services contribute to the Fund which meets the cost of property damage, public liability, employee liability, vehicle fleet and other claims. The council holds insurance cover to meet any large claims, the premium for which is charged to the Fund. Actuarial reviews are undertaken on a regular basis. The last full review took place during 2024/25. Capital Receipts Reserve The Capital Receipts Reserve holds the proceeds from the disposal of land or other assets which are restricted by statute from being used other than to fund new capital expenditure or to be set aside to finance historical capital expenditure. The balance on the reserve shows the resources that have yet to be applied for these purposes at the year end. 136
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63 Usable Reserves 2025/26 General Fund Balance £000 Housing Revenue Account £000 Repairs And Renewals Fund £000 Insurance Fund £000 Capital Statutory Funds £000 Capital Receipts Reserve £000 Total £000 Adjustments to Usable Reserves Permitted by Accounting Standards Adjustment for the Revaluation Element of Depreciation 15,041 17,494 - - - - 32,535 Total Adjustments to Usable Reserves Permitted by Accounting Standards 15,041 17,494 - - - - 32,535 Statutory Adjustments (Between Accounting and Funding Basis) Adjustments to Revenue Resources Amounts by which income and expenditure included in the Comprehensive Income and Expenditure Statement are different from revenue for the year calculated in accordance with statutory requirements: ▪ Pensions Costs transferred to (or from) the Pensions Reserve 26,297 825 - - - - 27,122 ▪ Financial Instruments (transferred to the Financial Instruments Adjustment Account) (268) (90) - - - - (358) ▪ Holiday Pay (transferred to (or from) the Accumulated Absences Reserve) 1,854 63 - - - - 1,917 ▪ Reversal of entries included in the Surplus or Deficit on the Provision of Services in relation to capital expenditure (these items are charged to the Capital Adjustment Account) 47,760 23,930 - - - - 71,690 Total Adjustments to Revenue Resources 75,643 24,728 - - - - 100,371 Adjustments between Revenue and Capital Resources Transfer of non-current asset sale proceeds from revenue to Capital Receipts Reserve (622) 12 - - - 610 - Statutory Provision for the repayment of debt (transfer from Capital Adjustment Account) (4,314) (4,405) - - - - (8,719) Capital expenditure financed from revenue balances (transfer to Capital Adjustment Account) (2,034) (25,815) - - - - (27,849) Total Adjustments between Revenue and Capital Resources (6,970) (30,208) 610 (36,568) Adjustments to Capital Resources Use of the Capital Receipts Reserve to finance capital expenditure - - - - - (700) (700) Application of capital grants to finance capital expenditure (43,719) (44,188) - - - (87,907) Total Adjustments to Capital Resources (43,719) (41,188) - - - (700) (88,607) Total Statutory Adjustments (Between Accounting and Funding Basis) 24,954 (49,668) - - - (90) (24,804) Total Adjustments to Usable Reserves Permitted by Accounting Standards 15,041 17,494 - - - - 32,535 Total Statutory Adjustments (Between Accounting and Funding Basis) 24,954 (49,668) - - - - (24,805) Total Comprehensive Expenditure and Income (6759) 28,186 - - - - 21,427 Net Increase / (Decrease) before transfers to / (from) Reserves 33,236 (3,988) - - - - 29,157 Transfers to / (from) Reserves - - - - - - - Increase / (Decrease) in Year 33,236 (3,988) - - - - 29,157 137
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64 Usable Reserves 2024/25 General Fund Balance £000 Housing Revenue Account £000 Repairs And Renewals Fund £000 Insurance Fund £000 Capital Statutory Funds £000 Capital Receipts Reserve £000 Total £000 Adjustments to Usable Reserves Permitted by Accounting Standards Adjustment for the Revaluation Element of Depreciation 15,113 17,810 - - - - 32,923 Total Adjustments to Usable Reserves Permitted by Accounting Standards 15,113 17,810 - - - - 32,923 Statutory Adjustments (Between Accounting and Funding Basis) Adjustments to Revenue Resources Amounts by which income and expenditure included in the Comprehensive Income and Expenditure Statement are different from revenue for the year calculated in accordance with statutory requirements: ▪ Pensions Costs transferred to (or from) the Pensions Reserve 36,094 1,275 - - - - 37,369 ▪ Financial Instruments (transferred to the Financial Instruments Adjustment Account) (271) (88) - - - - (358) ▪ Holiday Pay (transferred to (or from) the Accumulated Absences Reserve) 749 (20) - - - - 728 ▪ Reversal of entries included in the Surplus or Deficit on the Provision of Services in relation to capital expenditure (these items are charged to the Capital Adjustment Account) 39,034 22,224 - - - - 61,258 Total Adjustments to Revenue Resources 75,606 23,391 - - - - 98,997 Adjustments between Revenue and Capital Resources Transfer of non-current asset sale proceeds from revenue to Capital Receipts Reserve (7,572) (202) - - - 7,774 - Statutory Provision for the repayment of debt (transfer from Capital Adjustment Account) (3,730) (5) - - - - (3,735) Capital expenditure financed from revenue balances (transfer to Capital Adjustment Account) (1,605) (33,506) - - - - (35,111) Total Adjustments between Revenue and Capital Resources (12,907) (33,713) - - - 7,774 (38,846) Adjustments to Capital Resources Use of the Capital Receipts Reserve to finance capital expenditure - - - - - (1,542) (1,542) Application of capital grants to finance capital expenditure (29,501) (21,350) - - - - (50,851) Total Adjustments to Capital Resources (29,501) (21,350) - - - (1,542) (52,393) Total Statutory Adjustments (Between Accounting and Funding Basis) 33,198 (31,672) - - - 6,232 7,757 Total Adjustments to Usable Reserves Permitted by Accounting Standards 15,113 17,810 - - - - 32,923 Total Statutory Adjustments (Between Accounting and Funding Basis) 33,198 (31,672) - - - 6,232 7,757 Total Comprehensive Expenditure and Income (37,682) 10,881 - - - - (26,801) Net Increase / (Decrease) before transfers to / (from) Reserves 10,629 (2,981) - - - 6,232 13,879 Transfers to / (from) Reserves (1,402) 200 (224) 1,617 (191) - - Increase / (Decrease) in Year 9,227 (2,781) (224) 1,617 (191) 6,232 13,879 138
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65 Note 8 Comprehensive Income and Expenditure Statement – Financing and Investment Income and Expenditure 2024/25 £000 2025/26 £000 68,065 Interest payable and similar charges 55,644 6,285 Pensions interest cost and expected return on pensions assets 6,233 (13,186) Interest receivable and similar income (1) (853) Impairment on Financial Instruments 256 60,311 Total 62,132 Note 9 Comprehensive Income and Expenditure Statement – Taxation and Non-Specific Grant Income 2024/25 £000 2025/26 £000 (161,060) Council Tax income (172,137) (366,018) National Non-Domestic Rates (371,110) (411,592) Non-ringfenced Government grants (452,333) (50,851) Capital grants and contributions (87,907) (989,521) Total (1,083,487) 139
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66 Note 10 Movements in Usable Reserves This note sets out the amounts set aside from the General Fund and HRA balances in earmarked reserves to provide financing for future expenditure plans and the amounts posted back from earmarked reserves to meet General Fund and HRA expenditure in 2025/2026. 2024/25 Opening Balance 1 April 2024 £000 Transfers Out 2024/25 £000 Transfers In 2024/25 £000 2024/25 Closing Balance 31 March 2025 £000 2025/26 Opening Balance 1 April 2025 £000 Transfers Out 2025/26 £000 Transfers In 2025/26 £000 2025/26 Closing Balance 31 March 2026 £000 Future Budget Strategies – allocated to specific years 69,097 (33,798) 49,025 84,324 84,324 (19,833) 42,431 106,922 Investments (Multi Year) 5,036 (2,782) 202 2,456 2,456 (1,910) 10,663 11,209 Early Years (Multi-year) 7,711 (5,350) - 2,361 2,361 - - 2,361 Pupil Equity Fund (Specific funding) 323 (323) 631 631 631 (631) 653 653 Scottish Welfare Fund - - 1,153 1,153 1,153 (179) - 974 Multi Year Projects 3,499 (643) - 2,856 2,856 (424) - 2,432 Schools (Multi-year) 1,091 (1,091) - - - - - - Scheme of Assistance 742 (255) - 487 487 (302) - 185 Community and Enterprise Resources including Public Health and Local Plan 1,302 - 673 1,975 1,975 (970) 4,645 5,650 Temporary Homelessness / Community Safety (Specific funding) 1,575 - 355 1,930 1,930 (1,224) 123 829 New Initiatives (Multi-year) 912 - - 912 912 (912) - - Counselling in Schools 278 (278) - - - - - - Additional Support for Learning 482 - - 482 482 - 564 1,046 Grants to Voluntary Organisations - Area Grants c/f 207 - 106 313 313 (113) - 200 Lanarkshire Valuation Joint Board - Scottish Government funding 118 - - 118 118 (118) - - Other Funding (inc. LACER) 2,320 (321) 40 2,039 2,039 (2,039) - - Ukraine Resettlement 1,485 - 218 1,703 1,703 - - 1,703 Miscellaneous Balances 552 (64) 30 518 518 - 290 808 Scotland Excel Contract - - 200 200 200 (100) - 100 Office Accommodation - - 250 250 250 - - 250 Hamilton Town Centre - - 898 898 898 (154) - 744 Property Maintenance - - 350 350 350 - - 350 Marmot Initiative - - - - - - 2,000 2,000 2027 Local Government Election - - - - - - 1,000 1,000 Transformational Residential Care - - - - - - 500 500 The Promise - - - - - - 750 750 Total Earmarked General Fund 96,730 (44,905) 54,131 105,956 105,956 (28,909) 63,619 140,666 Uncommitted General Fund Uncommitted General Fund 13,043 - - 13,043 13,043 - - 13,043 Total Uncommitted General Fund 13,043 - - 13,043 13,043 - - 13,043 Total General Fund 109,773 (44,905) 54,131 118,999 118,999 (28,909) 63,619 153,709 140
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67 2024/25 Opening Balance 1 April 2024 £000 Transfers Out 2024/25 £000 Transfers In 2024/25 £000 2024/25 Closing Balance 31 March 2025 £000 2025/26 Opening Balance 1 April 2025 £000 Transfers Out 2025/26 £000 Transfers In 2025/26 £000 2025/26 Closing Balance 31 March 2026 £000 Repairs and Renewals Fleet Sinking Fund 40 - 40 80 80 (14) - 66 Waste 2,991 (120) - 2,871 2,871 (50) 425 3,246 Repairs and Restorations (Various Projects) 1,893 (144) - 1,749 1,749 (902) 50 897 Winter Maintenance 422 - - 422 422 - - 422 Total Repairs and Renewals 5,346 (264) 40 5,122 5,122 (966) 475 4,631 Capital Fund Education Capital Items Replacement Fund 2,035 - - 2,035 2,035 - 325 2,360 Adoptions 279 - - 279 279 - - 279 IT Development Fund / Digital Transformation 1,289 (1,000) - 289 289 (48) - 241 Central Energy Efficiency Fund 372 (47) 856 1,181 1,181 (975) 297 503 Total Capital Fund 3,975 (1,047) 856 3,784 3,784 (1,023) 622 3,383 Total Usable Capital Receipts 1,178 (1,542) 7,775 7,411 7,411 (700) 610 7,321 Total Insurance Fund 195 (986) 2,603 1,812 1,812 (1,090) 300 1,022 Total Housing Revenue Account 13,221 (2,981) 200 10,440 10,440 (3,988) 208 6,660 Total Usable Reserves 133,688 (51,725) 65,605 147,568 147,568 (36,676) 65,834 176,726 141
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68 Note 11 Balance Sheet – Unusable Reserves Unusable Reserves are those that the council is not able to utilise to provide services. These reserves are kept to manage the accounting processes for non-current assets, financial instruments and retirement benefits and that do not represent usable resources for the council. The two reserves arising from the system of capital accounting are the Revaluation Reserve and the Capital Adjustment Account. The former represents the gains on revaluation of fixed assets not yet realised through sales and the latter relates to amounts set aside from capital resources to meet past expenditure. The reserve arising from accounting for financial instruments is the Financial Instruments Adjustment Account. This is a balancing account to allow for differences in statutory requirements and proper accounting practices for lending and borrowing by the council. The Pensions Reserve as limited by the assets ceiling cap under IFRIC 14, arises from IAS19 Accounting Disclosures for Retirement Benefits and recognises the council’s share of actuarial gains and losses in the Strathclyde Pension Fund and the change in the council’s share of the Pension Fund liability chargeable to the CIES. The Accumulated Absences Reserve arises from IAS19 accounting disclosures for Short Term Accumulated Benefits and recognises the council’s liability for compensated absences (annual leave) earned by staff but not taken in the year. The Statutory Arrangements require that the impact on the General Fund Balance is neutralised by transfers to or from the Reserve. 142
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69 Unusable Reserves 2025/26 Revaluation Reserve £000 Capital Adjustment Account £000 Financial Instruments Adjustment Account £000 Pension Reserve £000 Accumulating Compensated Absences Adjustment Account £000 Total £000 Opening Balance 1,509,742 1,026,150 (3,493) (97,992) (23,736) 2,410,671 Movement in Year (118,306) 57,705 358 2,535 (1,917) (59,625) Closing Balance 1,391,436 1,083,855 (3,135) (95,457) (25,653) 2,351,046 Other Comprehensive Income and Expenditure (81,551) (81,551) Adjustments to Usable Reserves Permitted by Accounting Standards Difference Between Fair Value and Historic Cost Depreciation (32,535) 32,535 - Adjustments Between Accounting Basis and Funding Basis Under Regulation Charges for Depreciation and Impairment of Non-Current Assets (105,925) (105,925) Revaluation Gains / Losses on Property, Plant and Equipment (1,079) (1,079) Amortisation of Intangible Assets (1,162) (1,162) Non-Current Assets Written Off on Disposal or Sale (1,363) (1,363) Accumulated Gains on Assets Sold or Scrapped (4,220) (4,220) Use of Capital Receipts Reserve to Finance New Capital Expenditure 700 700 Capital Grants and Contributions 83,631 83,631 Statutory Charge for the Repayment of Debt 12,995 12,995 Statutory Provision for Financing of Capital Investment 9,524 9,524 Capital Expenditure Charged Against the General Fund and HRA Balance 27,849 27,849 Retrospective Benefit from applying revised Service Concession Guidance - Transfer Between Revaluation Reserve and Capital Adjustment Account - Premiums to be Charged Against the General Fund and HRA Balance 358 358 Reversal of Items Relating to Retirement Benefits (27,122) (27,122) Employer’s Pension Contribution Payable in Year 29,657 29,657 Amounts Accrued at the End of the Financial Year (1,917) (1,917) Total Movement in Year (118,306) 57,705 358 2,535 (1,917) (59,625) 143
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70 Unusable Reserves 2024/25 Revaluation Reserve £000 Capital Adjustment Account £000 Financial Instruments Adjustment Account £000 Pension Reserve £000 Accumulating Compensated Absences Adjustment Account £000 Total £000 Opening Balance 1,333,554 996,027 (3,851) (113,666) (23,008) 2,189,055 Movement in Year 176,188 30,123 358 15,674 (728) 221,615 Closing Balance 1,509,742 1,026,150 (3,493) (97,992) (23,736) 2,410,671 Other Comprehensive Income and Expenditure 209,253 - - 53,043 - 262,296 Adjustments to Usable Reserves Permitted by Accounting Standards Difference Between Fair Value and Historic Cost Depreciation (32,923) 32,923 - - - - Adjustments Between Accounting Basis and Funding Basis Under Regulation Charges for Depreciation and Impairment of Non-Current Assets - (102,134) - - - (102,134) Revaluation Gains / Losses on Property, Plant and Equipment - 1,117 - - - 1,117 Amortisation of Intangible Assets - (224) - - - (224) Non-Current Assets Written Off on Disposal or Sale - (365) - - - (365) Accumulated Gains on Assets Sold or Scrapped (142) - - - - (142) Use of Capital Receipts Reserve to Finance New Capital Expenditure - 1,542 - - - 1,542 Capital Grants and Contributions - 50,851 - - - 50,851 Statutory Charge for the Repayment of Debt - 3,735 - - - 3,735 Statutory Provision for Financing of Capital Investment - 7,567 - - - 7,567 Capital Expenditure Charged Against the General Fund and HRA Balance - 35,111 - - - 35,111 Retrospective Benefit from applying revised Service Concession Guidance - - - - - - Transfer Between Revaluation Reserve and Capital Adjustment Account - - - - - - Premiums to be Charged Against the General Fund and HRA Balance - - 358 - - 358 Reversal of Items Relating to Retirement Benefits - - - (66,598) - (66,598) Employer’s Pension Contribution Payable in Year - - - 29,229 - 29,229 Amounts Accrued at the End of the Financial Year - - - - (728) (728) Total Movement in Year 176,188 30,123 358 15,674 (728) 221,615 144
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71 Note 12 Members Allowances The council paid the following amounts to Members of the council during the year: 2025/26 £ 2024/25 £ Salaries 1,501,754 1,246,071 Mileage Allowance 13,010 14,564 Expenses 2,905 3,782 Total 1,517,669 1,264,417 Note 13 External Audit Costs The council has incurred the following external audit costs: 2025/26 £000 2024/25 £000 Fee payable to Audit Scotland for external audit services 661 633 Total 661 633 The council incurred these costs in relation to the audit of the Annual Accounts, the certification of grant claims and a contribution towards Audit Scotland’s national work programme. Fees payable in respect of other services provided by the appointed auditor were nil (2024/2025: nil). Note 14 Related Parties The council is required to disclose material transactions with related parties – bodies or individuals that have the potential to control or influence or to be controlled or influenced by the council. Disclosure of these transactions allows readers to assess the extent to which the council might have been constrained in its ability to operate independently or might have secured the ability to limit another party’s ability to bargain freely with the council. Scottish Government The Scottish Government has effective control over the general operations of the council – it is responsible for providing the statutory framework within which the council operates, provides the majority of its funding in the form of grants and prescribes the terms of many transactions that the council has with other parties (e.g. council tax bills, housing benefits). Grants received from government departments are set out in the subjective analysis in Note 5. Officers During 2025/2026, one senior officer of the council (Chief Executive) declared an interest in an organisation outwith those controlled or significantly influenced by the council, Improvement Service Company. No senior officer declared an interest of close family members in any organisations outwith those controlled or significantly influenced by the council. The total remuneration paid to senior officers is shown in the Remuneration Report on page 37. Members Members of the council have direct control over the council’s financial and operating policies. The total of members’ allowances paid in 2025/2026 is shown in Note 12. During 2025/2026, works and services to the value of £6.591 million were commissioned from 12 companies in which 13 members had an interest (2024/2025 - £6.618 million). Contracts were entered into in full compliance with the council’s standing orders. In addition, grants totalling £4.492 million were paid to 71 voluntary organisations in which members had an interest (2024/2025 - £4.872 million). The relevant members did not take part in any discussion or decision relating to the grants. Details of these transactions are recorded under each individual Councillor and can be found on the council’s website (Elected Members Interests). As these payments relate to payments ledgered in the financial year, there are no outstanding balances to be disclosed. The council has chosen a de minimis level of £0.100m as its threshold disclosure level for individual members interests in companies and voluntary organisations. In addition to the entities controlled or significantly influenced by the council (page 72), the council made individual payments above this threshold to the following companies and voluntary organisations in which members held an interest. These are detailed in the table overleaf. 145
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72 Member Organisation Individual Payment Exceeding £0.100m Cllr Maureen Devlin Clyde Cycle Park Board (SCIO) Two payments of £0.200m for Clyde Cycle Park Phase 2. Cllr Margaret Cowie Clyde Gateway Urban Regeneration Company One payment of £0.800m as contribution to core funding for support of activities in South Lanarkshire. Cllr Maureen Chalmers COSLA One payment of £0.225m for Local Authority Subscriptions. Cllr Joe Fagan Cllr Gavin Keatt General Teaching Council for Scotland One payment of £0.300m. Deduction at source Registration Fees from 1 April 2025 - 31 March 2026. Cllr John Anderson Routes to Work South Four Payments of £0.125m relating to the delivery of Making it Work. Two payments of £0.100m for WIN service delivery. Four invoices relating to Gateway to Employment; two for £0.260m, one for £0.257m and one for £0.236m. Cllr Catherine McClymont Cllr Graeme Horne Cllr Susan Kerr SEEMiS Group LLP One Payment of £0.338m. Membership Fee for 2025/26. Receipts and Payments Between the Council and Entities Controlled or Significantly Influenced by the Council 2025/26 Receipts £000 2025/26 Payments £000 2024/25 Receipts £000 2024/25 Payments £000 Subsidiaries: Common Good Fund 37 0 43 - Routes to Work South 0 2,765 - 2,844 South Lanarkshire Leisure and Culture Limited 2,093 15,513 2,053 15,626 Total Subsidiaries 2,130 18,278 2,096 18,470 Joint Ventures: South Lanarkshire HSCP Integration Joint Board 239,557 192,293 229,891 182,365 Total Joint Ventures 239,577 192,293 229,891 182,365 Joint Boards: Lanarkshire Valuation Joint Board 174 1,582 172 1,814 Strathclyde Partnership for Transport 0 15,731 - 16,488 Strathclyde Concessionary Travel Scheme Joint Committee 0 625 - 611 Total Joint Boards 174 17,938 172 18,913 Other Entities: Clyde Valley Learning and Development Joint Committee 59 12 59 12 Regen FX Youth Trust 0 254 - 509 SEEMIS Group LLP 232 353 226 353 Total Other Entities 291 619 285 874 Total 242,172 229,128 232,444 220,622 The amounts due (to) / from related parties are detailed below: 2025/26 £ 2024/25 £ Strathclyde Partnership for Transport - - South Lanarkshire Leisure and Culture Limited - - South Lanarkshire Health and Social Care Partnership (6,742) (3,629) Subsidiaries Common Good Fund The Common Good Fund is for the benefit of the geographical areas of the former burghs and is administered by the council. Routes to Work South Established in 1998, Routes to Work South’s main activity is supporting unemployed and workless residents in South Lanarkshire into employment, training, or further education. Routes to Work South delivers services to, and is funded by, the council. South 146
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73 Lanarkshire Council is the sole member of Routes to Work South and is included in the council’s group financial statements as a 100% subsidiary. South Lanarkshire Leisure and Culture Limited South Lanarkshire Leisure and Culture Limited was established as a Charitable Trust on 1 April 2002, became South Lanarkshire Leisure and Culture Limited in October 2010 and from 3 April 2023, the status of South Lanarkshire Leisure and Culture Limited changed from a Charitable Trust to a Scottish Charitable Incorporated Organisation (SCIO). The SCIO provides the council with a full range of leisure and cultural activities within the South Lanarkshire area. Whilst the Trust is entirely independent of the council under law and for taxation purposes, its activities are directed by means of contractual arrangements with the council, and, in recognition of this, South Lanarkshire Leisure and Culture Limited is treated as a 100% subsidiary, and included in the council’s group financial statements. Joint Ventures South Lanarkshire Health and Social Care Partnership Integration Joint Board The South Lanarkshire HSCP Integration Joint Board was established on 6 October 2015 as a partnership between South Lanarkshire Council and NHS Lanarkshire and is responsible for planning and seeing the delivery of a full range of community health and social work / social care services. In the year 2024/2025, the following financial transactions were made between South Lanarkshire Council and South Lanarkshire HSCP Integration Joint Board relating to the integrated and social care functions: 2025/26 £000 2024/25 £000 Contribution made to South Lanarkshire HSCP Integration Joint Board 192,293 182,365 Commissioning income received from South Lanarkshire HSCP Integration Joint Board 239,577 229,891 South Lanarkshire HSCP Integration Joint Board due (from)/to South Lanarkshire Council (6,742) (3,629) Joint Boards The council is represented on a number of joint boards which are independent public bodies formed by an Act of Parliament. These bodies are Lanarkshire Valuation Joint Board, Strathclyde Concessionary Travel Scheme and Strathclyde Partnership for Transport. All local government functions that relate to these bodies have been delegated from the constituent councils that comprise the area of each board. The members of each board are elected councillors and appointed by the councils in proportions specified in the legislation. The council has no shares, or ownership of any of these boards. Nevertheless, these boards are included within the council’s group accounts as associate, as the council is represented on the board and participate in policy making processes. The council’s share of each board’s net assets is calculated on its percentage share of the aggregate contributions made by the constituent councils. Other entities Details of all other public bodies in which the council has a significant interest are explained in the group accounts at Notes 4 to 7. Note 15 Leases Council as Lessee Finance Leases The council currently has obligations in relation to Glasgow Southern Orbital infrastructure and secondary schools. These are classed as PPP/PFI finance leases and are reported under Note 26 – Public Private Partnerships and Similar Contracts. The Council adopted IFRS 16 from 1 April 2024. IFRS 16 applies to service concession arrangements i.e. Public Private Partnerships (PPP) and similar schemes, in addition to right of use assets below. The table below outlines the value of liabilities resulting from service concession arrangements at each Balance Sheet date, and an analysis of the movement in those values. Service Concession Arrangements £000 Balance as at 31 March 2025 299,814 Remeasurement per IFRS16 10,396 Principal Repaid (14,309) Balance as at 31 March 2026 295,901 147
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74 Right of Use Assets The Council adopted IFRS 16 from 1 April 2024, to recognise all right of use assets. IFRS 16 will mean that the majority of leases where the Council acts as lessee will come onto the balance sheet and lessor accounting is effectively unchanged. Right-of-use assets and lease liabilities will have been calculated as if IFRS 16 had always applied but recognised in 2024/2025 and not by ad- justing prior year figures. The main impact of the new requirements is that, for arrangements previously accounted for as operating leases (i.e. without recog- nising the leased vehicles, plant, equipment, property and land as an asset and future rents as a liability), a right-of-use asset and a lease liability are now on the balance sheet at 1 April 2024. Leases for items of low value (below £0.010m assets) and leases that expire on or before 31 March 2025 are exempt from the new arrangements. A weighted average incremental borrowing rate, in line with the time period of the lease, has been applied to lease liabilities as at 1 April 2024. As a lessee, the Council has previously classified leases as operating or finance leases based on its assessment of whether the lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the Council. Under IFRS 16, the Council recognises right-of-use assets and lease liabilities for most leases. The Council has decided to apply recognition exemptions to short-term leases and has elected not to recognise right-of-use assets and lease liabilities for short term leases that have a term of 12 months or less and leases of low value assets. The Council recog- nises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. This table shows the change in the value of right-of-use assets held under leases by the Council. These are included within overall Property, Plant and Equipment in Note 18. Right of Use Assets 2025/2026 Land and Buildings Vehicles, Plant and Equipment Total £000 £000 £000 Value at 1 April 21,365 1,410 22,775 Additions 3,669 11,379 15,048 Revaluations - - - Depreciation (3,362) (2,344) (5,706) Disposals - - - Value at 31 March 21,672 10,445 32,117 The Council incurred the following expenses and cashflows in relation to leases. Transactions under Leases 2025/2026 £000 Comprehensive Income and Expenditure Statement Interest Expense on Lease Liabilities 1,535 Expense relating to short-term leases - Expense relating to exempt leases of low-value items 772 Cashflow Statement Total cashflow for leases 7,027 Minimum lease payments 4,720 The lease liabilities are due to be settled over the following time bands (measured at the undiscounted amounts of expected cash payments). Maturity Analysis of Lease Liabilities 2025/2026 Finance Lease Liability £000 Service Concession Arrangements Liability £000 Total Liability £000 Not later than one year 6,263 14,298 20,561 Later than one year and not later than five years 14,658 56,582 71,240 Later than five years 8,999 225,021 234,020 Total Undiscounted Liabilities 29,920 295,901 325,821 148
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75 Analysed by: Current 6,263 14,298 20,561 Non-Current 23,657 281,603 305,260 Total 29,920 295,901 325,821 Council as Lessor Operating Leases The council leases out property under operating leases. The purpose of the Lease Portfolio is principally Socio Economic – by supporting the wider corporate objectives of the council as stated in the Council Plan, Connect 2022-27, through strategic influence, control, occupational use and management of lease agreements. In particular, but not exclusively, to ‘support the local Economic Development by providing the right conditions for growth, improving skills and employability’. The future minimum lease payments receivable under non-cancellable leases in future years are: 2025/26 £000 2024/25 £000 Not later than one year 3,292 4,707 Later than one year and not later than five years 8,365 11,729 Later than five years 27,664 91,470 Total 39,321 107,906 The minimum lease payments receivable do not include rents that are contingent on events taking place after the lease was entered into, such as adjustments following rent reviews. In 2025/2026, no contingent rents were receivable by the council (2024/2025 – nil). Note 16 Grant Income The council credited the following grants, contributions and donations to the Comprehensive Income and Expenditure Statement in 2025/2026: 2025/26 £000 2024/25 £000 Credited to Taxation and Non Specific Grant Income Council Tax 172,137 161,060 Non Ring Fenced Government Grants 452,333 411,592 Non Domestic Rate Redistribution 371,110 366,018 Total 995,580 938,670 Credited to Services Scottish Government 36,117 34,808 European Grant Funding (191) - Skills Development Scotland 787 264 Central Government 47,648 69,196 Lottery 10 43 Creative Scotland 410 414 NHS (incl. Resource Transfer) 51,232 49,893 Other Grants 985 1,196 Total 136,998 155,814 Note 17 Events After the Balance Sheet Date The unaudited Annual Accounts were authorised for approval by the Executive Director (Finance and Corporate Resources) on 23 June 206. There are no events that occurred between 1 April 2026 and the date that the audited Accounts were authorised for issue, that would have an impact on the financial statements. Where events taking place before this date provided information about conditions existing at 31 March 2026, the figures in the financial statements and notes have been adjusted in all material respects to reflect the impact of this information. 149
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76 Note 18 Property, Plant and Equipment Movements on Balances Movements in 2025/2026: Council Dwellings £000 Other Land And Buildings £000 Vehicles, Plant And Equipment £000 Community Assets £000 Surplus Assets £000 Assets Under Construction £000 Total Property, Plant and Equipment £000 PPP assets Included in Property, Plant and Equipment £000 Infrastructure Assets (Note 1) £000 Cost or Valuation As at 1 April 2025 1,668,237 2,109,787 56,544 2,016 11,098 21,898 3,869,580 633,622 Recognition of Right of Use Assets - 3,669 11,379 - - - 15,048 - - Additions 68,371 17,443 4,440 498 - 31,960 122,712 10,410 22,249 Revaluation increases / (decreases) recognised in the Revaluation Reserve (218,476) 49,239 - - 433 - (168,804) (12,993) - Revaluation increases / (decreases) recognised in the Surplus / Deficit on the Provision of Services - (4,596) (6) (86) (403) - (5,091) - - De-recognition – Disposals - (5,660) (7,068) - - - (12,728) - - Assets reclassified from Held for Sale - - - - (2,086) - (2,086) - - Other movements in Cost or Valuation (Reclassifications) 13,908 5,991 1,400 974 691 (23,302) (338) 163 2,695 At 31 March 2026 1,532,040 2,175,873 66,689 3,402 9,733 30,556 3,818,293 631,202 150
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77 Council Dwellings £000 Other Land And Buildings £000 Vehicles, Plant And Equipment £000 Community Assets £000 Surplus Assets £000 Assets Under Constructio n £000 Total Property, Plant and Equipment £000 PPP assets Included in Property, Plant and Equipment £000 Infrastructure Assets (Note 1) £000 Accumulated Depreciation and Impairment As at 1 April 2025 - 80,345 29,127 10 29 - 109,511 6,934 Depreciation Charge 40,003 44,511 9,131 3 12 - 93,660 461 12,264 Depreciation written out to the Revaluation Reserve (40,003) (47,249) - - - - (87,252) (11,440) - Depreciation written out to the Surplus / Deficit on the Provision of Services - (3,963) (4) - (46) - (4,013) - - Impairment losses / (reversals) recognised in the Revaluation Reserve - - - - - - - - - Impairment losses / (reversals) recognised in the Deficit on the Provision of Services - - - - - - - - - De-recognition – Disposals - (246) (7,067) - - - (7,313) - - Eliminated on reclassification to Assets Held for Sale - - - - - - - - - Other movements in Depreciation and Impairment (Reclassifications) - (59) - - 59 - - - - At 31 March 2026 - 73,339 31,187 13 54 - 104,593 (4,045) Net book value At 31 March 2026 1532,040 2,102,534 35,502 3,389 9,679 30,556 3,713,700 635 363,638 At 31 March 2025 1,668,237 2,029,442 27,417 2,006 11,069 21,898 3,391,246 627 353,315 151
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78 Movements on Balances Movements in 2024/2025: Council Dwellings £000 Other Land And Buildings £000 Vehicles, Plant And Equipment £000 Community Assets £000 Surplus Assets £000 Assets Under Construction £000 Total Property, Plant and Equipment £000 PPP assets Included in Property, Plant and Equipment £000 Infrastructure Assets (Note 1) £000 Cost or Valuation As at 1 April 2024 1,477,115 1,941,604 55,394 1,626 10,250 24,790 3,510,779 515,933 Recognition of Right of Use Assets - 24,544 2,021 - - - 26,565 - - Additions 59,019 2,585 3,975 111 1 28,745 94,436 189 19,036 Revaluation increases / (decreases) recognised in the Revaluation Reserve 129,415 129,781 - 0 (1,968) 32 257,260 116,952 - Revaluation increases / (decreases) recognised in the Surplus / Deficit on the Provision of Services (56) 1,604 - (10) (2,621) - (1,083) - - De-recognition – Disposals (304) (130) (5,098) (5) - - (5,537) (304) (130) Assets reclassified from Held for Sale - - - - - - - - - Other movements in Cost or Valuation (Reclassifications) 3,048 9,799 252 294 5,436 (31,669) (12,840) 548 2,695 At 31 March 2025 1,668,237 2,109,787 56,544 2,016 11,098 21,898 3,869,580 633,622 152
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79 Council Dwellings £000 Other Land And Buildings £000 Vehicles, Plant And Equipment £000 Community Assets £000 Surplus Assets £000 Assets Under Construction £000 Total Property, Plant and Equipment £000 PPP assets Included in Property, Plant and Equipment £000 Infrastructure Assets (Note 1) £000 Accumulated Depreciation and Impairment As at 1 April 2024 - 94,294 25,208 10 21 - 119,533 38,284 Depreciation Charge 39,317 42,158 8,948 - 8 - 90,431 10,453 11,702 Depreciation written out to the Revaluation Reserve (39,317) (53,819) - - (85) - (93,221) (41,803) - Depreciation written out to the Surplus / Deficit on the Provision of Services - (2,089) - - (113) - (2,202) - - Impairment losses / (reversals) recognised in the Revaluation Reserve - - - - - - - - - Impairment losses / (reversals) recognised in the Deficit on the Provision of Services - - - - - - - - - De-recognition – Disposals - (1) (5,029) - - - (5,030) - - Eliminated on reclassification to Assets Held for Sale - - - - - - - - - Other movements in Depreciation and Impairment (Reclassifications) - (198) - - 198 - - - - At 31 March 2025 - 80,345 29,127 10 29 - 109,511 6,934 Net book value At 31 March 2025 1,668,237 2,029,442 27,417 2,006 11,069 21,898 3,760,069 626,688 353,315 At 31 March 2024 1,477,115 1,847,310 30,186 1,617 10,231 24,790 3,391,246 477,649 343,286 153
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80 Note 1: Infrastructure asset values have been disclosed in accordance with the Scottish Government’s Finance Circular 9/2022 Statutory Override - Accounting for Infrastructure Assets. The council has applied both statutory overrides set out in the circular which are as follows: ▪ For accounting periods commencing from 1 April 2021 until 31 March 2026, a local authority is not required to report the gross carrying amount and accumulated depreciation for infrastructure assets. ▪ For the accounting periods from 1 April 2021 to 31 March 2026, the carrying amount to be derecognised in respect of a replaced part of an infrastructure asset is to be accounted for as a nil amount, and no subsequent adjustment can be made to the carrying amount of the asset with respect to that part. The approach is set out in Note 39: Accounting Policies. Capital Commitments At 31 March 2026, the council has entered into a number of contracts for the construction or enhancement of Property, Plant and Equipment for housing and non-housing projects in 2026/2027 and future years. The major commitments for both Housing and General Services are as follows: Housing Projects £000 Non-Housing Projects £000 New Build Housing Housing Investment projects including Heating Projects, Windows and Doors, Fire Doors, External Fabric Upgrades, Roofing and Environmental Works 40,331 16,984 Cathcart Road Net Zero Renewal of Play parks - Hamilton/Blantyre Lanark Interchange Stonelaw Road, Rutherglen East Kilbride Cycle Track, A726 Strathaven Road Hairmyres P&R/Redwood Dr Improvements to Accessibility - Electronic Gates South Lanarkshire Lifestyle, Fairhill - Gym Extension Overtoun Park Bandstand - Refurbishment Phase 3 Lanark Memorial Hall - Refurbishment Phase 2 Town Hall Refurbishments First Stop Accommodation - Conversion of Clydesdale Hotel East Kilbride Town Centre Masterplan Schools ICT 2,055 403 464 208 229 350 451 353 362 334 702 280 4,269 11,700 Revaluations The council carries out a rolling programme that ensures that all Property, Plant and Equipment required to be measured at fair value is revalued at least every five years. All valuations were carried out internally. Valuations of land and buildings were carried out in accordance with the methodologies and bases for estimation set out in the professional standards of the Royal Institution of Chartered Surveyors. Valuations of vehicles, plant and equipment are based on current prices where there is an active second-hand market or latest list prices adjusted for the condition of the asset. Vehicles, plant and equipment, despite being valued in the Balance Sheet at current costs are not included in the five year revaluation programme as any changes in valuation are considered to be immaterial. Council dwellings are revalued every year. The significant assumptions applied in estimating the fair values are: ■ All valuations are prepared in accordance with the current edition of the RICS Valuation Standards. ■ All valuations are provided by a Valuer directly employed by South Lanarkshire Council and are accordingly defined as internal valuations. Valuation Assumptions Unless the Appointed Valuer is advised or reports to the contrary, the following valuation assumptions shall apply to all asset valuations provided under this service: ■ It is assumed that the Local Authority shall continue to provide the services to which the assets relate; ■ It is assumed that the property valued, is not at the date of valuation, affected by any mining subsidence and will not be affected in the future; ■ It is assumed that the site is stable and will not occasion any extraordinary costs with regard to mining subsidence; ■ It is assumed that the title to the subject contains no onerous burdens and restrictive conditions and that it has not been ascertained what minerals, rights of support and compensation is attached to the land nor whether rights of use and re-entry have been reserved; ■ It is assumed that the property and its value are unaffected by any matters which would be revealed by local search and replies to the usual enquiries or by inspection of any register and that its condition, use, or intended use was, is or will be lawful; ■ It is assumed that the property has the necessary statutory consents for the current buildings and use and that 154
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81 there are no policies or proposals by statutory authorities that could impact positively or adversely on the value; ■ No investigation shall be undertaken, or information provided regarding the use of hazardous or deleterious materials or techniques in the construction of the property. It is assumed that no such materials or techniques have been used; ■ No investigation shall be undertaken, or information provided regarding the presence of contamination or hazardous substances in the property (including the site) and neighbouring properties. It is assumed that no such contamination or hazardous substances are present; ■ No environmental assessment shall be carried out or information provided on the presence of naturally occurring radon gas. It is assumed that no radon gas is present in the property; ■ It is assumed that adequate repairs and maintenance is being undertaken; and ■ Unless otherwise stated, the date of valuation shall be 1 April of the specified financial year. Revaluation Programme The table below shows the progress of the council’s programme for the revaluation of Property, Plant and Equipment that ensures that all its PPE assets required to be measured at fair value are revalued at least every five years, which are supported by annual indexation in the intervening years. The measurement basis used for determining the gross carrying amount, and the significant assumptions applied in estimating the fair values are disclosed above and in Note 39 Accounting Policies under Section P ‘Property, Plant and Equipment’. Council Dwellings £000 Other Land and Buildings £000 Vehicles, Plant and Equipment £0000 Infrastructure Assets £000 Community Assets £000 Surplus Assets £000 Assets Under Construction £000 Total £000 Carried at historical cost - - 25,064 363,638 3,389 - 30,556 422,647 Valued at fair value 2025/26 1,532,040 545,212 - - - 4,776 2,082,028 2024/25 - 723,310 - - - 1,635 - 724,945 2023/24 - 283,486 - - - 327 - 283,813 2022/23 - 278,351 - - - 924 - 279,275 2021/22 - 250,500 - - - 2,017 - 252,517 5 years ago, and greater - - - - - - - - Total Cost or Valuation 1,532,040 2,080,059 25,064 363,638 3,389 9,679 30,556 4,045,225 Note 19 Other Assets – Intangible, Heritage and Assets Held For Sale Intangible Assets Intangible Assets Heritage Assets Heritage Assets Assets Held for Sale Assets Held for Sale 2025/26 £000 2024/25 £000 2025/26 £000 2024/25 £000 2025/26 £000 2024/25 £000 Cost or Valuation Balance at 1 April 10,447 302 3,853 3,853 168 168 Additions - - - - - - Revaluation increases / (decreases) recognised in the Revaluation Reserve - - - - - - De-recognition – Disposals (272) - - - (168) - Assets reclassified (to) / from Assets Held for Sale - - - - 2,086) - Assets reclassified (to) / from Asset Under Construction - 10,145 - - - - Balance at 31 March 10,175 10,447 3,853 3,853 2,086 168 Accumulated Depreciation Balance at 1 April 388 164 3,853 3,853 - - Depreciation charge 1,162 224 - - - - Depreciation – Disposals (272) - - - - - Balance at 31 March 1,278 388 - - - - Net Book Value at 31 March 8,897 10,059 3,853 3,853 - 168 155
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82 Note 20 Capital Expenditure and Capital Financing The total amount of capital expenditure incurred in the year is shown in the table below (including the value of assets acquired under finance leases and PPP/PFI contracts), together with the resources that have been used to finance it. Where capital expenditure is to be financed in future years by charges to revenue as assets are used by the council, the expenditure results in an increase in the Capital Financing Requirement (CFR), a measure of the capital expenditure incurred historically by the council that has yet to be financed. The CFR is analysed in the second part of this note. General Fund 2025/26 £000 HRA 2025/26 £000 Total 2025/26 £000 General Fund 2024/25 £000 HRA 2024/25 £000 Total 2024/25 £000 Opening Capital Financing Requirement 1,268,007 323,679 1,591,686 1,102,027 307,217 1,409,244 Capital Investment Property, Plant and Equipment 48,784 85,782 134,566 41,928 71,544 113,472 Intangible Assets - - - - - - Decrease in PPP Finance Lease Liability - - - - - - Increase in PPP Finance Lease Liability 2,745 - 2,745 151,221 - 151,221 Impact of Applying Service Concession Flexibility 9,496 - 9,496 9,007 - 9,007 Sources of Finance Capital Receipts (700) - (700) (1,340) (202) (1,542) Government Grants and Other Contributions (36,754) (44,205) (80,959) (29,501) (21,369) (50,870) Sums set aside from revenue: ▪ Direct Revenue Contributions (1,042) (25,815) (26,857) (1,605) (33,506) (35,111) ▪ Loans Fund Principal (8,590) (4,405) (12,995) (3,730) (5) (3,735) Closing Capital Financing Requirement 1,281,946 335,036 1,616,982 1,268,007 323,679 1,591,686 Explanation of movements in year: Increase in Underlying Need to Borrow 10,288 15,762 26,050 9,482 16,467 25,949 Loans Fund Repayments (8,590) (4,405) (12,995) (3,730) (5) (3,735) Decrease in PPP Finance Lease Liability - - - - - - Increase in PPP Finance Lease Liability 2,745 - 2,745 151,221 - 151,221 Impact of Applying Service Concession Flexibility 9,496 - 9,496 9,007 - 9,007 Increase / (Decrease) in Capital Financing Requirement 13,939 11,357 25,296 165,980 16,462 182,442 Note 21 Short Term Debtors 31 March 2026 £000 31 March 2025 £000 Trade Receivables 45,816 31,099 Prepayments 7,610 8,220 Other Receivable Amounts 26,375 60,787 Total 79,801 100,106 156
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83 Note 22 Debtors for Local Taxation The past due but not impaired amount for local taxation and non-domestic rates can be analysed by age as follows: 31 March 2026 Council Tax £000 31 March 2026 NDR £000 31 March 2025 Council Tax £000 31 March 2025 NDR £000 Less than one year 2,557 1,124 2,329 237 One to two years 1,021 130 854 345 Two to five years 196 150 - - More than five years - - - - Total 3,774 1,404 3,183 582 Note 23 Short Term Creditors 31 March 2026 £000 31 March 2025 £000 Trade Payables 126,504 109,667 Other Payables 133,897 125,620 Total 260,401 235,287 Note: Included within the Other Payables balance of £133.897m are balances held on behalf of third parties totalling £7.095m. They relate to Lanarkshire Valuation Joint Board, Clyde Valley Learning and Development Joint Committee, SEEMIS LLP, Regen FX Youth Trust, Supplier Development Programme, Common Good and Trust Funds whose financial transactions are hosted in the Council’s Financial Management System. Note 24 Provisions Injury and damage compensation claims £000 Other provisions (1) £000 Total £000 Balance at 31 March 2025 0 608 608 Additional provisions made in 2025/26 0 144 144 Amount used in 2025/26 0 (608) (608) Unused amounts reversed in 2025/26 0 0 0 Unwinding of discounting in 2025/26 0 0 0 Balance at 31 March 2026 0 144 144 The above provisions can be further analysed into Short Term and Long Term as follows: Injury and damage compensation claims £000 Other provisions (2) £000 Total £000 Short Term 0 144 144 Long Term 0 0 0 Balance at 31 March 2026 0 144 144 (1) The majority of this amount relates to provisions in respect of orders for bespoke adaptations. 157
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84 Note 25 Receipts in Advance The council has received a number of grants and contributions that have yet to be recognised as income. This is because they have conditions attached to them which requires the monies or property to be returned to the giver if these conditions are not met. These monies are committed to spend in 2026/2027. The balances at 31 March 2026 are as follows: 31 March 2026 £000 31 March 2025 £000 Revenue Grants and Contributions Big Lottery - - UK Government - 219 Clyde Gateway 85 85 National Health Service - 30 Scottish Coal 498 498 Scottish Government 653 1,046 North Lanarkshire Council Business Gateway - 300 North Lanarkshire Council ERDF - 1,121 Wind Turbine Construction Compensation (Various) 140 140 Other - 37 Total 1,376 3,476 Note 26 Public Private Partnership and Similar Contracts The Council has two PPP or similar contracts: Secondary Schools PPP and Glasgow Southern Orbital. Secondary Schools PPP: The council entered the PPP agreement in June 2006 for the provision of 17 new build schools (which includes 2 named Additional Support Needs schools) as well as the major refurbishment of Stonelaw High School and Hamilton Grammar. The Unitary Charge is index linked with the inflation rate in the January of the preceding financial year used to agree the charge for the new financial year. The agreement will last 30 years and will end in 2039/2040. The unitary charge paid to the contractor includes the repayment of construction costs, interest and service charges and the projected payments due under the agreement, based on assumed RPI of 2.5% per annum. Glasgow Southern Orbital: The council entered the PPP agreement in July 2006 for the Design, Build, Finance and Operate Contract which covered both the Glasgow Southern Orbital and the M77 Extension with a contract value of £130m. The agreement will last 30 years and will end in 2035/2036. The actual payments made on PPP contracts are single sum unitary charge payments made to the contractor. For year-end accounting purposes we are required to calculate notional figures. Payments remaining to be made under PPP contracts for both Schools and Glasgow Southern Orbital as at 31 March 2025 (assuming an inflation rate of 2.5% for Schools PPP and excluding any estimation of availability/ performance deductions) are as follows: Payment For Services £000 Reimbursement Of Capital Expenditure £000 Interest £000 Contingent Rents £000 Total £000 Payable in 2026/2027 21,469 7,593 8,251 14,742 52,055 Payable within two to five years 91,433 30,058 29,149 62,429 213,069 Payable within six to ten years 127,891 63,770 24,811 115,115 331,587 Payable within eleven to fifteen years 95,948 55,626 6,076 95,946 253,596 Total 336,741 157,047 68,287 288,232 850,307 The impact of a 1% movement in inflation on the 2025/2026 Unitary charge payment would be £0.490m. The liability outstanding to pay the contractor for capital expenditure incurred is as follows: 158
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85 2025/26 £000 2024/25 £000 Balance outstanding at start of year 164,646 172,036 Payments during year (7,599) (7,390) Capital expenditure incurred in the year - - Reduction in liability for prepaid assets - - Balance outstanding at year end 157,047 164,646 Implementation of PPP Service Concession Flexibilities In accordance with Accounting Policy S on page 107 and in line with Finance Circular 10/2022, the Council implemented the permitted PPP Service Concession flexibility in financial year 2022/2023 on a retrospective annuity basis with a useful life of 50 years. The flexibility being applied is consistent with current Council Loans Fund arrangements and is considered prudent, sustainable, and affordable over the life of the asset. The implementation of this arrangement has no impact on the payments made to the contractor. The current notional repayments noted above have been compared against an annuity repayment profile based on the estimated useful asset lives for the each of the two PPP or similar arrangements, over the contract period. The most appropriate asset life is considered to be 50 years which replicates the useful asset life of other similar type assets held on the Council’s balance sheet (schools and roads). By applying the flexibility, a one-off combined retrospective saving of £59.733m was achieved. In addition to the one-off retrospective element, in-year savings have been realised in the scheduled debt repayments up to 2025/2026 of £27.576m. This will be followed by a reduction in the annual charges for further 15 years and then the continuation of the statutory charges after the PPP and similar contracts have been repaid. Over the full asset life of the arrangement, the total repayment for the debt liability remains the same. PPP debt repayment Original repayment £000 Revised repayment £000 Benefit / (Cost) £000 Pre 2025/2026 112,989 35,179 77,810 Paid in 2025/2026 14,310 4,811 9,499 Payable within one to five years 70,880 28,227 42,653 Payable within six to ten years 120,097 36,677 83,420 Payable within eleven to fifteen years 104,924 47,657 57,267 Payable within sixteen to twenty years - 61,924 (61,924) Payable within twenty-one to twenty-five years - 80,204 (80,204) Payable within twenty-six to thirty years - 104,203 (104,203) Payable within thirty-one to forty-five years - 24,318 (24,318) Total 423,200 423,200 - Further information on the movement in value of PPP assets held under service concession arrangements can be found in Note 18. Note 27 Pension Schemes Accounted for as Defined Contribution Schemes Teachers employed by the council are members of the Teachers’ Pension Scheme, administered by the Scottish Government. The Scheme provides teachers with specified benefits upon their retirement, and the council contributes towards the costs by making contributions based on a percentage of members’ pensionable salaries. The Scheme is technically a defined benefit scheme. However, the Scheme is unfunded and the Scottish Government uses a notional fund as the basis for calculating the employers’ contribution rate paid by local authorities. The council is not able to identify its share of underlying financial position and performance of the Scheme with sufficient reliability for accounting purposes. For the purposes of the Financial Statements, it is therefore accounted for on the same basis as a defined contribution scheme. South Lanarkshire Council’s level of participation in the scheme is 5.37% based on the proportion of employer contributions paid in 2024/2025. In 2025/2026, the council paid £50.261 million into the Teachers’ Pension Scheme in respect of employer contributions, being 159
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86 26.0% of pensionable pay. The figures for 2023/2024 were £48.420 million and 26.0% of pensionable pay. The council is responsible for the costs of any additional benefits awarded upon early retirement outside of the terms of the teachers’ scheme. These costs are accounted for on a defined benefit basis and detailed in Note 28. Note 28 Pension Schemes Accounted for as Defined Benefit Schemes The post-employment scheme for employees other than teachers is the Local Government Pension Scheme (LGPS) and is administered in the West of Scotland by Glasgow City Council in respect of all local authorities and admitted bodies in the former Strathclyde area. This is a multi-employer scheme in which it is possible for an employer to identify its share of the assets and liabilities on a consistent and reasonable basis. Employer’s liabilities can be evaluated directly by the Actuary at any time on membership data. Individual employer assets have been apportioned to each employer since 2002. Prior to that date, each employer was considered to have the same funding as the whole Fund. Benefits ■ It is a defined benefit final salary scheme, meaning that the council and employees pay contributions into a fund, calculated at a level to balance the pensions liability with investment assets. ■ A new Career Average Related Earnings (CARE) pension scheme has been introduced from 1 April 2015. The pension accrual rate guarantees a pension that is built up at a rate of 1/49th of the pensionable pay in the financial year. The amount built up in the year is transferred to the member’s pension account and at the end of each financial year the total in the member’s pension account is adjusted in line with the cost of living to ensure it retains its purchasing power. ■ For pension contributions from 2009 to 2015, the pension is based on 1/60th of final pensionable salary and years of service, and prior to 2009, the accrual rate guarantees a pension based on 1/80th and a lump sum based on 3/80th of final pensionable pay and years of pensionable service. ■ There is no automatic entitlement to a lump sum. Members may opt to give up (commute) pension for lump sum up to the limits set by the Finance Act 2004. The scheme’s retirement age is the normal age for the state pension. Pensions are increased annually in line with changes to the Pensions (Increase) Act 1971 and Section 59 of the Social Security Pensions Act 1975. Governance ■ The Strathclyde Pension Fund is operated under the regulatory framework for the LGPS in Scotland and the governance of the scheme is the responsibility of the Strathclyde Pension Fund Committee. This committee is comprised solely of Elected Members of Glasgow City Council. Employing authorities (including South Lanarkshire Council) are represented at the Strathclyde Pension Fund Representative Forum. ■ Policy is determined in accordance with the Local Government Pension Scheme (Scotland) Regulations. Management of the Fund’s investments is carried out by the Fund’s Investment Advisory Panel which selects and appoints a number of external investment managers/partners and monitors their investment performance. ■ Under the Regulations, employers fall into three categories, scheme employers (also known as schedule bodies) such as South Lanarkshire Council, community admission bodies and transferee admission bodies. Admission agreements are generally assumed to be open-ended. However, either party can voluntarily terminate the admission agreement by giving an appropriate period of notice to the other parties. Any deficit arising from the cessation valuation will usually be levied on the departing admission body as a capital payment. Principal Risks ■ The principal risks to the scheme are the longevity assumptions, statutory changes to the scheme, changes to inflation, bond yields and the performance of the investments held by the scheme. These are mitigated to a certain extent by the statutory requirements to charge the General Fund the amount due by statute as described in the accounting policy note. Discretionary Post-employment Benefits ■ Discretionary post-retirement benefits on early retirement are an unfunded defined benefit arrangement, under which liabilities are recognised when an award is made. There are no plan assets built up to meet these pension liabilities. 160
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87 Legal and Regulatory Uncertainty Section 37 confirmations (Virgin Media vs NTL Pension Trustees II Limited ruling) The actuary has advised on an initial legal judgement from July 2023 regarding Section 37 confirmations. The actuary has made no additional allowance within the accounting balance sheet for this because at the time of writing the ruling only applies to the above- named private sector pension scheme; the legal judgement was subject to appeal; it is unknown whether there would be any potential remedy required to public service schemes (including the LGPS); it is unknown what the impact of any potential remedy would be and it is unknown whether Section 37 certificates exist for prior scheme amendments. Accordingly, no provision has been made in the accounts. Guaranteed Minimum Pension Equalisation / Indexation Treatment (Lloyd’s Ruling) Guaranteed Minimum Pension (GMP) was accrued by members of the Local Government Pension Scheme (LGPS) between 6 April 1978 and 5 April 1997. Strathclyde Pension Fund’s actuary has allowed for the impact of full GMP indexation in the calculation of the latest funding valuation results. The Employer’s funding valuation results are used as the starting point for the accounting roll forward calculations and therefore an allowance for full GMP indexation has already been included in the accounting disclosure. Guaranteed Minimum Pension Equalisation - Historical Transfers (Further Lloyd’s Ruling) A further ruling was passed in relation to historical transfers and it is the opinion of Strathclyde Pension Fund’s actuary that this is unlikely to have a significant impact on the pension obligations of a typical employer. In addition, the historic individual member data to assess the impact is not readily available, therefore no allowance has been made in the calculations. McCloud / Sargeant Treatment Ruling – Age Discrimination When the Local Government Pension Scheme (LGPS) Scotland benefit structure was reformed in 2015, transitional protections were applied to certain older members close to retirement age. The benefits accrued from 1 April 2015 by these members are subject to an ‘underpin’ which means that they cannot be lower than what they would have received under the previous benefit structure. In December 2018, the Court of Appeal upheld a ruling (McCloud case) that similar transitional protections were unlawful on the grounds of age discrimination. This means that the LGPS Scotland benefits accrued from 2015 may need to be enhanced so that all eligible members, regardless of age, will benefit from the underpin. The impact of this will depend on the compensation awarded, members’ future salary increases, length of service, retirement age and whether (when) members withdraw from active service. In 2019, Strathclyde Pension Fund’s actuary included an estimate of the impact of this in their IAS19 reports and the Pension Liability reported in the council’s Balance Sheet. In July 2020, the Government published a consultation covering Scotland which proposed amendments to the Local Government Pension Scheme in order to provide a remedy for the McCloud and Sargeant legal rulings and actuaries reviewed their assumptions in the IAS19 reports. The actuary has allowed for the McCloud judgement in the calculation of the latest funding valuation results. The Employer’s funding valuation results are used as the starting point for the accounting roll forward calculations and therefore an allowance is included in the accounting disclosure. Goodwin Treatment Scottish Public Pension Agency circular (Local Government Pension Scheme 2020/04), refers to a ruling that same-sex survivors were originally entitled to survivor benefits, taking into account the member’s service from 6 April 1978. Following the Goodwin Tribunal, regulatory amendments will now need to be made with effect from the same date to extend that entitlement to male spouse survivors of female members. Previously, the male spouse survivor’s entitlement was based on service accrued from 6 April 1988. The change is backdated to 5 December 2005, therefore affects the pension of male spouse survivors where their entitlement arose on or after 5 December 2005. While there is still uncertainty surrounding the potential remedy to the Goodwin judgement, Strathclyde Pension Fund’s actuary has carried out analysis in order to understand the potential impact of implementing a solution to correct the past underpayment of spouses’ benefits and have ascertained that they feel the impact is very small for a typical fund (c0.1% of obligations), therefore no allowance has currently been made in the calculations. Other Cases (Walker and O’Brien) The actuary has also highlighted 2 other court cases which may impact on Local Government Pension Scheme benefits in the future. The first was the Walker case where it was ruled that surviving spouses in same sex marriages should be entitled to the same benefits as those in different sex marriages and also the O’Brien case where it was ruled that recognition of part time benefits should apply to service for the period prior to 7 April 2000. The Actuary’s view remains unchanged from previous years and is that they are unlikely to be significant judgements in terms of impact on pension obligations. Until further guidance is released from the relevant governing bodies in the LGPS, no allowance has been made for the potential remedies for these judgements. Transactions Relating to Post-Employment Benefits The cost of retirement benefits is recognised in the reported Cost of Services when they are earned by the council’s employees, rather than when the benefits are eventually paid as pensions. However, the charge that is statutorily required to be made against the Council Tax is based upon the pension contributions payable by the council in the year, and an adjustment is made in the Movement in Reserves Statement to achieve this. 161
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88 The following transactions have been made in the accounting statements in 2025/2026 and the prior year 2024/2025. 31 March 2026 £000 31 March 2025 £000 Comprehensive Income and Expenditure Statement (CIES) Cost of Services: Service cost comprising: • current service cost 46,896 60,313 • past service costs 3,685 - • unfunded benefits - - Financing and Investment Income and Expenditure • net interest expense 6,233 6,285 Total Post Employment Benefit Charged to the Surplus or Deficit on the Provision of Services 56,814 66,598 Other Benefits Charged to the CIES Re-measurement of the net defined liability comprising: • Expected return on pension fund assets (102,059) 37,946 • Actuarial (gains) or losses arising on changes in demographic assumptions 11,802 (3,614) • Actuarial (gains) or losses arising on changes in financial assumptions (72,671) (314,469) • Actuarial (gains) or losses arising on changes in other experiences 16,799 (22,890) • Actuarial (gains) or losses arising on de-recognition of Pension Asset 116,472 249,984 Total Post Employment Benefit Charged to the CIES (29,657) (53,043) Net charge to the Surplus / Deficit on the Provision of Services brought forward 56,814 66,598 Movement in Reserves Statement (MIRS) • Reversal of net charges made to the Surplus or Deficit on the Provision of Services for post-employment benefits in accordance with the Code (27,122) (37,369) Actual amount charged against the General Fund balance for pensions in the year: Employers’ contributions payable to Strathclyde Pension Fund 29,692 29,229 Pensions Assets and Liabilities Recognised in the Balance Sheet The amount included in the Balance Sheet arising from the Council’s obligation in respect of its defined benefit plans is per the table below. The net asset arising from the Council’s involvement in the defined benefit scheme totals £1,398,538m at 31 March 2026. However, this has been limited to £nil in line with the accounting requirements of IFRIC 14 to limit the recognition of a pension asset to the extent to which the Council can recover the benefits through either refunds or reduced contributions. As the Council is not able to withdraw from the scheme or recover funds directly, the asset is therefore limited to the forecast reductions in contributions as compared to the forecast future service costs. This has limited the recognition of the pension asset to £nil. Separately the Council has continued to recognise the unfunded element of its pension liabilities as there are no scheme assets to cover the future costs of these liabilities as they are due going forward. 31 March 2026 £000 31 March 2025 £000 Present Value of Funded Obligations (1,841,527) (1,784,877) Fair Value of Pension Fund Assets 3,240,065 2,996,706 De-Recognition of Pension Fund Assets (Surplus) to Asset Ceiling (1,398,538) (1,211,829) Net Asset / (Liability) arising from Funded Obligations 0 0 Teachers’ Unfunded Pensions 50,776 (51,939) Unfunded Liabilities for Pension Fund 36,387 (37,021) Unfunded Liabilities Prior to 1996 Local Government Reorganisation 8,294 (9,032) Present Value of Unfunded Obligations Accounted for Separately 95,457 (97,992) A reconciliation of South Lanarkshire Council’s share of the present value of Strathclyde Pension Fund’s defined benefit obligation (liability) is as follows: 162
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89 31 March 2026 £000 31 March 2025 £000 Opening balance at 1 April (1,882,869) (2,122,392) Current service cost (46,896) (60,313) Interest cost (108,900) (102,831) Contributions by Pension Fund participants (18,936) (18,309) Re-measurement gains and (losses) • Actuarial gains and losses arising on changes in demographic assumptions (11,802) 3,614 • Actuarial gains and losses arising on changes in financial assumptions 72,671 314,469 • Actuarial gains and losses arising on changes in other experiences (16,799) 22,890 Past service costs (including curtailment) (3,685) - Settlements - Benefits paid 80,232 80,003 Closing balance at 31 March (1,936,984) (1,882,869) Less Present Value of Unfunded Obligations Accounted for Separately 95,457 97,992 Present Value of Funded Obligations (1,841,527) (1,784,877) A reconciliation of South Lanarkshire Council’s share of the fair value of Strathclyde Pension Fund’s assets is as follows: 31 March 2026 £000 31 March 2025 £000 Opening fair value of pension fund assets 2,996,706 2,926,079 Interest Income 172,904 141,038 Re-measurement gains and (losses) • Expected rate of return on pension fund assets 102,059 (37,946) • Actuarial gains and (losses) - - • Actuarial losses arising on changes in other experiences - - The effect of changes in foreign exchange rates - - Contributions from employers 29,692 29,229 Contributions from employees into the scheme 18,936 18,309 Benefits paid (80,232) (80,003) Closing balance at 31 March 3,240,065 2,996,706 Analysis of Pension Fund’s Assets 31 March 2026 31 March 2025 Quoted Prices in Active Markets £000 Prices not quoted in Active Markets £000 Total £000 Quoted Prices in Active Markets £000 Prices not quoted in Active Markets £000 Total £000 Cash and cash equivalents - 104,487 104,487 - 72,914 72,914 Equity Instruments 681,338 2,342 683,680 620,802 1,937 622,739 Debt Instruments - - - - - - Real Estate - 224,598 224,598 - 226,095 226,095 Derivatives - - - - (2) (2) Private Equity - 777,034 777,034 - 692,693 692,693 Investment Funds - 1,450,266 1,450,266 10,972 1,371,295 1,382,267 Total Assets 681,338 2,558,727 3,240,065 631,774 2,364,932 2,996,706 Basis for Estimating Assets and Liabilities The council’s share of the net obligations of the Strathclyde Pension Fund is an estimated figure based on actuarial assumptions about the future and is a snapshot at the end of the financial year. The net obligation has been assessed using the “projected unit method”, that estimates the pensions that will be payable in future years dependent upon assumptions about mortality rates, salary levels and so on. The Fund’s obligation has been assessed by Hymans Robertson, an independent firm of actuaries, and the estimates are based on the latest full valuation of the Fund at 31 March 2023. The significant assumptions used by the actuary are shown in the table below. Note 2 includes a sensitivity analysis for the pension obligation based on reasonably possible changes of these assumptions occurring at the reporting date. 163
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90 31 March 2026 £000 31 March 2025 £000 Long term expected rate of return on assets in the Fund • Equity investment 4.85% • Bonds 4.85% • Property 4.85% • Cash 4.85% Mortality Assumptions (years): • Men 20.0 19.6 • Women 22.5 22.3 Longevity at 65 for future pensioners (years): • Men 20.7 20.4 • Women 24.3 24.1 Rate of inflation 2.75% Rate of increase in salaries 3.70% 3.45% Rate of increase in pensions 3.00% 2.75% Rate for discounting Fund liabilities 6.30% 5.80% Take-up option to convert annual pension into retirement lump sum - Pre April 2009 service 75.0% 75.0% - Post April 2009 service 75.0% 75.0% Asset and Liability Matching (ALM) Strategy The main fund (Fund 1) of Strathclyde Pension Fund does not have an asset and liability matching strategy [ALM] as this is used mainly by mature funds. The Fund does match, to the extent possible, the types of assets invested to the liabilities in the defined benefit obligation. As is required by the pensions and investment regulations, the suitability of various types of investment has been considered, as has the need to diversify investments to reduce the risk of being invested in too narrow a range. The Fund invests in equities, bonds, properties and in cash. Impact of High Inflationary Environment The Fund’s actuary had advised that the CARE, deferred pensioner and pensioner obligations are increased each April in line with previous September rate of CPI, and the April 2026 Pension Increase Order of 3.8% has been applied to the obligations within the 31 March 2026 closing Balance Sheet figures. Impact on the Authority’s Cash Flow The objectives of the Fund are to keep employers’ contributions at as constant a rate as possible. The Fund has agreed a strategy to achieve a funding rate of 100% in the longer term. The Scheme is a multi-employer defined benefit plan and employers’ contributions have been determined so that employee and employer rates are standard across all participating Local Authorities. Following the completion of the triennial valuation as at 31 March 2023, employers’ contribution rates were set at a reduced rate of 6.5% for 2024/2025 and 2025/2026. They are due to increase up to 17.5% in 2026/2027. The total contributions expected to be made by the council to Strathclyde Pension Fund in the year to 31 March 2027 is £55.829 million. The assumed weighted average duration of the defined benefit obligation for scheme members is 17.0 years. 164
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91 Note 29 Contingent Assets and Liabilities As at 31 March 2026 the council has the following material contingent liabilities: Historical Childhood Abuse The council recognises the potential for compensation claims deriving from the Scottish Government’s Limitation (Childhood Abuse) Scotland Act 2017. At this stage the extent of the council’s potential liability is unknown. The Government introduced a Redress Scheme in December 2021. This may have an impact on the extent of the Council’s liability. This cannot be quantified. Strathclyde Regional Council Intromissions Glasgow City Council are the accounting authority for any intromissions in relation to claims/litigation for the former Strathclyde authorities. The Council has included confirmed liabilities to date in the 2025/2026 Accounts, however, at this stage the extent of any further potential liability of the council is unknown. Pensions A ruling was passed in relation to historical transfers and it is the opinion of Strathclyde Pension Fund’s actuary that this is unlikely to have a significant impact on the pension obligations of a typical employer. In addition, the historic individual member data to assess the impact is not readily available, therefore no allowance has been made in the calculations. Given the uncertainty and the immaterial nature of any potential impact, no provision has been made in the Accounts. A circular from the Scottish Public Pensions Agency (Local Government Pension Scheme 2020/04) refers to a ruling that same-sex survivors were originally entitled to survivor benefits, taking into account the member’s service from 6 April 1978. Previously, the male spouse survivor’s entitlement was based on service accrued from 6 April 1988. The change is backdated to 5 December 2005, therefore affects the pension of male spouse survivors where their entitlement arose on or after 5 December 2005. Following the Goodwin Tribunal, regulatory amendments will now need to be made with effect from the same date to extend that entitlement to male survivors of female members. While this could have a financial impact on future years’ costs, and the impact cannot yet be quantified, current information from the Strathclyde Pension Fund actuary suggests that this is likely to be minimal. Given the uncertainty, and the immaterial nature of any potential impact, no provision has been made in the Accounts. In addition, the actuary also highlighted an awareness of 2 other court cases which may impact on pension benefits in the future. The first was the Walker case where it was ruled that surviving spouses in same sex marriages should be entitled to the same benefits as those in different sex marriages and also the O’Brien case where it was ruled that recognition of part time benefits should apply to service for the period prior to 7 April 2000. The actuary’s understanding is that these are unlikely to be significant judgements in terms of impact on future pension obligations of Employers. Again, given the uncertainty, the immaterial nature of any potential impact, and as no further guidance has been released from the relevant governing bodies in the LGPS no provision has been made in the Accounts. Finally, the actuary has advised on an initial legal judgement from July 2023 (Virgin Media vs NTL Pension Trustees II Limited ruling) regarding Section 37 confirmations. The actuary has made no additional allowance within the accounting balance sheet for this because at the time of writing the ruling only applies to the above-named private sector pension scheme; the legal judgement was appealed however, the Court of Appeals dismissed the case and the original decision stands; it is unknown whether there would be any potential remedy required to public service schemes (including the LGPS); it is unknown what the impact of any potential remedy would be and it is unknown whether Section 37 certificates exist for prior scheme amendments. Accordingly, no provision has been made in the accounts. Contractor Claims There are no outstanding claims that have not been accounted for in the Accounts. Legal Action The Council is involved in an ongoing legal claim involving an alleged data breach. Matters are ongoing, therefore any potential liability cannot be determined. 165
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92 Note 30 Financial Instruments Categories of Financial Instruments The following categories of financial instrument are carried in the Balance Sheet: 31 March 2026 31 March 2025 Long Term £000 Current £000 Total £000 Long Term £000 Current £000 Total £000 Financial Assets Fair value through profit and loss - - - - Amortised Cost - 60,153 60,153 - 23,836 23,836 Total Financial Assets - 60,153 60,153 - 23,836 23,836 Financial Liabilities Fair value through profit and loss - - - Amortised cost (1,076,478) (244,243) (1,320,721) (1,146,593) (193,054) (1,339,647) Total Financial Liabilities (1,076,478) (244,243) (1,320,721) (1,146,593) (193,054) (1,339,647) 166
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93 Income, Expense, Gains and Losses 2025/26 2024/25 Surplus or Deficit on the Provision of Services £000 Other Comprehensive Income and Expenditure £000 Total £000 Surplus or Deficit on the Provision of Services £000 Other Comprehensive Income and Expenditure £000 Total £000 Net Gains/Losses on: Financial Assets Measured at Fair Value Through Profit and Loss - - - - - - Financial Assets Measured at Amortised Cost - - - - - - Investments in Equity Instruments Designated at Fair Value Through Other Comprehensive Income - - - - - - Financial Assets Measured at Fair Value Through Other Comprehensive Income - - - - - - Financial Liabilities Measured at Amortised Cost - - - - - - Total Net Gains/Losses - - - - - - Interest Revenue Financial Assets Measured at Amortised Cost (4,330) - (4,330) 3,711 - 3,711 Other Financial Assets Measured at Fair Value Through Other Comprehensive Income - - Total Interest Revenue (4,330) - (4,330) 3,711 - 3,711 Interest Expense 40,291 - 40,291 (38,921) - (38,921) Fee Income Financial Assets or Financial Liabilities that are not at Fair Value Through Profit and Loss - - - - - - Trust and Other Fiduciary Activities - - - - - - Total Fee Income - - - - - - Fee Expense Financial Assets or Financial Liabilities that are not at Fair Value Through Profit and Loss - - - - - - Trust and Other Fiduciary Activities - - - - - - Total Fee Expense - - - - - - 167
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94 Fair Value of Financial Assets There are no financial assets held at fair value. Transfers Between Levels of the Fair Value Hierarchy There were no transfers between input levels 1 and 2 during the year. Changes in the Valuation Technique There has been no change in the valuation technique used during the year for the financial instruments. The Fair Values of Financial Assets and Financial Liabilities that are not Measured at Fair Value (but for which Fair Value Disclosures are Required) All financial assets and liabilities held by the authority are carried in the Balance Sheet at amortised cost. Their fair value can be assessed by calculating the present value of the cash flows that take place over the remaining life of the instruments, using the following assumptions: ■ For loans from the Public Works Loans Board (PWLB), premature repayment rates from the PWLB have been applied to provide the fair value under PWLB debt redemption procedures. ■ For non PWLB loans, premature repayment rates from the PWLB have been applied to provide the fair value under PWLB debt redemption procedures. ■ Where an instrument has a maturity of less than 12 months the fair value is taken to be the principal outstanding. The fair values calculated are as follows: 2025/26 2025/26 2024/25 2024/25 Carrying Amount £000 Fair Value £000 Carrying Amount £000 Fair Value £000 Financial Liabilities Financial Liabilities held at amortised cost: PWLB Debt 860,236 813,246 (980,907) (949,737) Financial Liabilities held at amortised cost: Non PWLB Debt 160,670 161,091 (58,926) (59,501) PFI and Finance Lease Liabilities 299,814 299,814 (299,814) (299,814) Total Financial Liabilities 1,320,720 1,274,151 (1,339,647) (1,309,052) Financial Assets Financial Assets held at amortised cost 60,153 60,153 23,836 23,836 Total Financial Assets 60,153 60,153 23,836 23,836 The fair value of the liabilities is greater than the carrying amount because the Council’s portfolio of loans includes a number of fixed rate loans where the interest rate payable is higher than the rates available for similar loans in the market at the balance sheet date. This shows a notional future loss (based on economic conditions at 31 March 2026) arising from a commitment to pay interest to lenders above current market rates. The fair value of Public Works Loan Board (PWLB) loans of £813.246m measures the economic effect of the terms agreed with the PWLB compared with estimates of the terms that would be offered for market transactions undertaken at the Balance Sheet date, which has been assumed as the PWLB redemption interest rates. The difference between the carrying amount and the fair value measures the additional interest that the Council will pay over the remaining terms of the loans under the agreements with the PWLB, against what would be paid if the loans were at prevailing market rates. However, the authority has a continuing ability to borrow at concessionary rates from the PWLB rather than from the markets, termed the PWLB Certainty interest rates. A supplementary measure of the fair value as a result of its PWLB commitments for fixed rate loans is to compare the terms of these loans with the new borrowing rates available from the PWLB. If a value is calculated on this basis, the carrying amount of £860.236m would be valued at £760.323m. But, if the authority were to seek to avoid the projected loss by repaying the loans to the PWLB, the PWLB would raise a penalty charge, based on the redemption interest rates, for early redemption of £46.990m for the additional interest that will not now be paid. The exit price for the PWLB loans including the penalty charge would be £813.246m. 168
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95 Fair Value Hierarchy for Financial Assets and Financial Liabilities that are not Measured at Fair Value as at 31 March 2026: Recurring fair value measurements using: Quoted Prices in Active Markets for Identical Assets (Level 1) £000 Other Significant Observable Inputs (Level 2) £000 Significant Unobservable Inputs (Level 3) £000 Total £000 Financial Liabilities Financial Liabilities held at amortised cost: PWLB Debt - (813,246) - (813,246) Financial Liabilities held at amortised cost: Non PWLB Debt - (161,091) - (161,091) PFI and Finance Lease Liabilities - (299,814) - (299,814) Financial Assets Financial Assets held at amortised cost - - - - Total Assets / Liabilities (1,274,151) - (1,274,151) Fair Value Hierarchy for Financial Assets and Financial Liabilities that are not Measured at Fair Value as at 31 March 2025: Recurring fair value measurements using: Quoted Prices in Active Markets for Identical Assets (Level 1) £000 Other Significant Observable Inputs (Level 2) £000 Significant Unobservable Inputs (Level 3) £000 Total £000 Financial Liabilities - (949,737) - (949,737) Financial Liabilities held at amortised cost: PWLB Debt - (59,501) - (59,501) Financial Liabilities held at amortised cost: Non PWLB Debt - (299,814) - (299,814) PFI and Finance Lease Liabilities Financial Assets 23,836 - - 23,836 Financial Assets held at amortised cost 23,836 (1,309,052) - (1,285,216) Total Assets / Liabilities - (949,737) - (949,737) Note 31 Disclosure of Nature and Extent of Risks Arising From Financial Instruments Key Risks The council’s activities expose it to a variety of financial risks: ■ Credit Risk – the possibility that other parties might fail to pay amounts due to the council ■ Liquidity Risk – the possibility that the council might not have funds available to meet its commitments to make payments ■ Refinancing Risk – the possibility that the council might be required to renew a financial instrument on maturity at disadvantageous interest rates or terms ■ Market Risk – the possibility that financial loss might arise for the council as a result of changes in such measures as interest rates or stock market movements. 169
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96 Overall Procedures for Managing Risk The procedures for risk management are set out through a legal framework set out in the Local Government (Scotland) Act 2003 and the associated regulations. These require the council to comply with the CIPFA Prudential Code and the CIPFA Treasury Management in the Public Services Code of Practice. Overall these procedures require the Council to manage risk in the following ways: ■ by approving an investment strategy for the forthcoming year setting out its criteria for both investing and selecting investment counterparties; ■ by formally adopting the requirements of the Code of Practice; ■ by approving annually in advance prudential indicators for the following three years limiting: ▪ The council’s overall borrowing ▪ Its maximum and minimum exposures to fixed and variable rates ▪ Its maximum and minimum exposures of the maturity structure of its debt ▪ Its maximum annual exposures to investments maturing beyond a year These are required to be reported and approved at, or before, the council’s annual Council Tax budget setting. These items are reported within the Annual Treasury Management Strategy which outlines the detailed approach to managing risk in relation to the council’s financial instrument exposure. Actual performance is also reported quarterly to Members. These polices are implemented by a central treasury team. The council maintains written principles for overall risk management, as well as written policies covering specific areas, such as interest rate risk, credit risk, and the investment of surplus cash through Treasury Management Practices (TMPs). Nature and Extent of Risks – Credit Risk Credit Risk Credit Risk arises from deposits with banks and financial institutions, as well as credit exposures to the council’s customers The council manages this risk by ensuring that investments are placed with the Debt Management Office, other local authorities or Banks and Building Societies having sufficiently high credit worthiness as set out in the Treasury Management Strategy. The table below summarises the nominal value of the Council’s investment portfolio at the end of 31 March 2025 into the relative credit ratings. Balance Invested as at 31 March 2026 Counterparty/Country Long Term Rating (Fitch) Up to 1 month £000 Greater than 1 month and up to 3 months £000 Greater than 3 months and up to 6 months £000 Greater than 6 months and up to 9 months £000 Greater than 9 months and up to 12 months £000 Greater than 12 months £000 Total £000 Debt Management Office AA- 14,960 - - - - - 14,960 Total UK Government 14,960 - - - - - 14,960 Local Authorities NR* 45,000 - - - - - 45,000 Total UK Local Authorities 45,000 - - - - - 45,000 Bank of Scotland AA- 83 - - - - - 83 The Royal Bank of Scotland AA- 65 - - - - - 65 Total UK Banks 148 - - - - - 148 Total 60,108 - - - - - 60,108 *NR = Not Rated The Ratings are as at 31 March 2026 and are intended to provide an indication of credit risk. These are not necessarily the ratings of institutions at the time deposits were placed. The Ratings above are from Fitch ratings. The Long-Term Rating is the benchmark measure of probability of default. 170
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97 Amounts Arising from Expected Credit Losses The council’s investments have been assessed and it has been concluded that the expected credit loss is not material and therefore no allowances have been made. The following analysis summarises the council’s potential maximum exposure to credit risk on the level of default on debtors. 2025/26 £000 Bad Debt Provision £000 2024/25 £000 Bad Debt Provision £000 Debtors 78,282 8,171 82,003 (7,961) The Debtors figure above does not include debtors for Council Tax, Non-Domestic Rates and Council House Rents as these are not considered to be financial assets. Of the gross Debtors figure included in the note, £20.109m (2023/2024: £14.504m) is considered to be past its date for payment. This past due amount can be analysed by age as follows: 2025/26 £000 2024/25 £000 Less than three months 6,189 11,251 Three to six months 1,813 1,790 Six months to one year 1,268 915 More than one year 6,874 6,153 Total 16,144 20,109 Nature and Extent of Risks – Liquidity Risk Liquidity Risk As the council has ready access to borrowings from the Public Works Loans Board, there is no significant risk that it will be unable to raise finance to meet its commitments under financial instruments. There may be a risk that the council will be bound to replenish a significant proportion of its borrowings at a time of unfavourable interest rates. The approved prudential indicator sets limits on the maturity structure of debt, and the council’s approved treasury and investment strategies address the main risks, and the central Treasury team address the operational risks within the approved parameters. This includes: ■ Monitoring the maturity profile of financial liabilities and amending the profile through either new borrowing or the rescheduling of existing debt. ■ Monitoring the maturity profile of investments to ensure sufficient liquidity is available for the Council’s day to day cash flow requirements. The maturity analysis of financial liabilities is as follows: 2025/26 £000 2024/25 £000 Less than one year 230,412 179,224 Between one and two years 70,112 70,115 Between two and five years 244,527 213,468 More than five years 475,856 577,026 Total 1,020,907 1,039,833 All trade and other payables are due to be paid in less than one year. 171
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98 Nature and Extent of Risks – Market Risk Interest Rate Risk The council is exposed to interest rate movements on its borrowings and investments. Movements in interest rates have a complex impact on the council. For instance, a rise in interest rates would have the following effects: ■ borrowings at variable rates – the interest expense charged to the Comprehensive Income and Expenditure Statement will rise ■ borrowings at fixed rates – the fair value of the liabilities borrowings will fall ■ investments at variable rates – the interest income credited to the Comprehensive Income and Expenditure Statement will rise ■ investments at fixed rates – the fair value of the assets will fall Borrowings are not carried at fair value on the balance sheet, so nominal gains and losses on fixed rate borrowings would not impact on the surplus or deficit on the provision of services or other comprehensive income and expenditure. However, changes in interest payable and receivable on variable rate borrowings and investments will be posted to the surplus or deficit on the provision of services and affect the General Fund balance. Movements in the fair value of fixed rate investments that have a quoted market price will be reflected in the other comprehensive income and expenditure. The council has a number of strategies for managing interest rate risk. The Annual Treasury Management Strategy draws together the council’s prudential indicators and its expected treasury operations, including an expectation of interest rate movements. From this Strategy a prudential indicator is set which provides maximum and minimum limits for fixed and variable interest rate exposure. The central Treasury team will monitor market and forecast interest rates within the year to adjust exposures appropriately. A sensitivity analysis has been carried out to assess the financial effect of a 1% variance in interest rates as suggested in the Code Guidance Notes 2025/2026. If all interest rates had been 1% higher (with all other variables held constant) the financial effect would be: £000 Increase in interest payable on variable rate borrowings 80 Increase in interest receivable on variable rate investments 1,102 Impact on Comprehensive Income and Expenditure Statement 1,182 Share of overall impact credited to the HRA 296 Decrease in fair value of fixed rate investment assets 0 Impact on Comprehensive Income and Expenditure Statement 0 Decrease in fair value of fixed rate borrowing liabilities (no impact on Comprehensive Income and Expenditure Statement) (102,074) The approximate impact of a 1% fall in interest rates would be as above but with the movements being reversed. These assumptions are based on the same methodology as used in the Note – Fair Value of Assets and Liabilities carried at Amortised Cost. Price Risk The council does not invest in equity shares and is therefore not exposed to losses arising from movements in the price of shares. Foreign Exchange Risk The Council has no financial assets or liabilities denominated in foreign currencies. It therefore, has no exposure to loss arising from movements in exchange rates. 172
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99 Note 32 Cash Flow Statement Non-Cash Movements The balance of non-cash movements is made up of the following elements: 31 March 2025 £000 31 March 2026 £000 101,241 Depreciation, impairment and amortisation of assets 108,165 30,494 Movement in creditors 21,744 4,869 Movement in debtors 22,296 635 Movement in inventories (78) 37,369 Movement in pension liability 27,122 507 Carrying amount of non-current assets and non-current assets held for sale, sold or derecognised 5,583 - Other non-cash items charged to the net surplus / deficit on the provision of services - 175,115 Net cash flows from the provision of services for non-cash movements 184,832 Note 33 Cash Flow Statement Operating Activities Items Included in Net Surplus / (Deficit) on the Provision of Services That are Investing and Financing Activities The cash flows for these activities include the following items: 2024/25 £000 2025/26 £000 (50,851) Capital grants and contributions (87,907) (7,775) Proceeds from the sale of property, plant and equipment, investment property and intangible assets (610) (58,626) Net cash flows from items included in the net surplus / (deficit) on the provision of services that are investing and financing activities (88,517) Note 34 Cash Flow Statement Investing Activities 2024/25 £000 2025/26 £000 (113,472) Purchase of property, plant and equipment and intangible assets (134,566) (40,000) Purchase of short-term investments - 7,775 Proceeds from the sale of property, plant and equipment and intangible assets - 40,000 Proceeds from short term investments 611 49,144 Other receipts from investing activities 82,892 (56,553) Net cash flows from investing activities (51,063) Note 35 - Cash Flow Statement Financing Activities 2024/25 £000 2025/26 £000 145,000 Cash receipts of short term and long term borrowing 336,500 (16,575) Cash payments for the reduction of the outstanding liabilities relating to finance leases for PPP contracts (19,018) (148,770) Repayments of short term and long term borrowing (355,154) (20,345) Net cash flows from financing activities (37,672) Note 36 - Cash Flow Statement Cash and Cash Equivalents 31 March 2025 £000 31 March 2026 £000 101 Cash held by officers 105 9,024 Bank current accounts (6,126) 15,906 Short term deposits 60,059 25,031 Total cash and cash equivalents 54,038 173
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100 Note 37 Common Good Common Good funds are for the benefit of the geographical areas of the former burghs and the council’s Finance and Corporate Resources Committee considers the uses to which funds can be put. Summary of Common Good Funds 2024/25 Total £000 Lanark £000 Biggar £000 Hamilton £000 Rutherglen £000 2025/26 Total £000 Income and Expenditure Accounts 1,000 Income for Year 41 1 147 5 194 (811) Expenditure for Year (71) (230) (327) - (628) 189 Surplus / (Deficit) To Balance Sheet (30) (229) (180) 5 (434) Balance Sheet Fixed Assets 3,176 Property, Plant and Equipment 1,594 3,323 1,506 - 6,423 Investments - General - - - - - 1,252 Advances to South Lanarkshire Council Loans Fund 302 27 613 138 1,080 - - Debtors - - - - 4,428 Total Assets 1,896 3,350 2,119 138 7,503 Current Liabilities (21) Creditors (2) (16) (18) 4,407 Total Assets less Current Liabilities 1,894 3,350 2,103 138 7,485 Represented by: 2,886 Common Good Account 1,181 26 1,690 133 3,030 188 Surplus / (Deficit) (30) (229) (180) 5 (434) 14 Amortisation of Revaluation Reserve 5 12 7 - 24 (58) Gain / Loss on Disposal of Fixed Assets - - - - - 3,030 1,156 (191) 1,517 138 2,620 Revaluation Reserve 1,383 Opening Balance 792 0 585 - 1,377 8 Gain / Loss on Revaluation (49) 3,553 8 - 3,512 (14) Amortisation of Revaluation Reserve (5) (12) (7) - (24) 1,377 Closing Balance 738 3,541 586 - 4,865 4,407 1,894 3,350 2,103 138 7,485 174
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101 Note 38 Trust Funds The Council administers a total of 3 Trust Funds, all of which are historically significant and some of which are financially significant. The most significant fund is the Loudon Bequest (shown within the Social Work section) which is used to finance holiday projects for elderly people. The balance of the fund as at 31 March 2026 was £1.029m. These Trust Funds do not represent assets of the Council and as a result are not included in the Council's Balance Sheet. The individual funds have not been subject to a separate audit or audit opinion; however, they have been considered in overall terms, in the context of those materiality levels which apply to the Council's Financial Statements. Summary of Trust Funds 2024/25 Total £000 Charitable £000 The South Lanarkshire Charitable Trust £000 The South Lanarkshire Educational Trust £000 2025/26 Total £000 Note Income and Expenditure Account 45 Income for Year 47 5 4 56 (30) Expenditure for Year (7) (12) (9) (28) 15 Surplus / (Deficit) to Balance Sheet 40 (7) (5) 28 Balance Sheet 824 Investments - General 813 10 - 822 380 Investments - South Lanarkshire Council 216 97 95 408 1,204 Net Assets 1,029 107 95 1,231 Represented by: 827 Capital Account as at 1/4/2025 814 10 - 824 (3) Movement During Year (1) - - (2) 1 824 Capital Account as at 31/3/2026 813 10 - 823 363 Revenue Account as at 1/4/2025 176 104 100 380 17 Movement During Year 40 (7) (5) 28 2 380 Revenue Account as at 31/3/2026 216 97 95 408 1,204 Total Reserves 1,029 107 95 1,231 Note 1 The movement on the Capital Account represents the net purchase and sale of investments on the Loudon Bequest during the year. Note 2 The movement on the Revenue Account represents the income and expenditure of the trust fund. 175
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102 Note 39 Accounting Policies A General Principles The Annual Accounts summarise the council’s transactions for the 2025/2026 financial year and its position at the year-end of 31 March 2026. The council is required to prepare Annual Accounts by the Local Authority Accounts (Scotland) Regulations 2014, which section 12 of the Local Government in Scotland Act 2003 requires to be prepared in accordance with proper accounting practices. These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2025/2026, supported by International Financial Reporting Standards (IFRS) and statutory guidance issued under section 12 of the 2003 Act. The accounting convention adopted in the Annual Accounts is principally historical cost, modified by the revaluation of certain categories of non-current assets and financial instruments. The accounting policies have been applied consistently. B Accruals of Income and Expenditure Activity is accounted for in the year that it takes place, not simply when cash payments are made or received. In particular: ■ Revenue from contracts is recognised reflecting the transfer of goods or services to the recipient at the amount which the council expects to be entitled to in exchange for those goods or services. ■ Other revenue is recognised when the council can measure reliably the percentage of completion of the transaction and it is probable that economic benefits or service potential associated with the transaction will flow to the council. ■ Supplies are recorded as expenditure when they are consumed – where there is a difference between the date supplies are received and their consumption, they are carried as stock on the council’s Balance Sheet. ■ Expenses in relation to services received are recorded as expenditure when the services are received, rather than when payments are made. ■ The Corporate i-Procurement system operates across the council’s service areas. For all purchases made via the i-Procurement system, sundry creditors were accrued on the basis of all goods and services received by 31 March 2026, regardless of value and materiality. During the financial year, period end accruals have also been made on a similar period by period basis. For any residual purchases, not made via the i- Procurement System sundry creditors are accrued on the basis of payments made during the first 3 weeks of April, together with specific accruals in respect of further material items. ■ Interest payable on borrowings and receivable on investments is accounted for respectively as expenditure and income on the basis of the effective interest rate for the relevant financial instrument rather than the cash flows fixed or determined by the contract. ■ Where revenue and expenditure have been recognised but cash has not yet been received or paid, a debtor or creditor for the relevant amount is recorded in the Balance Sheet. ■ Where revenue relating to a contract has been recognised but cash has not yet been received, this is recorded in the Balance Sheet as a contract asset. ■ Where cash relating to a contract has been received in advance of the transfer of goods or services, this is recorded in the Balance Sheet as a contract liability. ■ Where there is evidence that debts are unlikely to be settled, the balance of debtors is written down and a charge made to revenue for the income that might not be collected. Where the council is acting as an agent for another party (for example in the collection of National Non- Domestic Rates and Council Tax), income and expenditure are recognised only to the extent that commission is receivable by the council for the agency services rendered or the council incurs expenses directly on its own behalf in rendering the services. C Cash and Cash Equivalents Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are investments that mature in three months or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value. In the Cash Flow Statement, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the council’s cash management. D Charges to Revenue for Non- Current Assets Services are debited or credited with the following amounts to record the cost of holding non-current assets during the year: ■ depreciation attributable to the assets used by the relevant service ■ revaluation and impairment losses on assets used by the service where there are no accumulated gains in the Revaluation Reserve against which the losses can be written off ■ amortisation of intangible fixed assets attributable to the service ■ the reversal of a revaluation or impairment loss previously charged to the Surplus or Deficit on the Provision of Services. The council is not required to raise Council Tax to cover depreciation, revaluation and impairment losses or amortisation. However, it is required to contribute towards the reduction in its overall borrowing requirement through loans fund principal charges. Depreciation, revaluation and impairment losses and amortisations are therefore replaced by a statutory adjustment in the General Fund Balance, by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two. E Employee Benefits Benefits Payable During Employment Short-term employee benefits (those that fall due wholly within 12 months of the year-end), such as wages and salaries, paid annual leave and paid sick leave and any non-monetary benefits for current employees, are recognised as an expense in the year in which employees render service to the council. An accrual is made against services in the Surplus or Deficit 176
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103 on the Provision of Services for the cost of holiday entitlements earned by employees but not taken before the year-end and which employees can carry forward into the next financial year. Any accrual made is required under statute to be reversed out of the General Fund Balance by a debit / credit to the Accumulating Compensated Absences Account in the Movement in Reserves Statement. In February 2018, the Scottish Government issued Financial Circular 2/2018 (replacing FC 3/2010), that amends the absences covered by the statutory mitigation. From 1 April 2018, the flexi and time in lieu absences are no longer covered by the statute and therefore cannot be reversed out. In terms of the teachers Statutory Accumulated Compensated Absences, the methodology for 2024/2025 reflects the changes to teachers’ terms and conditions as per SCNT 11/26 (12 July 2011). Termination Benefits Termination benefits are amounts payable as a result of a decision by the council to terminate an officer’s employment before the normal retirement date or an officer’s decision to accept voluntary redundancy and are charged on an accruals basis to the Comprehensive Income and Expenditure Statement when the council is demonstrably committed to either terminating the employment of an officer or group of officers or making an offer to encourage voluntary redundancy. Where termination benefits involve the enhancement of pensions, statutory provisions require the General Fund Balance to be charged with the amount payable by the council to the pension fund or pensioner in the year. In the Movement in Reserves Statement, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for termination benefits related to pensions enhancements and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year end. Post Employment Benefits Employees of the council are members of two separate pension schemes: ■ The Local Government Pension Scheme (Strathclyde Pension Fund), administered by Glasgow City Council. ■ Teachers Pension Scheme administered by the Scottish Pension Agency (Scottish Government). Both schemes provided defined benefits to members (retirement lump sums and pensions), earned as employees worked for the council. However, the arrangements for the teachers’ scheme mean that liabilities for these benefits cannot be identified specifically to the council. The scheme is therefore accounted for as if it were a defined contributions scheme – no liability for future payment of benefits is recognised in the Balance Sheet and the Education Service line in the Comprehensive Income and Expenditure Statement is charged with the employer’s contributions payable to Teachers’ Pensions in the year. The Local Government Pension Scheme The Local Government Scheme is accounted for as a defined benefits scheme: ■ The liabilities of the Strathclyde Pension Fund are included in the Balance Sheet on an actuarial basis using the projected unit method – that is an assessment of the future payments that will be made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates, etc, and projected earnings for current employees. ■ Liabilities are discounted to their value at current prices, using a discount rate based on an average of high-quality corporate bonds. ■ Assets of the Strathclyde Pension Fund are ordinarily included in the Balance Sheet at their fair value (current bid prices as required under IAS19), principally the bid price for quoted securities, estimated fair value for unquoted securities and market price for property. However, while the requirements of IAS19 have been applied in the current year, the significant nature of the Asset has been reviewed, and in line with IFRIC14, the asset has been de-recognised to equate to the level of the asset ceiling, provided by the Fund’s actuary. This reflects the net present value of future service costs less the net present value of future obligations over the future working lifetime as at 31 March 2026. In relation to retirement benefits, statutory provisions require the General Fund Balance to be charged with the amount payable by the council to the pension fund or directly to pensioners in the year, not the amount calculated according to the relevant accounting standards. In the Movement in Reserves Statement, this means that there are appropriations to and from the Pensions Reserve to remove the notional debits and credits for retirement benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year end. The negative balance that arises on the Pensions Reserve thereby measures the beneficial impact on the General Fund of being required to account for retirement benefits on the basis of cash flows rather than as benefits are earned by employees. Discretionary Benefits The council also has restricted powers to make discretionary awards of retirement benefits in the event of early retirements. Any liabilities estimated to arise as a result of an award to any member of staff (including teachers) are accrued in the year of the decision to make the award and accounted for using the same policies as are applied to the Local Government Pension Scheme. F Events After the Reporting Period There are events, both favourable and unfavourable, that occur between the end of the reporting period and the date when the Annual Accounts is authorised for issue. An adjustment is made to the financial statements where there is evidence that the event relates to the reporting period, otherwise the financial statements are not adjusted, and where the amount is material, a disclosure is made in the notes. Events taking place after the date of authorisation for issue are not reflected in the Annual Accounts. G Material Items of Income and Expenditure When items of income and expenditure are material, their nature and amount is disclosed separately, either on the face of the Comprehensive Income and Expenditure Statement or in the notes to the financial statements, depending on how significant the items are to an understanding of the council’s financial performance. H Financial Liabilities Financial liabilities are recognised on the Balance Sheet when the council becomes a party to the contractual provisions of a financial instrument and initially measured at fair value and carried at their amortised cost. For most of the borrowings that the council has, this means that the amount presented in the Balance Sheet is the outstanding principal repayable (plus accrued interest) and interest charged to the Comprehensive Income and Expenditure Statement is the amount payable for the year according to the loan agreement. 177
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104 Costs associated with debt restructuring (premiums and discounts) are charged to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement in the year of repayment of the original debt in accordance with accounting regulations. Where premiums and discounts have been charged to the Comprehensive Income and Expenditure Statement, regulations permit the costs of restructuring to be released to revenue over the period of the replacement loan. The reconciliation of amounts charged to the Comprehensive Income and Expenditure Statement to the net charge required against the General Fund Balance is managed by a transfer to or from the Financial Instruments Adjustment Account in the Movement in Reserves Statement. I Statutory Repayment of Loans Fund Advances The repayment of loans fund advances ensures that the council makes a prudent provision each year to pay off an element of the accumulated loans fund advances made in previous financial years. The policy for the repayment of loans fund advances is to use the most appropriate method of repayment for individual capital scheme or projects from the following methods: ■ Asset Life Method – loans fund advances will be repaid with reference to the life of an asset on an annuity basis. ■ Funding/Income Profile Method – loans fund advances will be repaid by reference to an associated income stream. For loans fund advances repaid using the annuity basis, the annual repayment will be calculated using an appropriate interest rate based on an average cost of funding capital advances to services. The council’s strategy for managing debt includes making additional voluntary repayments. These repayments will be used as a tool to reduce interest costs in the short to medium term by lowering the council’s need to borrow. These additional voluntary repayments will be retained and used to offset higher loans fund repayments in the long term. All of this helps to ensure that charges to the revenue account remain prudent and affordable in the long term. J Financial Assets Financial assets are classified into two types: ■ loans and receivables – assets that have fixed or determinable payments but are not quoted in an active market. ■ available-for-sale assets – assets that have a quoted market price and/or do not have fixed or determinable payments. Loans and Receivables Loans and receivables are recognised on the Balance Sheet when the council becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value, then at amortised cost. For most of the loans that the council has made, this means that the amount presented in the Balance Sheet is the outstanding principal receivable (plus accrued interest) and interest credited to the Comprehensive Income and Expenditure Statement is the amount receivable for the year in the loan agreement. Where assets are identified as impaired because of a likelihood arising from a past event that payments due under the contract will not be made, the asset is written down and a charge made to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. The impairment loss is measured as the difference between the carrying amount and the present value of the revised future cash flows discounted at the asset’s original effective interest rate. Available-for-Sale Assets Available for sale assets are assets that have a quoted market price and / or do not have fixed or determinable payments and are recognised on the Balance Sheet when the council becomes a party to the contractual provisions of a financial instrument and are initially measured and carried at fair value. Where the asset has fixed or determinable payments, annual credits to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement for interest receivable are based on the amortised cost of the asset multiplied by the effective rate of interest for the instrument. Where there are no fixed or determinable payments, income (e.g. dividends) is credited to the Comprehensive Income and Expenditure Statement when it becomes receivable by the council. Assets are maintained in the Balance Sheet at fair value. Values are based on the following principles: ■ instruments with quoted market prices – the market price ■ other instruments with fixed and determinable payments – discounted cash flow analysis ■ equity shares with no quoted market prices – independent appraisal of company valuations. The inputs to the measurement techniques are categorised in accordance with the following three levels: ■ Level 1 inputs – quoted prices (unadjusted) in active markets for identical assets that the authority can access at the measurement date. ■ Level 2 inputs – inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly. ■ Level 3 inputs – unobservable inputs for the asset. Changes in fair value are balanced by an entry in the Available-for-Sale Reserve and the gain/loss is recognised in the Surplus or Deficit on Revaluation of Available-for-Sale Financial Assets. The exception is where impairment losses have been incurred – these are debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement, along with any net gain or loss for the asset accumulated in the Available-for-Sale Reserve. K Government Grants and Contributions Government grants, third party contributions and donations are recognised as due to the council when there is reasonable assurance that: ■ the council will comply with the conditions attached to the payments, and ■ the grants or contributions will be received Monies advanced as grants and contributions for which conditions have not been satisfied are carried in the Balance Sheet as Receipts in Advance. When conditions are satisfied, the grant or contribution is credited to the relevant service line (attributable revenue grants/contributions) or Taxation and Non- Specific Grant Income (non-ring-fenced revenue grants and all capital grants) in the Comprehensive Income and Expenditure Statement. Where capital grants 178
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105 are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund Balance in the Movement in Reserves Statement. Where the grant has yet to be used to finance capital expenditure, it is posted to the Capital Grants Unapplied Account. Where it has been applied, it is posted to the Capital Adjustment Account. Amounts in the Capital Grants Unapplied Account are transferred to the Capital Adjustment Account once they have been applied. L Intangible Assets Expenditure on non-monetary assets that do not have physical substance but are controlled by the council as a result of past events (for example, software licences) is capitalised when it is expected that it will bring benefits to the council for more than 12 months. Intangible assets are measured initially at cost. Amounts are not revalued as the fair value of the assets held cannot be determined by reference to an active market. The depreciable amount of an intangible asset is amortised over its useful life to the relevant service line(s) in the Comprehensive Income and Expenditure Statement. The useful life of these assets is deemed to be five years. M Interests in Companies and Other Entities The council has material interests in companies and other entities that have the nature of associates and jointly controlled entities and require it to prepare group accounts. More information about these entities is detailed in the Group Accounts and Notes to the Group Accounts (pages 115-127). N Inventories Inventories are included in the Balance Sheet at the lower of cost and net realisable value. The value of work in progress has been made at cost plus an appropriate proportion of overheads, with allowances for foreseeable losses. O Leases The Council adopted IFRS 16 (Leases) with effect from 1 April 2024. The main impact of the requirements of IFRS 16 is that, for arrangements previously accounted for as operating leases (where any leased equipment and property were not recognised as an asset, and future rents were not recognised as a liability), a right-of-use asset and a lease liability are now included on the balance sheet from 1 April 2024. The Council has elected to apply recognition exemptions to low value assets (below £10,000 when new) and to short-term leases (existing leases that expire on or before 31 March 2026), and new leases with a duration of less than 12 months. A contract is, or contains a lease, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In transitioning to IFRS16 the Council elected to use the Modified Retrospective Approach. This approach allows entities to adopt the standard without restating prior periods, recognizing the cumulative effect of the new leases standard as an adjustment to opening balances. This approach involved: Calculating lease liabilities at the transition date, typically as the present value of remaining lease payments discounted at the incremental borrowing rate. Recognising a right-of-use asset, which may equal the lease liability (adjusted for prepayments/accruals) or be measured retrospectively from lease commencement, less accumulated depreciation and impairment. Recognize any difference between assets and liabilities in opening reserves (typically, the General Fund or equivalent). P Overheads and Support Services The 2016/2017 Code removed the requirement for councils to report on a total cost basis per the CIPFA Service Reporting Code of Practice. Councils are only required to reallocate overheads and support costs if this is how they treat/report these services in their management reports throughout the year. The council reports these as services during the year and does not allocate them in the management reports, therefore the only overhead and support allocation will be to the Housing Revenue Account, where appropriate. Q Property, Plant and Equipment Assets that have physical substance and are held for use in the supply of goods or services, for rental to others or for administrative purposes and that are expected to be used during more than one financial year are classified as Property, Plant and Equipment. Recognition Expenditure on the acquisition, creation or enhancement of Property, Plant and Equipment is capitalised on an accruals basis. Expenditure that merely maintains the condition of an asset e.g. repairs and maintenance is charged as an expense when it is incurred. Measurement Assets are initially measured at cost, comprising: the purchase price any costs attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management The council does not capitalise borrowing costs incurred whilst assets are under construction. Assets are then carried in the Balance Sheet using the following measurement bases: dwellings – current value, determined using the basis of existing use value for social housing (EUV-SH) other land and buildings – current value, determined by the amount that would be paid for the asset in its existing use (existing use value – EUV) vehicles, plant and equipment – where non- property assets that have short useful lives or low values (or both), depreciated historical cost basis is used as a proxy for current value infrastructure, community assets and assets under construction – depreciated historical cost surplus assets – current value based on market value in highest and best use. Where there is no market-based evidence of fair value because of the specialist nature of an asset, depreciated replacement cost is used as an estimate of fair value. Council Dwellings and non-operational lease portfolio are valued annually. The remainder of the land and property assets are valued through a five year rolling programme. The programme is prioritised by asset type to ensure consistency. Increases in valuations are matched by credits to the Revaluation Reserve to recognise unrealised gains. 179
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106 Where decreases in value are identified, the revaluation loss is accounted for as follows: where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains) where there is no balance in the Revaluation Reserve or insufficient balance, the carrying amount of the asset is written down against the relevant service line(s) in the Comprehensive Income and Expenditure Statement. The Revaluation Reserve contains revaluation gains recognised since 1 April 2007 only, the date of its formal implementation. Gains arising before that date have been consolidated into the Capital Adjustment Account. The values for land and property assets in the accounts are based upon certificates produced by the council valuer who is MRICS qualified (Member of Royal Institute of Chartered Surveyors) and issued in the name of the council’s Executive Director of Housing and Technical Resources. Impairment or Revaluation Loss Assets are assessed at each year end as to whether there is any indication that an asset may be impaired. Where indications of impairment exist and any possible differences are estimated to be material, the recoverable amount of the asset is estimated and, where this is less than the carrying amount of the asset, an impairment loss is recognised for the shortfall. Where impairment losses are identified, they are accounted for as follows: ■ where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains). ■ where there is no balance in the Revaluation Reserve or insufficient balance, the carrying amount of the asset is written down against the relevant service line(s) in the Comprehensive Income and Expenditure Statement. Where an impairment loss is reversed subsequently, the reversal is credited to the relevant service line(s) in the Comprehensive Income and Expenditure Statement, up to the amount of the original loss, adjusted for depreciation that would have been charged if the loss had not been recognised. Assets Held for Sale Property, land and buildings are classified as ‘Held for Sale’ when the following criteria are met: ■ The property is available for immediate sale in its present condition; ■ The sale must be highly probable and an active programme to locate a buyer and complete the plan must have been initiated; ■ The asset must be actively marketed for sale at a price that is reasonable in relation to its current fair value; ■ The sale should be expected to qualify for recognition as a completed sale within one year (although events or circumstances, may extend the period to complete the sale beyond one year) When these criteria are met, assets within the category ‘Property, Plant and Equipment’ will be reclassified to ‘Assets Held for Sale’. Disposals When it becomes probable that the carrying amount of an asset will be recovered principally through a sale transaction rather than through its continuing use, it is reclassified as an Asset Held for Sale. The asset is revalued immediately before reclassification and then carried at the lower of this amount and fair value less costs to sell. Where there is a subsequent decrease to fair value costs to sell, the loss is taken to the Comprehensive Income and Expenditure Statement. Gains in fair value are recognised only up to the amount of any previously recognised losses in the Surplus or Deficit in Provision of Services. Disposal and Derecognition of Infrastructure Assets When a component of an infrastructure asset is disposed of or decommissioned, the carrying amount of the component in the Balance Sheet is written off to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement as part of the gain or loss on disposal. Receipts from disposals (if any) are credited to the same line in the Comprehensive Income and Expenditure Statement, also as part of the gain or loss on disposal (i.e, netted off against the carrying value of the asset at the time of the disposal). The written-off amounts of disposals is not a charge against the council tax, as the cost of non-current assets is fully provided for under separate arrangements for capital financing. Amounts are transferred to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserves Statement. Where any part of infrastructure assets are replaced, an adaptation provided in a separate update to the Code assumes that from the introduction of the IFRS based Code when parts of an asset are replaced or restored the carrying amount of the derecognised part will be zero because parts of infrastructure assets are rarely replaced before the part has been fully consumed. Depreciation Depreciation is provided for on all Property, Plant and Equipment assets. An exception is made for assets without a determinable finite useful life (that is freehold land and certain Community Assets) and assets that are not yet available for use (i.e. assets under construction). Depreciation is calculated on the following bases: ■ dwellings and other buildings – straight-line allocation over the useful life of the property as estimated by the valuer (dwellings 40 years, other buildings 10 – 50 years). ■ vehicles, plant and equipment – straight line allocation over the useful life of the asset (3 – 20 years). ■ infrastructure – straight line allocation over 40 years. Where an item of Property, Plant and Equipment asset has major components whose cost is significant in relation to the total cost of the item, the components are depreciated separately, if the component has a different useful life or depreciation method that differs significantly from the remainder of the asset. Revaluation gains are also depreciated, with an amount equal to the difference between current value depreciation charged on assets and the depreciation that would have been chargeable based on their historical cost being transferred each year from the Revaluation Reserve to the Capital Adjustment Account. 180
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107 R Heritage Assets South Lanarkshire Council’s heritage assets comprise collections held within the Museum Service, Archives and Information Service and the Library Service. These collections reflect different aspects of our culture, identity and history. Heritage Assets, where the cost or value of the asset are known, are recognised on the balance sheet at valuation and no depreciation is charged on these assets. A de-minimis level of £10,000 has been applied. Assets which have a value of less than £10,000 will not be recorded on the Balance Sheet. Heritage assets will only be revalued where there is specific evidence that a revaluation is required and where the costs of the revaluation do not outweigh the benefit to users of the Annual Accounts. The carrying amounts of heritage assets are reviewed where there is evidence of impairment, for example where doubts arise as to its authenticity. Any impairment is recognised and measured in accordance with the council’s general policies on impairment. As a result of the cultural and education value of these assets, disposals of heritage assets tend to be rare. The proceeds of such disposals are accounted for in accordance with the council’s general provisions relating to the disposal of property plant and equipment and disclosed separately in the Notes to the Accounts. S Public Private Partnership (PPP) and Similar Contracts PPP and similar contracts are agreements to receive services, where the responsibility for making available the property, plant and equipment needed to provide the services passed to the PPP contractor. As the council is deemed to control the services that are provided under its PPP schemes and as ownership of the property, plant and equipment will pass to the council at the end of the contracts for no additional charge, the council carries the assets used under the contracts on its Balance Sheet as part of Property, Plant and Equipment. The original recognition of these assets at fair value (based on the cost to purchase the property, plant and equipment) was balanced by the recognition of a liability for amounts due to the scheme operator to pay for the capital investment. For Secondary Schools’ Modernisation Programme – Public Private Partnership (PPP), the liability was written down by an initial capital contribution of £48.050m. The amounts payable to the PPP operators each year are analysed into five elements: fair value of the services received during the year – debited to the relevant service in the Comprehensive Income and Expenditure Statement. finance cost – an interest charge is debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. contingent rent – increases in the amount to be paid for the property arising during the contract, debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. payment towards liability – applied to write down the Balance Sheet liability towards the PPP operator (the profile of write-downs is calculated using the same principles as for a finance lease). lifecycle replacement costs – there have been no lifecycle costs to date. The Scottish Government’s 2022 Resource Spending Review contained details of a Service Concession flexibility that related to the Council’s PPP schools. The flexibility permits councils to undertake internal accounting changes that extend the period over which the principal repayment of the unitary charge can be made which results in a one-off credit to the General Fund and ongoing annual savings for a period of time. In the remaining years following the end of the SCAs, the rescheduled debt repayments continue until the debt liability has been extinguished. The Council has applied the permitted change in the calculation of the statutory charge in 2025/2026 and the adopted approach has been applied across all three such arrangements held by the Council in line with the key accounting principle of consistency. The annual unitary charge will continue to be paid to the contractor over the contract period. The guidance applies to principal and not to interest, service charge costs or grant. These will continue to be accounted for over the contract period. The Council has applied the permitted change in 2025/2026 and has been applied to the Secondary Schools PPP and the Glasgow Southern Orbital financial arrangement. Annuity method for revised repayment of debt liability The recalculation of the debt liability charges applies the annuity method to calculate the revised repayments. This method best represents the consumption of the assets over their useful lives. This methodology is applied within the Councils current Loans Fund repayment policy. The use of an annuity method for the writing down of the PPP debt liability therefore ensures a consistent approach for the writing down of all debt which is financing capital expenditure, in that; The annuity method provides a fairer charge than equal instalments as it takes account of the time value of money, whereby paying £100 in 10 years’ time is less of a burden than paying £100 now. The schedule of charges produced by the annuity method thus results in a consistent charge over an asset’s life, considering the real value of the amounts when they fall due. The annuity method is a prudent basis for providing for assets that provided a steady flow of benefits over their useful life.’ Useful Economic Life The most appropriate asset life for the calculation is considered to be 50 years which replicates the useful asset life of other similar type assets held on the Council’s balance sheet i.e. schools. The Council’s Loans Fund methodology use a Useful Economic Life of 50 years when calculating the repayment of debt liability for borrowing to support capital expenditure for similar types of assets. The proposed application a useful economic life of 50 years for the council’s 2 PPP or similar arrangement is therefore considered consistent with current council methodology. Capital Financing Requirement The reprofiling of the debt liability repayments over the life of the asset rather than the life of the contract increases the Capital Financing Requirement as at 1 April 2022. The increase in the Capital Financing Requirement will continue to be reduced by the revised repayments after each PPP or similar contract has expired until the end of the revised period. Accounting Treatment The statutory adjustment can be made as at 1 April in the year the revised repayments are applied. This option was implemented 181
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108 in 2022/2023 and applied retrospectively. Being a cumulative statutory adjustment there was no prior year restatement of statutory adjustments in the Annual Accounts. The statutory adjustment up to 31 March 2022 resulted in a retrospective debit to the Capital Adjustment account in 2022/2023 with a corresponding credit in the Movement in Reserves Statement within the General Fund. Further in year annual reductions will be applied along similar lines as the retrospective adjustment until the end of the contract period for each of the three SCAs. Thereafter the revised charges will result in higher cost being charged to the General fund that the current repayment profile until the end of the Useful Economic Life. T Provisions, Contingent Liabilities and Contingent Assets Provisions Provisions are made where an event has taken place that gives the council a legal or constructive obligation that probably requires settlement by a transfer of economic benefits or service potential, and a reliable estimate can be made of the amount of the obligation. Provisions are charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement in the year that the council becomes aware of the obligation, and measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance Sheet. Estimated settlements are reviewed at the end of each financial year – where it becomes less than probable that a transfer of economic benefits will now be required (or a lower settlement than anticipated is made), the provision is reversed and credited back to the relevant service. Contingent Assets and Liabilities A contingent asset or liability arises where an event has taken place that gives the council a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the council. Contingent assets and liabilities also arise in circumstances where a provision would otherwise be made but either it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured reliably. Contingent assets and liabilities are not recognised in the Balance Sheet but disclosed in a Note to the Accounts. U Reserves Reserves are created by appropriating amounts out of the General Fund Balance in the Movement in Reserves Statement. When expenditure to be financed from a reserve is incurred, it is charged to the appropriate service in the Comprehensive Income and Expenditure Statement. The reserve is then appropriated back into the General Fund Balance in the Movement in Reserves Statement so that there is no net charge against council tax for the expenditure. Usable Reserves The council has several reserve funds within this category. The Insurance Fund covers the main classes of insurance and is earmarked for insurance purposes. The Repairs and Renewals Fund provides for the upkeep of specific assets held by the council. The Capital Fund is used to meet the costs of capital investment and for the repayment of the principal element of borrowing. Unusable Reserves Certain reserves are kept to manage the accounting processes for non-current assets, financial instruments and retirement benefits and that do not represent usable resources for the council. These reserves are explained in Note 11 on pages 68- 70. V Revenue Expenditure Funded from Capital under Statute Any expenditure incurred during the year that may be capitalised under statutory provisions but does not result in the creation of a non-current asset has been charged as expenditure to the relevant service in the Comprehensive Income and Expenditure Statement in the year. Where the council has determined to meet the cost of this expenditure from existing capital resources or by borrowing, a transfer is made in the Movement in Reserves Statement from the General Fund Balance to the Capital Adjustment Account, then reverses out the amount charged so that there is no impact on the level of council tax. W VAT VAT payable is included as an expense only to the extent that it is not recoverable from His Majesty’s Revenue and Customs. VAT receivable is excluded from income. 182
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109 Note 40 Critical Judgements in Applying Accounting Policies In applying the accounting policies set out in Note 39, the council has had to make certain judgments about complex transactions or those involving uncertainty about future events. The critical judgements made in the Annual Accounts are: ■ The council has entered into a Public Private Partnership (PPP) for the provision of secondary schools, their maintenance and related facilities. The annual unitary charge payable by the council in respect of this contract is allocated across the various expenditure headings. In the main, these transactions reflect the detailed financial model which is in line with the assumptions made within the service provider’s operating model. Further details are provided in Note 26. ■ In assessing potential liabilities arising from legal claims against the council, legal opinion has been sought. The council has considered and assessed its exposure to potential liabilities and made provision where it is probable that an outflow of resources will occur and where the amount of liability can be reliably quantified. Where it is not possible to measure the liability or is not probable in the council’s opinion that there will be a liability to meet, the contingent liability is disclosed in Note 29. ■ The accounts have been prepared on a going concern basis as it is expected that despite the uncertainty around future finance settlements, that the council’s process of delivering efficiency savings will provide sufficient resources to finance future liabilities. ■ Assets held at current value are revalued on a 5 year rolling basis. The council asserts that at any point in time, the carrying amount does not differ materially from that which would be determined using current value. Note 41 Assumptions Made About the Future and Other Major Sources of Estimation Uncertainty The Financial Statements contain estimated figures that are based on assumptions made by the council about the future or that are otherwise uncertain. Estimates are made taking into account historical experience, current trends and other relevant factors. However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates. The items in the council’s Balance Sheet at 31 March 2026 for which there is a significant risk of material adjustment in the forthcoming financial year are as follows: Item Uncertainties Effect if actual results differ from assumptions Pensions Liability – Actuarial Assumptions Estimation of the liability to pay pensions depends on a number of complex judgements relating to the discount rate used, the rate at which salaries are projected to increase, changes in retirement ages, mortality rates and expected returns on pension fund assets. A firm of consulting actuaries is engaged by Strathclyde Pension Fund, to provide the council with expert advice about the assumptions to be applied. Following decisions in relation to Age Discrimination and Guaranteed Minimum Pensions, the Actuary has included the estimated impact of these in the reported pension liability figure. However, the actual impact is influenced by a number of factors and therefore the actual impact could vary from the impact currently estimated and included in the liability. The effects on the pension liability of changes in individual assumptions can be measured. For instance, a 0.1% decrease in the discount rate assumption would result in an increase in the pension liability of £32.182m. However, the assumptions interact in complex ways. During 2025/2026, the council’s actuaries advised that the net pension liability had increased by £37.946m as a result of the return on assets, and decreased by £340.973m attributable to changes in demographic and financial assumptions and estimates being corrected through experience. For 2025/2026, the liability is far outweighed by the asset, however due to the pension asset in the balance sheet being capped under IFRIC 14, these figures do not tie to the difference between the 24/25 pension liability and the 25/26 pension asset as stated in the balance sheet. Property, Plant and Equipment – Valuation Assets are depreciated over useful lives that are dependent on assumptions about the level of repairs and maintenance that will be incurred in relation to individual assets. The current economic climate makes it uncertain that the authority will be able to sustain its current spending on repair and maintenance, bringing into doubt the useful lives assigned to assets. Assets are valued on a five-year rolling basis, supported by indexation adjustments in years where assets are not valued. Where the authority is unable to obtain a suitable index, a desktop revaluation of If the useful life of assets is reduced, depreciation increase and the carrying amount of the asset falls. It is estimated that the annual depreciation for buildings would increase by £12.20m for every year that useful lives had to be reduced. Based on the assets that were valued in the year as part of the five-year rolling revaluation programme, the average increase in the value of the asset was 26.35%. For those assets where indexation was applied, the average increase in the value of the asset was %. 183
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110 Item Uncertainties Effect if actual results differ from assumptions the asset is carried out in year three of the five-year cycle. If the valuation percentage was applied to the assets valued using indices, this would increase their Balance sheet value by £, compared to an indexation increase of £. This list does not include assets and liabilities that are carried at fair value based on a recently observed market price. 184
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111 Supplementary Statement No 1 Housing Revenue Account Income and Expenditure Statement This statement reflects the statutory requirement to account for local authority housing provision, as defined in the Housing (Scotland) Act 1987. It shows the elements of expenditure incurred in the management and investment of the council’s housing stock and the funding of this by rents, and other income. The council has a duty to cover any deficit, and any accumulated surplus is carried forward to future years for use in the management and investment of its council housing stock. Housing Revenue Account Income and Expenditure Statement 2024/25 2025/26 £000 £000 £000 Expenditure 42,937 Repairs and Maintenance 44,695 25,025 Supervision and Management 36,513 39,730 Depreciation and Impairment on Non-Current Assets 41,424 1,022 Movement in the Allowance for Bad Debts 1,089 5,050 Other Expenditure 4,870 113,764 Total Expenditure 128,591 Income (110,672) Dwelling Rents (119,213) (3,601) Non-Dwelling Rents (3,300) - Housing Support Grants - - Other Income - (114,273) Total Income (122,513) (509) Net Cost of HRA Services as included in the Comprehensive Income and Expenditure Statement 6,078 105 HRA Services share of Corporate and Democratic Core 205 - HRA Share of Other Amounts included in the Whole Council Net Cost of Services but not Allocated to Specific Services - (404) Net Cost for HRA Services 6,283 HRA share of the operating income and expenditure included in the Comprehensive Income and Expenditure Statement: 102 (Gain) or Loss on the Disposal of Non-Current Assets 12 12,374 Interest Payable and Similar Charges 9,497 (1,807) Interest and Investment Income (1) 214 Pension Interest Cost and Expected Return on Pension Assets 218 (21,360) Capital Grants and Contributions Receivable (44,198) (10,881) (Surplus) / Deficit for the Year on HRA Services (28,189) Note: The expenditure in the table above is lower than that included in the Comprehensive Income and Expenditure Statement (page 51) by £0.073 million (2024/2025: £0.189 million higher). This reflects the CIPFA Code of Practice requirement to transfer the movement in bad debt from the Net Cost of Services in the CIES to the Financing and Investment Income line, whilst in the Housing Revenue Account it remains part of the Net Cost of Services figure. 185
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112 Statement of Movement on the Housing Revenue Account Balance 2024/25 2025/26 £000 Notes £000 £000 (13,221) Balance on the HRA at the end of the Previous Year (10,440) (10,881) Surplus / (Deficit) for the Year on HRA Income and Expenditure Statement (28,189) (17,810) Adjustments Permitted by Accounting Standards 1 (17,494) 31,672 Adjustments between Accounting Basis and Funding Basis Under Statute 2 49,668 2,981 Net (Increase) / Decrease Before Transfers to or from Reserves 3,985 (200) Transfers (to) or from Reserves (208) 2,781 (Increase) / Decrease in the Year on the HRA 3,777 (10,440) Balance on the HRA at the end of the Current Year (6,663) Housing Revenue Account Disclosures 1. Adjustments Permitted by Accounting Standards 2024/25 £000 2024526 £000 (17,810) Charge for Depreciation and Impairment of Non-Current Assets (17,494) (17,810) Total (17,494) 2. Adjustments Between Accounting Basis and Funding Basis Under Statute 2024/25 £000 2025/26 £000 - Adjustment involving Revaluation Reserve - (21,920) Charge for Depreciation and Impairment of Non-Current Assets (23,930) (304) Adjustment involving Capital Adjustment Account - 21,350 Capital Grants and Contributions 44,188 5 Statutory Provision for the Financing of Capital Investment 4,405 33,506 Capital Expenditure funded by the HRA 25,815 202 Adjustment involving Capital Receipts Reserve (12) 88 Adjustments involving Financial Instruments Adjustment Account 90 (1,275) Adjustments involving the Pension Reserve (825) 20 Adjustments involving the Statutory Accumulated Compensated Absences Account (63) 31,672 Total 49,668 3. Housing Stock The council’s housing stock at 31 March 2026 was 26,169 (25,923 at 31 March 2025) in the following categories: 2024/25 Number 2025/26 Number Average Weekly Rent 12,236 Houses 12,371 £100.53 1,353 High Rise 1,358 £81.30 5,544 Tenements 5,614 £74.18 4,697 4 in a block 4,730 £90.08 2,093 Maisonettes 2,096 £74.54 25,923 Total 26,169 4. Rent Arrears Rent Arrears at 31 March 2026 were £8.458 million (£7.795 million at 31 March 2025). 5. Impairment of Debtors In 2025/2026 an impairment of £12.761 million has been provided in the Balance Sheet for irrecoverable rents, which is the same provision as in 2024/2025. 6. Exceptional or Prior Year Adjustments There were no exceptional items or prior year adjustments not disclosed in the statement. 7. Void Rent Loss The figures above include rent loss on void properties of £2.542 million (£2.625 million for 2024/2025). 186
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113 Supplementary Statement No 2 National Non-Domestic Rates Income and Expenditure Statement National Non-Domestic Rates (NNDR) income is collected by councils, but all income is then remitted to the Scottish Government, where it is pooled nationally, and re-distributed back to councils along with the General Revenue Grant. The table below details the actual levels of NNDR collected by the council, and the overall increase/decrease between the rates collected and the amount that the council is entitled to receive under the National Pooling arrangement. 2024/25 2025/26 £000 £000 Note 408,051 Gross rates levied and contributions in lieu 426,747 1 Less: (33,336) Reliefs and other deductions (31,810) (483) Payments of interest (337) (3,055) Provision of bad and doubtful debts (6,304) 371,177 Net Non-Domestic Rate Income 388,296 - Adjustment for years prior to the introduction of the pool - 371,177 Contribution to the National Non-Domestic Rate pool 388,296 (5,159) Net contribution (to) / from National Non-Domestic Rate pool (17,186) 366,018 Gross Non-Domestic Rate Income to the Comprehensive Income and Expenditure Statement 371,110 - Non-Domestic Rate income retained by council (BRIS) - 2 366,018 Non-Domestic Rate Income per the Comprehensive Income and Expenditure Statement 371,110 Note 1 In 2025-2026, the gross rates levied amount of £426.747m includes an amount of £246.629m in relation to NDR Utilities which South Lanarkshire Council collected on behalf of the Scottish Government. This has resulted in a net contribution TO the NDRI pool FROM the Council of £17.186m. Note 2 The Business Rate Incentivisation Scheme (BRIS) permits the Council to retain half of the NDR income which exceeds the income target set by the Scottish Government. In 2025/2026, the Council did not receive any additional funding from BRIS. 2025-2026 £ Analysis of Rateable Values: Rateable Value at 01/04/25 780,177,309 Running Roll (Full Year Rateable Value) 94,276,951 Rateable Value at 31/03/26 874,454,260 Less: Wholly Exempt (2,716,610) Net Rateable Value at 31/03/26 871,737,650 Net Rateable Value Calculation The amount paid for Non-Domestic Rates is determined by the rateable value placed on the property by the Assessor multiplied by the Rate per £ (poundage) announced each year by the Scottish Government. The Scottish Government previously introduced three different property rates linked to the rateable value of properties. The 2024/25 rates are as follows: • Basic Property Rate (£0.498) • Intermediate Property Rate (£0.554) • Higher Property Rate (£0.568) Larger businesses with a Rateable Value between £51,001 and £100,000 pay an additional supplement of 5.6 pence in the pound and businesses with a Rateable Value over £100,000 pay an additional supplement of 7.0 pence in the pound, which contributes towards the cost of the Small Business Bonus Scheme. The Small Business Bonus Scheme provides a discount of between 0.5% and 100% to businesses in Scotland on individual properties with a rateable value of up to £20,000, with a maximum combined rateable value of £35,000. For information, South Lanarkshire Council’s Rateable Values at 1 April 2025: £ Commercial 124,996,664 Industrial and Freight Transport 63,059,035 Public Undertakings 513,497,525 Other 78,624,085 Total 780,177,309 187
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114 Supplementary Statement No 3 Council Tax Income and Expenditure Statement Local Councils raise taxes from residents by way of a property tax - the Council Tax - which is based on property values. Each dwelling house in a local authority area is placed into one of eight valuation bands A to H. The Council declares a tax for band D properties and all other properties are charged a proportion of this, lower valued properties pay less, higher valued properties pay more. The council tax income account (Scotland) shows the gross income raised from council taxes levied and deductions made under statute. The resultant net income is transferred to the Comprehensive Income and Expenditure Statement of the authority. 2024/25 £000 2025/26 £000 210,831 Gross Council Tax levied and contributions in lieu 225,834 2,178 Adjustments for prior years Council Tax 1,564 213,009 227,398 Adjusted for: (23,613) Council Tax Reduction (24,976) (23,651) Other discounts and reductions (25,255) (4,685) Provision for Non-collection (5.030) 161,060 Transfer to General Fund 172,137 From 1 April 2013, the Council Tax Reduction Scheme replaced Council Tax Benefit, with the resultant decrease in Council Tax Income shown in the Taxation and Non-Specific Grant Income line in the Comprehensive Income and Expenditure Statement. Council Tax Benefit grant and payments were previously disclosed as part of General Fund Housing in the Net Cost of Services. The calculation of the Council Tax Base 2025/26 No. of Dwellings No. of Exemptions Disabled Relief Discount 25% Discount 50% C Tax Reduction Total Dwellings Ratio to Band D Band D Equivalent Band A (discount) - - (112) 12 - - 100 5/9 56 Band A 37,788 1,651 (41) 5,356 240 10,918 19,664 6/9 13,110 Band B 32,425 1,182 (26) 4,185 190 6,628 20,266 7/9 15,762 Band C 28,491 714 7 2,853 133 3,803 20,981 8/9 18,650 Band D 23,930 432 (93) 1,907 103 1,689 19,892 9/9 19,892 Band E 22,273 316 97 1,305 53 731 19,771 473/360 25,977 Band F 15,240 135 78 570 26 295 14,136 585/360 22,971 Band G 7,768 57 79 250 18 93 7,271 705/360 14,239 Band H 631 8 12 17 2 3 589 882/360 1,443 Class 18 Dwellings - 122,670 Total 132,100 Provision for non-collection (2.875%) 3,798 Council Tax Base 128,302 Dwellings fall within a valuation band between A to H which is determined by the Assessor. The Council Tax charge is calculated using the Council Tax Base i.e. Band D equivalents. This value is then increased or decreased depending on the band. Based on the Council Tax base available to South Lanarkshire Council, the Band D charge for 2025/2026 was £1,378.85. South Lanarkshire Council £ per year for 2025/2026 Band A 919.23 Band E 1,811.66 Band B 1,072.44 Band F 2,240.63 Band C 1,225.64 Band G 2,700.25 Band D 1,378.85 Band H 3,378.18 188
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115 GROUP ACCOUNTS Group Comprehensive Income and Expenditure Statement The Comprehensive Income and Expenditure Statement shows the accounting cost in the year of providing services in accordance with the CIPFA Accounting Code of Practice, rather than the amount to be funded from taxation. The council raises taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Expenditure and Funding Analysis and Movement in Reserves Statements. Restated Gross Expenditure £000 2024/25 Restated Gross Income £000 Restated Net Expenditure / (Income) £000 Gross Expenditure £000 2025/26 Gross Income £000 Net Expenditure / (Income) £000 233,706 77,155 156,551 Community and Enterprise Resources 249,821 89,668 160,153 513,697 20,327 493,370 Education Resources 524,046 20,177 503,869 111,769 66,529 45,240 Finance and Corporate Resources 105,548 53,310 52,238 Housing and Technical Resources 113,953 114,283 (330) - Housing Revenue Account 128,644 122,522 6,122 75,047 52,904 22,143 - Housing Other 77,616 50,970 26,646 509,487 265,185 244,302 Social Work Resources 531,519 276,791 254,728 1,864 - 1,864 Joint Board 1,635 - 1,635 987 509 478 Corporate Items (6,871) 1,637 (8,508) 105 - 105 Corporate and Democratic Core (HRA) 201 - 201 - - - Non-Distributed Costs – Non-Operational Assets (HRA) - - - 812 1,000 (188) Common Good 628 194 434 1,561,427 597,892 963,535 Net Cost of Services 1,612,787 615,269 997,518 (7,268) - (7,268) Other Operating Expenditure 4,973 - 4,973 72,597 12,287 60,310 Financing and Investment (Income) and Expenditure (Note 8) 61,832 (300) 62,132 - 989,521 (989,521) Taxation and Non-Specific Grant Income (Note 9) - 1,083,487 (1,083,487) 1,626,756 1,599,700 27,056 (Surplus) on Provision of Services 1,679,592 1,698,456 (18,864) (7,132) Share of the (Surplus) or Deficit on the provision of services by associates (13,092) 19,924 Group (Surplus) / Deficit (31,956) (209,203) (Surplus) / Deficit on Revaluation of Fixed Assets 163,102 (55,718) Re-measurement of the Pension Liability / (Asset) (34,734) (637) Share of Other Comprehensive (Income) and Expenditure of Associates and Joint Ventures (2,277) (265,558) Other Comprehensive (Income) and Expenditure 126,091 (245,634) Total Comprehensive (Income) and Expenditure 94,135 189
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116 Group Balance Sheet The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the council. The net assets of the council (assets less liabilities) are matched by the reserves held by the council. Reserves are reported in two categories. ■ The first category of reserves are usable reserves, that is those reserves that the council may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use (for example the Capital Receipts Reserve that may only be used to fund capital expenditure or repay debt). ■ The second category of reserves is those that the council is not able to use to provide services. This category of reserves includes reserves that hold unrealised gains and losses (for example the Revaluation Reserve), where amounts would only become available to provide services if the assets are sold; and reserves that hold timing differences shown in the Movement in Reserves Statement line ‘Adjustments between accounting basis and funding basis under regulations’. Restated Group 31 March 2025 £000 Single Entity 31 March 2026 £000 Group Adjustments 31 March 2026 £000 Group 31 March 2026 £000 4,116,800 Property, Plant and Equipment 4,077,338 6,622 4,083,960 3,853 Heritage Assets 3,853 - 3,853 10,059 Intangible Assets 8,897 - 8,897 97,030 Investments in associates and joint ventures - 112,378 112,378 1,910 Long Term Debtors 1,794 - 1,794 - Other Long Term Assets (Pension) - - - 4,229,652 Non Current Assets 4,091,882 119,000 4,210,882 - Short Term Investments - - - 4,368 Inventories 4,257 166 4,423 102,156 Short Term Debtors 79,801 2,095 81,896 168 Assets Held for Sale 2,086 - 2,086 34,089 Cash and Cash Equivalents (see cash flow notes) 54,038 9,917 63,955 140,781 Current Assets 140,182 12,178 152,360 (179,224) Short Term Borrowing (281,468) - (281,468) (240,282) Short Term Creditors (260,401) (6,895) (267,296) - Contract Liability – IFRS15 - - - (17,142) Other Short-Term Liabilities (PPP / Finance Leases) (20,673) - (20,673) (608) Provisions (144) - (144) (3,476) Receipts in Advance (1,376) - (1,376) (440,732) Current Liabilities (564,062) (6,895) (570,957) (667) Long Term Creditors - (694) (694) (251) Long Term Provisions - (251) (251) (860,609) Long Term Borrowing (739,437) - (739,437) - Liabilities in Associates and Joint Ventures - - - (306,113) Other Long-Term Liabilities (PPP / Finance Lease) (305,336) - (305,336) (99,299) Other Long-Term Liabilities (Pension) (95,457) (1,302) (96,759) (1,266,939) Long Term Liabilities (1,140,230) (2,247) (1,142,477) 2,662,762 Net Assets 2,527,772 122,036 2,649,808 147,568 Usable Reserves 176,726 - 176,726 2,410,671 Unusable Reserves 2,351,046 - 2,351,046 104,523 Group Reserves - 122,036 122,036 2,662,762 Total Reserves 2,527,772 122,036 2,649,808 The notes on pages 121 to 127 form part of the group financial statements. Jackie Taylor Executive Director (Finance and Corporate Resources) 190
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117 Group Movement in Reserves Statement This statement shows the movement in the year on the different reserves held by the council, analysed into ‘usable reserves’ (those that can be applied to fund expenditure or reduce local taxation) and other reserves. The Surplus or (Deficit) on the Provision of Services line shows the true economic cost of providing the council’s services, more details of which are shown in the Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund Balance and the Housing Revenue Account for council tax setting and dwellings rent setting purposes. The Net Increase / Decrease before Transfers to Earmarked Reserves line shows the statutory General Fund Balance and Housing Revenue Account Balance before any discretionary transfers to or from earmarked reserves undertaken by the council. Revenue Statutory Funds General Fund Balance £000 Housing Revenue Account £000 Repairs and Renewals Fund £000 Insurance Fund £000 Capital Statutory Fund £000 Capital Receipts Reserve £000 Total Usable Reserves £000 Unusable Reserves £000 Total Council Reserves £000 Council’s Share of Usable Reserves of Subsidiaries and Associates £000 Council’s Share of Unusable Reserves of Subsidiaries and Associates £000 Total Group Reserves £000 Balance at 1 April 2025 118,997 10,440 5,123 1,812 3,784 7,412 147,568 2,410,671 2,558,239 51,136 53,387 2,662,762 Movement in reserves during 2025/26 Total Comprehensive Expenditure and Income (6,759) 28,186 - - - - 21,427 (51,894) (30,467) 15,858 2,025 (12,584) Adjustments permitted under accounting standards 15,041 17,494 - - - - 32,535 (32,535) - - - - Adjustments between accounting basis and funding basis under regulations 24,954 (49,668) - - - (90) (24,804) 24,804 - (3,174) 3,174 - Adjustments for Changes in Council’s share of associates - - - - - - - - - (149) 128 (21) Net Increase / (Decrease) before Transfers to Reserves 33,236 (3,988) - - - (90) 29,158 (59,625) (30,467) 12,535 5,327 (12,605) Transfers to/ (from) Reserves 1,474 208 (491) (790) (401) - - - - - - - Increase / (Decrease) in Year 34,710 (3,780) (491) (790) (401) (90) 29,158 (59,625) (30,467) 12,535 5,327 (12,605) Balance at 31 March 2026 carried forward 153,707 6,660 4,632 1,022 3,383 7,322 176,726 2,351,046 (30,467) 63,670 58,713 2,650,155 191
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118 Revenue Statutory Funds General Fund Balance £000 Housing Revenue Account £000 Repairs and Renewals Fund £000 Insurance Fund £000 Capital Statutory Fund £000 Capital Receipts Reserve £000 Total Usable Reserves £000 Unusable Reserves £000 Total Council Reserves £000 Council’s Share of Usable Reserves of Subsidiaries and Associates £000 Council’s Share of Unusable Reserves of Subsidiaries and Associates £000 Total Group Reserves £000 Balance at 1 April 2024 109,772 13,221 5,347 195 3,975 1,179 133,689 2,189,055 2,322,744 123,353 48,212 2,494,309 Restatement* - - - - - - - - - (78,439) - (78,439) Restated Balance at 1 April 2024 109,772 13,221 5,347 195 3,975 1,179 133,689 2,189,055 2,322,744 44,914 48,212 2,415,870 Movement in reserves during 2024/25 Total Comprehensive Expenditure and Income (37,682) 10,881 - - - - (26,801) 262,296 235,495 9,876 263 245,634 Adjustments permitted under accounting standards 15,113 17,810 - - - - 32,923 (32,923) - - - - Adjustments between accounting basis and funding basis under regulations 33,196 (31,672) - - - 6,233 7,757 (7,757) - (4,091) 4,091 - Adjustments for Changes in Council’s share of associates - - - - - - - - - 437 821 1,258 Net Increase / (Decrease) before Transfers to Reserves 10,627 (2,981) - - - 6233 13,879 221,616 235,495 6,222 5,175 246,892 Transfers to/ (from) Reserves (1,402) 200 (224) 1,617 (191) - - - - - - - Increase / (Decrease) in Year 9,225 (2,781) (224) 1,617 (191) 6233 13,879 221,616 235,495 6,222 5,175 246,892 Balance at 31 March 2025 carried forward 118,997 10,440 5,123 1,812 3,784 7,412 147,568 2,410,671 2,558,239 51,136 53,387 2,662,762 192
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119 Group Cash Flow Statement The Cash Flow Statement shows the changes in cash and cash equivalents of the council during the reporting period. The statement shows how the council generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of the extent to which the operations of the council are funded by way of taxation and grant income or from the recipients of services provided by the council. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the council’s future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (that is borrowing) to the council. Further analysis of movements is provided in the cash flow notes following the statement. 2024/25 £000 2025/26 £000 (27,056) Net surplus / (deficit) on the provision of services 19,025 175,684 Adjust net surplus / deficit on the provision of services for non cash movements 188,322 (58,626) Adjust for items included in the net surplus / deficit on the provision of services that are investing and financing activities (88,445) 90,002 Net cash flows from Operating Activities 118,902 (56,254) Investing Activities (50,855) (20,345) Financing Activities (37,542) 13,402 Net increase / (decrease) in cash and cash equivalents 30,505 20,686 Cash and cash equivalents at the beginning of the reporting period 33,867 34,089 Cash and cash equivalents at the end of the reporting period 64,372 Cash Flow Statement Note – Non-Cash Movements The balance of non-cash movements is made up of the following elements: 31 March 2025 £000 31 March 2026 £000 101,363 Depreciation, impairment and amortisation of assets 108,281 28,582 Movement in creditors 23,330 4,767 Movement in debtors 22,185 598 Movement in inventories (55) 39,871 Movement in pension liability 28,998 507 Carrying amount of non-current assets and non-current assets held for sale, sold or derecognised 5,583 (4) Other non-cash items charged to the net surplus / deficit on the provision of services - 175,684 Net cash flows from the provision of services for non-cash movements 188,322 Cash Flow Statement Note – Operating Activities – Items Included in Net Surplus / (Deficit) on the Provision of Services That are Investing and Financing Activities The cash flows for these activities include the following items: 2024/25 £000 2025/26 £000 (50,851) Capital contributions and grants (87,907) (7,775) Capital receipts applied (610) (58,626) Net cash flows from items included in the net surplus / (deficit) on the provision of services that are investing and financing activities (88,517) 193
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120 Cash Flow Statement Note – Investing Activities 2024/25 £000 2025/26 £000 (113,510) Purchase of property, plant and equipment and intangible assets (134,623) (40,000) Purchase of short term investments - 7,775 Proceeds from the sale of property, plant and equipment and intangible assets 611 40,000 Proceeds from short term investments - 49,481 Other receipts from investing activities 83,157 (56,254) Net cash flows from investing activities (50,855) Cash Flow Statement Note – Financing Activities 2024/25 £000 2025/26 £000 145,000 Cash receipts of short term and long term borrowing 336,500 (16,575) Cash payments for the reduction of the outstanding liabilities relating to finance leases for PPP contracts (19,018) (148,770) Repayments of short term and long term borrowing (355,154) (20,345) Net cash flows from financing activities (37,672) Cash Flow Statement Note – Cash and Cash Equivalents 31 March 2025 £000 31 March 2026 £000 101 Cash held by officers 105 18,082 Bank current accounts 3,962 15,906 Short term deposits 60,059 34,089 Total cash and cash equivalents 64,126 The credit figures shown against Bank Accounts in 2025 relate to balances in the financial ledger. This is due to timing differences in posting transactions in the ledger. Actual balances held at bank are not in an overdraft position. The group cash flow statement represents the single entity cash flow for South Lanarkshire Council adjusted for its subsidiaries, Routes to Work South, Common Good and South Lanarkshire Leisure and Culture Trust. The adjusted figures are as follows: South Lanarkshire Council £000 Routes to Work South £000 Common Good £000 South Lanarkshire Leisure & Culture Trust £000 Total £000 Net surplus / (deficit) on provision of services 21,427 (6) 434 (2,830) 19,025 Adjust net surplus / (deficit) on the provision of services for non-cash movements 184,832 167 34 3,289 188,322 Adjust for items included in the net surplus / (deficit) that are investing and financing activities (88,517) - - 72 (88,445) Net Cash Flows from Operating Activities 117,742 161 468 531 118,902 Investing Activities (51,063) 18 - 190 (50,855) Financing Activities (37,672) 130 - - (37,542) Net increase / decrease in cash and cash equivalents 29,007 309 468 721 30,505 Cash and cash equivalents at beginning of period 25,031 1,679 1,029 6,128 33,867 Cash and cash equivalents at end of reporting period 54,038 1,988 1,497 6,849 64,372 194
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121 Notes to Group Financial Statements Note 1 Group Expenditure and Funding Analysis Net Expenditure Chargeable To the General Fund And HRA Balance £000 2024/25 Adjustments between the Funding and Accounting Basis £000 Net Expenditure in the Comprehensive Income and Expenditure Statement £000 Net Expenditure Chargeable To the General Fund And HRA Balance £000 2025/26 Adjustments between the Funding and Accounting Basis £000 Net Expenditure in the Comprehensive Income and Expenditure Statement £000 128,375 27,374 155,749 Community and Enterprise Resources 129,069 28,949 158,018 482,703 10,667 493,370 Education Resources 502,133 1,736 503,869 40,103 5,137 45,240 Finance and Corporate Resources 44,318 7,926 52,244 Housing and Technical Resources 2,981 (3,311) (330) - Housing Revenue Account 3,988 2,134 6,122 15,972 6,171 22,143 - Housing Other 21,259 5,387 26,646 235,309 8,993 244,302 Social Work Resources 247,052 7,676 254,728 1,864 - 1,864 Joint Board 1,635 - 1,635 (8,870) 9,348 478 Corporate Items (18,041) 9,533 (8,508) 105 105 Corporate and Democratic Core (HRA) - - - - - - Non-Distributed Costs – Non-Operational Assets (HRA) - 201 201 (189) - (189) Common Good 898,248 64,484 962,732 Net Cost of Services 931,413 63,542 994,955 (906,444) (30,035) (936,479) Other (Income) and Expenditure (8,196) 34,449 26,253 (Surplus) or Deficit (960,661) (55,721) (1,016,382) (7,436) - (7,436) Share of Associates (15,632) 34,449 18,817 (29,248) 7,821 (21,427) General Fund including Subsidiaries and HRA General Fund Group Associates Total Group General Fund including HRA General Fund including Subsidiaries and HRA General Fund Group Associates Total Group General Fund including HRA (128,212) (92,316) (220,528) Opening General Fund and HRA Balance (152,640) (44,885) (197,525) (8,196) (7,436) (15,632) Less/plus Surplus or Deficit on General Fund (29,248) - (29,248) (16,232) 54,867 38,635 Transfers to/from Other Reserves (1,474) (208) (1,682) (152,640) (44,885) (197,525) Closing General Fund and HRA Balance (183,362) (45,093) (228,455) 195
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122 Adjustments from General Fund to arrive at the Comprehensive Income and Expenditure Statement 2025/26 Adjustments for Capital Purposes £000 Net change for the Pensions Adjustments £000 Other Differences £000 Total Adjustments between Funding and Accounting Basis £000 Community and Enterprise Resources 25,056 3,641 252 28,949 Education Resources 25,585 6,010 (29,859) 1,736 Finance and Corporate Resources 2,466 5,260 200 7,926 Housing and Technical Resources - Housing Revenue Account 11,205 605 (9,676) 2,134 - Housing Other 3,432 1,741 214 5,387 Social Work Resources 3,947 3,632 97 7,676 Joint Board - - - - Corporate Items - - 9,533 9,533 Corporate and Democratic Core (HRA) - - 201 201 Non-Distributed Costs – Non-Operational Assets (HRA) Net Cost of Services 71,691 20,889 (29,038) 63,542 Other Income and Expenditure from the Expenditure and Funding Analysis (87,740) 6,233 25,786 (55,721) Surplus or Deficit (16,049) 27,122 (3,252) 7,821 Share of (Surplus) or Deficit on the Provision of Services by Associates Difference between General Fund Surplus or Deficit and Comprehensive Income and Expenditure Statement Surplus or Deficit on the Provision of Services (16,049) 27,122 (3,252) 7,821 2024/25 Adjustments for Capital Purposes £000 Net change for the Pensions Adjustments £000 Other Differences £000 Total Adjustments between Funding and Accounting Basis £000 Community and Enterprise Resources 21,085 6,437 (148) 27,374 Education Resources 28,423 11,012 (28,768) 10,667 Finance and Corporate Resources 1,876 3,174 87 5,137 Housing and Technical Resources - Housing Revenue Account 6,219 1,061 (10,591) (3,311) - Housing Other 928 3,157 2,086 6,171 Social Work Resources 4,859 6,243 (2,109) 8,993 Joint Board - - - - Corporate Items - - 9,348 9,348 Corporate and Democratic Core (HRA) - - 105 105 Non-Distributed Costs – Non-Operational Assets (HRA) - - - - Net Cost of Services 63,390 31,084 (29,990) 64,484 Other Income and Expenditure from the Expenditure and Funding Analysis (62,239) 6,285 25,919 (30,035) Surplus or Deficit 1,151 37,369 (4,071) 34,449 Share of (Surplus) or Deficit on the Provision of Services by Associates - - - - Difference between General Fund Surplus or Deficit and Comprehensive Income and Expenditure Statement Surplus or Deficit on the Provision of Services 1,151 37,369 (4,071) 34,449 196
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123 Note 2 Expenditure and Income Analysed by Nature (Group) The group’s expenditure and income are analysed below: 2025/26 £000 2024/25 £000 Expenditure Employee Benefits Expenses 689,909 697,892 Other Services Expenditure 904,823 764,534 Support Services Recharges 0 - Depreciation, Amortisation, Impairment 31,104 97,494 Interest Payment 55,644 68,065 Pension Net Interest Expense 6,355 6,285 Impairment on Financial Instruments (45) (1,752) Loss on the Disposal of Assets 4,973 (7,268) Total Expenditure 1,692,763 1,625,250 Income Fees and Charges and Other Service Income 493,203 439,840 Interest and Investment Income 1,160 14,441 Impairment on Financial Instruments (54) (618) Gain on the Disposal of Assets 1 - Income from Council Tax 172,137 161,060 Government Grants and Contributions 1,048,349 984,274 Total Income 1,714,795 1,598,997 (Surplus) or Deficit on the Provision of Services (22,032) 26,253 Note 3 Investments / Liabilities in Associates and Joint Boards The group’s share of the net asset / liabilities by associate and joint board is shown below: Investments in associates and joint boards 31 March 2026 £000 31 March 2025 £000 Strathclyde Partnership for Transport 85,133 78,457 Strathclyde Concessionary Travel Scheme Joint Committee 685 558 South Lanarkshire Integration Joint Board 25,880 16,991 Lanarkshire Valuation Joint Board 680 1,024 Total 112,378 97,030 197
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124 Note 4 Disclosure of Interests in Other Entities The council has adopted the recommendations of the Code in the United Kingdom 2025/2026, as supported by the International Financial Reporting Standard (IFRS), which requires local authorities to consider their interests in all types of entity to incorporate into Group Accounts. A full set of Group Accounts, in addition to the council’s accounts, has been prepared which incorporates material balances from identified associates and joint ventures. The Financial Statements in the Group Accounts are prepared in accordance with the Accounting Policies set out in the Accounting Policies on pages 102 - 108. Note 5 Financial Impact of Consolidation By including the group entities (details of which are provided below), the effect on the Group Balance Sheet is an increase in both Reserves and Net Assets of £122.036M million. This represents the council’s share of the net assets in these entities. Note 6 Group Entities The Group Accounts consolidate the results of the council with eight other entities – Common Good Fund, four joint boards, South Lanarkshire Leisure and Culture Limited, Routes to Work South and Clyde Valley Learning and Development Joint Committee. The joint boards are: ■ Strathclyde Partnership for Transport ■ Strathclyde Concessionary Travel Scheme Joint Committee ■ Lanarkshire Valuation Joint Board ■ South Lanarkshire Integration Joint Board. South Lanarkshire Council holds no shares in the bodies governed by these Boards. The joint boards have a wide range of functions to discharge, and members of each Board are elected councillors and are appointed by the councils in proportions specified in the legislation. Under accounting standards guidance, South Lanarkshire Council can be seen to have significant influence over these statutory bodies, through nominated Council Member involvement in the bodies’ governing Boards. The Boards are included within the Group Accounts even when our interest in these bodies is less than the 20% that is normally presumed to represent significant influence. Further details on each of the Boards and the Trust are provided below: Common Good Fund The Common Good Fund is for the benefit of the geographical areas of the former burghs and is administered by the council. The council’s share of the year-end net asset of £7.485m is included in the Group Balance Sheet. The Common Good Account is included within the council’s core financial statements Note 37. Strathclyde Partnership for Transport Strathclyde Partnership for Transport is the statutory body responsible for formulating the public transport policy for the 12 local authorities in the former Strathclyde area of the West of Scotland. The accounting period for the Board is the twelve months to 31 March 2026. In 2025/2026, South Lanarkshire Council contributed 14.63% of the entity’s estimated running costs. This body has been included as an associate in the council’s Group Accounts, with the council’s share of the year-end net asset of £85.133m included in the Group Balance Sheet. Copies of the Board’s accounts may be obtained from the Treasurer to Strathclyde Partnership for Transport, 131 St Vincent Street, Glasgow, G2 5JF. The accounts of the Partnership have been subject to audit. Strathclyde Concessionary Travel Scheme Joint Committee Strathclyde Concessionary Travel Scheme Joint Committee comprises the 12 councils within the West of Scotland and oversees the operation of the concessionary fares scheme for public transport within its area. The Strathclyde Passenger Transport Executive administers the Scheme on behalf of the Joint Committee. The accounting period for the Joint Committee is the twelve months to 31 March 2026. In 2025/2026, South Lanarkshire Council contributed 14.95% of the Committee’s estimated running costs. This body has been included as an associate in the council’s Group Accounts with the council’s share of the year-end net assets of £0.685m included in the Group Balance Sheet. Copies of the Board’s accounts may be obtained from the Treasurer to Strathclyde Concessionary Travel Scheme Joint Committee, 131 St Vincent Street, Glasgow, G2 5JF. The accounts of the Committee have been subject to audit. 198
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125 Lanarkshire Valuation Joint Board Lanarkshire Valuation Joint Board was formed in 1996 at local government re-organisation. The Board maintains the Electoral, Council Tax and Non- Domestic Rates registers for North and South Lanarkshire. The Board’s running costs are met by the two member councils. Surpluses or deficits on the Board’s operations are shared between the councils. The accounting period for the Board is the twelve months to 31 March 2026. In 2025/2026, South Lanarkshire Council contributed 50.00% of the Board’s estimated running costs. This body has been included as an associate in the Group Accounts, with the council’s share of the year-end net assets of £0.680m included in the Group Balance Sheet. The following additional disclosures are required under accounting regulations for Lanarkshire Valuation Joint Board because the council’s share of the net assets of the Board exceeds 25%. The figures below show the entity’s position before group percentages have been applied. 2025/26 £000 2024/25 £000 Expenditure 4,528 3,725 Total Comprehensive Income and Expenditure 688 (522) Non-Current Assets 449 557 Long Term Pension Assets - - Current Assets 1,974 2,653 Liabilities due within one year (312) (324) Liabilities due after one year (752) (839) Capital and reserves 1,359 2,047 Contingent liabilities - - Capital commitments - - Copies of the Board’s accounts may be obtained from the Treasurer to the Lanarkshire Valuation Joint Board, Floor 4, Council Offices, Almada Street, Hamilton, ML3 0AB. The accounts of the Board are subject to audit. South Lanarkshire Integration Joint Board South Lanarkshire Integration Joint Board was established by South Lanarkshire Council with NHS Lanarkshire to formally integrate health and social care provision within South Lanarkshire. South Lanarkshire Council delegated resources of £192.293 or 24.42% of the Board’s income in 2025/2026. This body has been included as a joint venture in the Group Accounts, with the council’s 50.00% share of the year end net asset of £25.880m included in the Group Balance Sheet. 2025/26 £000 2024/25 £000 Expenditure 769,599 732,771 Total Comprehensive Income and Expenditure (17,7770 (5,147) Fixed Assets - - Current Assets 51,759 33,982 Liabilities due within one year - - Liabilities due after one year - - Capital and Reserves 51,759 33,982 Contingent Liabilities - - Capital Commitments - - Copies of the Integration Joint Board accounts may be obtained from the Chief Financial Officer of the South Lanarkshire Integration Joint Board, Floor 8, Council Offices, Almada Street, Hamilton, ML3 0AB. The accounts of the Integration Joint Board have been subject to audit. South Lanarkshire Leisure and Culture Limited South Lanarkshire Leisure Limited was established as a Charitable Trust on 1 April 2002, changed to South Lanarkshire Leisure and Culture Limited in October 2010 and then became a SCIO on 3 April 2023. It provides the council with a full range of leisure and cultural services within the South Lanarkshire area. The Trust is entirely independent of the council under law and for taxation purposes. The council and the council’s nominee company are the sole members of the SCIO. South Lanarkshire Council currently has 5 out of the 14 Board positions meaning 35.71% representation on the Board of Directors. The SCIO meets the definition of a structured entity. This describes an entity that has been designed so that the relevant activities are directed by means of contractual arrangements. In recognition of this, South Lanarkshire Leisure and Culture SCIO is included in the Group Financial Statements as a 100% subsidiary. The accounts of the SCIO are published separately and may be obtained from the Secretary, South Lanarkshire Leisure and Culture Limited, Floor 5, Council Offices, Almada Street, Hamilton, ML3 0AB. The accounts of the SCIO have been subject to audit. 199
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126 The following additional disclosures are required under accounting regulations for South Lanarkshire Leisure and Culture Limited because the council’s share of the net assets of the Board exceeds 25%. 2025/26 £000 2024/25 £000 Expenditure 40,609 38,593 Total Comprehensive Income and Expenditure (2,482) (795) Fixed Assets 180 213 Long Term Assets - - Current Assets 9,069 8,293 Liabilities due within one year (5,715) (4,393) Liabilities due after one year (694) (667) Capital and Reserves 1,538 2,139 Contingent Liabilities - - Capital Commitments - - On 3 April 2023, the status of South Lanarkshire Leisure and Culture Limited changed from a Charitable Trust to a Scottish Charitable Incorporated Organisation. This will have no impact on the relationship with the council moving forward. Routes to Work South Routes to Work South was established in 1998. Its main activity is supporting unemployed and workless residents of South Lanarkshire into employment, training or further education. Routes to Work South delivers services to the council and is funded by the council. South Lanarkshire Council is the sole member of Routes to Work South. In recognition of this, Routes to Work South is included in the Group Financial Statements as a 100% subsidiary. The accounts of Routes to Work South are published separately and may be obtained from the Secretary, Routes to Work South, 1-5 Main Street, Cambuslang, Glasgow G72 7EX. The accounts have been subject to audit. The following additional disclosures are required under accounting regulations for Routes to Work South because the Councils’ share of the net assets exceeds 25%. 2025/26 £000 2024/25 £000 Expenditure 2,849 3,257 Total Comprehensive Income and Expenditure (6) (7) Fixed Assets 19 27 Current Assets 2,029 1,753 Liabilities due within one year (1,189) (928) Liabilities due after one year (251) (251) Capital and Reserves 608 602 Contingent Liabilities - - Capital Commitments - - Clyde Valley Learning and Development Joint Committee Clyde Valley Learning and Development Joint Committee was established, with the backing of the Scottish Government’s Efficiency and Reform Fund, to provide procurement of training activities to each of its member councils. South Lanarkshire Council is the lead authority for this project and its constituent membership totalled 20.00% in 2025/2026. This body has been included as an associate in the council’s Group Accounts, however, as the Joint Committee net assets at 31 March 2026 are nil, there has been no financial impact on South Lanarkshire’s Single Entity Accounts. The accounts of Clyde Valley Learning and Development Joint Committee are published separately and may be obtained from the Treasurer, Finance and Corporate Resources, Floor 4, Almada Street, Hamilton, ML3 0AB. The Accounts of the Joint Committee are subject to audit. Note 7 Non-Material Interest in Other Entities The council also has an interest in: ■ Scotland Excel (previously Authorities Buying Consortium) is a Joint Committee established to serve the buying requirements of the councils within the former Strathclyde area. South Lanarkshire Council contributed 5.3% of Scotland Excel’s estimated running costs in 2025/2026, but the financial results of this organisation have not been consolidated into the council’s Group Accounts as the amounts are not material. . ■ West of Scotland Archaeology Service is a Joint Service established to provide planning related archaeological advice to its 11 member councils. South Lanarkshire Council contributed 9.45% of the estimated running costs of the Joint Service in 2025/2026, however, the financial results of this organisation have not been consolidated into the council’s Group Accounts as the amounts are not material. 200
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127 ■ Continuing Education Gateway is a consortium of 10 local authorities in the West of Scotland. It was formed in April 2000 to further the provision of careers and educational guidance services. South Lanarkshire Council contributed 14.50% of the consortium’s estimated running costs in 2025/2026, however, the financial results of this organisation have not been consolidated into the council’s Group Accounts as the amounts are not material. ■ SEEMIS Group LLP is a not-for-profit body whose principal activity is the provision of education related information technology solutions to its member councils. South Lanarkshire Council contributed 6.21% of the organisation’s estimated running costs in 2024/2025, however, the financial results of this organisation have not been consolidated into the council’s Group Accounts as the amounts are not material. ■ Glasgow City Region – City Deal Cabinet was established on 20 January 2015. The purpose of the committee is to determine the Strategic Development Priorities for the Clyde Valley Region and to monitor and ensure delivery of the City Deal Programme as agreed between member authorities and the UK and Scottish Governments. The City Deal aims to deliver a £1.1 billion investment programme, including delivery of labour market and innovation programmes. South Lanarkshire Council contributed 17.7% of the organisation’s running costs in 2024/2025, however, the financial results have not been consolidated into the council’s Group Accounts as the amounts are not material. ■ The Rural Development Trust is based in South Lanarkshire and works with local communities to deliver innovative solutions including resolving transport problems in rural areas and developing markets towns. The council supports the Rural Development Trust. The financial results have not been consolidated into the council’s Group Accounts as the amounts are not material. ■ Regen: FX Youth Trust was established as a Charitable Trust on 1 April 2007. It serves the council by developing and co-ordinating out of school diversion activities within the South Lanarkshire area. The Trust is entirely independent of the council under law and for taxation purposes. The council has neither any shares in, nor ownership of the Trust. The financial results have not been consolidated into the council’s Group Accounts, as the amounts are not material. ■ Clyde Gateway was established to re-develop large sections of the East End of Glasgow extending into Shawfield and Rutherglen in South Lanarkshire. The key stakeholders are Glasgow City Council, Scottish Enterprise and South Lanarkshire Council, with the two council partners providing land holdings on a phased basis over the anticipated 20-year lifetime of the project as well as capital funding. The financial results have not been consolidated into the council's Group Accounts as the amounts are not material. 201
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128 Audit Arrangements Under arrangements approved by the Commission for Local Authority Accounts in Scotland (“The Accounts Commission”) the auditor with overall responsibility for the audit of the accounts of South Lanarkshire Council for the year ended 31 March 2026 is: Audit Scotland 4th Floor 102 West Port Edinburgh EH3 9DN 202
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129 Glossary of Terms Much of the terminology used in this report is intended to be self-explanatory, however, the following additional definition and interpretation of terms may be helpful: 1. Current Service Cost (Pensions) The increase in the current value of a defined benefit scheme’s liabilities, expected to arise from employee service in the current financial year. 2. Past Service Costs (Pensions) For a defined benefit scheme, the increase in the present value of the scheme’s liabilities relating to employee service in prior years arising in the current financial year as a result of the introduction of, or improvement to, retirement benefits. 3. Interest Cost (Pensions) For a defined benefit scheme, the expected increase during the financial year of the scheme’s liabilities because the benefits are one year closer to settlement. 4. Actuarial Gains and Losses (Pensions) For a defined benefit scheme, the changes in actuarial deficits or surpluses that arise because events have not coincided with the actuarial assumptions made for the last valuation (experience gains and losses) or the actuarial assumptions have changed. 5. Pension Scheme Liabilities The liabilities of a defined benefits pension scheme for outgoings due after the valuation date. The scheme’s liabilities, measured using the ‘projected unit method’, reflect the benefits that the employer is committed to provide for service up to the valuation date. 6. Pension Reserve The Pension Reserve recognises the council’s share of the actuarial gains and losses in the Strathclyde Pension Fund and the change in the council’s share of the net liability chargeable to the Comprehensive Income and Expenditure Statement. 7. Asset An item having value to the council in monetary terms. Assets are categorised as either current or non-current. A current asset will be consumed or cease to have material value within the next financial year (e.g. cash and stock). A non- current asset provides benefit to the council and the services it provides for a period of more than one year. 8. Liability A liability is where the council owes payment to an individual or another organisation. A current liability is an amount which will become payable within the next financial year. A non-current liability is an amount which by arrangement is payable beyond the next year at some point in the future or to be paid off by an annual sum over the period of time. 9. Contingent Liability A contingent liability is either: • A possible obligation arising from past events whose existence will be confirmed only by the occurrence of one or more uncertain events not wholly within the council’s control, or • A present obligation arising from past events where it is not probable that a transfer of economic benefits will be required, or the amount of the obligation cannot be measured with sufficient reliability. 10. Capital Expenditure and Financing This is expenditure incurred in creating, acquiring or improving assets. Expenditure is normally financed by borrowing (with repayment over a period of years), income from the sale of existing assets, revenue funds or external grants and contributions. 11. Capital Financed from Current Revenue This is expenditure incurred in creating, acquiring or improving assets where that expenditure is funded directly from the revenue account in the year in which it is incurred. 12. Non-Current Assets Fixed Assets are created as a result of the capital expenditure incurred by the council. As such, they comprise buildings, property, vehicles, plant and machinery, and computer equipment etc. 203
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130 13. Property, Plant and Equipment These are assets with physical substance (tangible assets) that are held for use in the production or supply of goods and services, for rental to others, or for administrative purposes, and expected to be used during more than one year. These are further analysed in the Notes to the Accounts as follows: a) Council Dwellings – these are council houses b) Other Land and Buildings c) Vehicles, Plant and Equipment d) Infrastructure Assets – these are assets where there is no prospect of sale or alternative use e.g. roads, bridges, tunnels, water supply and drainage systems e) Community Assets – assets that the council intends to hold in perpetuity that have no determinable useful life and may have restrictions on their disposal e.g. open land and public parks. f) Surplus Assets – assets that are not being used to deliver services, but which do not meet the criteria to be classified as either investment properties or non-current assets held for sale. g) Assets Under Construction 14. Heritage Assets Heritage assets are assets that have cultural, environmental, or historical association that make their preservation for future generations important. Heritage assets are maintained principally for their contribution to knowledge and culture, and it is this which distinguishes them from other assets e.g. museum artefacts. 15. Assets Held for Sale These are assets where the carrying value of the asset will be realised through its sale rather than continued use. 16. Intangible Asset These are assets which do not have a physical substance (e.g. IT software and licences) 17. Depreciation The measure of the cost of wearing out, consumption or reduction in the useful economic life of the council’s non- current assets during the financial year, whether from use, the passage of time or obsolescence through technical or other changes. 18. Impairment A reduction in the value of non-current asset to below its carrying value in the Balance Sheet. 19. Fair Value The fair value of an asset is the price at which it could be exchanged in an arm’s length transaction, less where applicable, any grants receivable towards the purchase or use of the asset. 20. Net Carrying Value The amount at which non-current assets are included in the Balance Sheet, i.e. historical cost or current value less the cumulative amounts provided for depreciation. 21. Accrual The concept that income and expenditure are recognised as they are earned or incurred, not as the money is paid or received. 22. Provision An amount put aside in the accounts for future liabilities or losses which are certain or very likely to occur but the amounts or dates or when they will arise are uncertain. 204
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Appendix 2 Table 1 Reconciliation of Monitoring Position to Annual Accounts Actual to 31/03/26 (Exec Com, 24 June 2026) £m Move Corporate Items £m Remove Approved Transfers to Reserves £m Remove Transfers from Reserves £m Revised General Fund Position per EFA £m Add: HRA Position £m Total EFA per Annual Accounts £m Statutory Accounting Adjustment £m CIES Figure per Annual Accounts £m Col 1 Col 2 Col 3 Col 4 Col 5 Col 6 Col 7 Col 8 Col 9 Community and Enterprise Resources 129.609 - - - 129.609 - 129.609 28.949 158.018 Education Resources 502.132 - - - 502.132 - 502.133 1.736 503.869 Finance and Corporate Resources 43.228 - - 1.090 44.318 - 44.318 7.926 52.244 Housing and Technical Resources 21.260 - - - 21.260 - 21.259 5.387 26.646 Housing Revenue Account - - - - - 3.988 3.988 2.134 6.122 Social Work Resources 247.052 - - - 247.052 - 247.052 7.676 254.728 Joint Boards 1.635 - - - 1.635 - 1.635 - 1.635 Corporate Items - (18.040) - - (18.040) - (18.041) 9.533 (8.508) Corporate and Democratic Core - HRA - - - - - - - 0.201 0.201 Non-Distributed Costs - HRA - - - - - - - - - Total Resources 944.376 (18.040) - 0.987 927.426 3.988 931.413 63.542 994.955 CFCR 1.042 - - 0.992 2.034 - 2.034 Loan Charges 32.885 - - - 32.885 - 32.885 Corporate Items (18.040) 18.040 - - - - - Loans Fund Review - T/f to Reserves 13.349 - (13.349) - - - - Teacher Numbers - T/f to Reserves 13.859 - (13.859) - - - - 2025/2026 Investments - T/f to Reserves 4.200 - (4.200) - - Waste and Recycling Services - T/f to Reserves 2.200 - (2.200) - - Budget Strategy - T/f to Reserves 4.500 - (4.500) - - Council Tax (172.137) - - - (172.137) - (172.137) General Revenue Grant (452.333) - - - (452.333) - (452.333) Non Domestic Rates (371.110) - - - (371.110) - (371.110) Transfer from Reserves (29.906) - - 29.906 - - - Other Income and Expenditure (971.491) 18.040 (38.108) 30.898 (960.661) - (960.661) (55.721) (1,016.382) (Surplus)/Deficit on Provision of Services (27.115) 0.000 (38.108) 31.988 (33.235) 3.988 (29.248) 7.821 (21.427) 4 207
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Annual Accounts: Restatement of Monitoring Figures Reported This Appendix reconciles the monitoring figures reported to the Council’s Executive Committee (24 June 2026) to the figures in the Council’s Annual Accounts (in the Expenditure and Funding Analysis Statement and the Comprehensive Income and Expenditure Account). This is detailed below: • The starting point for the Expenditure and Funding Analysis (col 1) is the year-end outturn position shown in Appendix 1 of the report to Executive Committee, 24 June 2026), and is the monitoring surplus of £27.115 million. An adjustment is made to move the Corporate Items from the Other Income and Expenditure to the Resources in Appendix 2 (col 2). This is where they are shown in the Annual Accounts. • Appendix 2 (col 3 and 4) then takes this monitoring surplus of £27.115 million, and removes the approved Transfer to Reserves of £38.108 million and Transfers from Reserves totalling £31.988 million, as the accounting requirements require us to remove both Transfers To and Transfers From Reserves, from these reported Committee figures. • The table in Appendix 2 then adds the HRA outturn position (col 6) to give the Council’s total position: a surplus on provision of services of £29.247 million. This represents the Council’s outturn position (General Fund plus HRA) on an accounting basis before Transfers To / Transfers From Reserves and is the position shown in the Expenditure and Funding Analysis (col 7). • Finally, the Expenditure and Funding Analysis position (col 7) is adjusted by adding the technical accounting transactions, including depreciation and pension accounting entries, which are out with the normal Council monitoring process, to arrive at the figures in the Comprehensive Income and Expenditure Statement of a surplus of £21.427 million, before the entries to reverse out the accounting transactions and to add in transfers to and from reserves. These transactions are for accounting purposes and reflect the Council spend in line with accounting guidance. They do not change the final outturn position of the Council and have no impact on the actual position of the Council and the funds available. • As detailed in above, the Expenditure and Funding Analysis shows the movement on the General Fund Reserve and HRA Reserve before any transfers to/from other reserves. These transfers relate to transfers from Other Reserves including the Repairs and Renewals Fund (including Winter Maintenance), the Insurance Fund and the Capital Fund to offset expenditure 208
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and commitments that have been charged to the Revenue Budget but where the funding to pay for these commitments sits in another Reserve and are shown in Table 3 below. • These transfers need to be taken into account to arrive at the total movement in the General Fund Reserve and HRA Reserve included in the Balance Sheet (Table 2 below). Table 2 below shows that when these transfers totalling £1.682 million are taken into account, the total General Fund and HRA position for the year is an increase of £30.929 million. This increase takes account of the final year end position of breakeven as well as all transfers to and from all reserves, including those above. Table 2 - Total Movement in General Fund Reserve and HRA Reserve General Fund £m HRA £m Total £m Closing General Fund and HRA Balance 118.997 10.440 129.437 Surplus/(Deficit) per EFA 33.235 (3.988) 29.247 Transfer (to)/from Other Reserves (see Table 3) 1.474 0.208 1.682 Total Movement in Year 34.709 (3.780) 30.929 Closing General Fund and HRA Balance 153.706 6.660 160.366 Table 3 - Transfers (to)/from Other Reserves General Fund £m Repairs and Renewals (including Winter Maintenance) 0.491 Insurance Fund 0.790 Capital Fund (including IT Development Fund, Central Energy Efficiency Fund, Education Capital Items Replacement) 0.401 Total Transfers to/(from) Other Reserves 1.682 209
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South Lanarkshire Council Charitable Trusts Trustees’ Annual Report – for the year ended 31 March 2026 ________________________________________________________________________ The Trustees present their annual report together with the financial statements and Independent Auditors’ report for the year ended 31 March 2026. Reference and Administration Information Charity Name: South Lanarkshire Council Charitable Trusts Charity Number: SC025089 Principal Office: Finance Services Council Offices Almada Street Hamilton ML3 0AA Trustees: Finance and Corporate Resources Committee, South Lanarkshire Council Independent Auditors: Audit Scotland Structure, Governance and Management Governing Document South Lanarkshire Council Charitable Trusts includes one remaining Charitable Trust Fund / Bequest established under previous local authorities. The Trust Fund / Bequest is restricted for the purpose which it was set up. Charity Trustees The trustees of the charities are elected members (Councillors) of South Lanarkshire Council. Trustees are appointed through their election to the Finance and Corporate Resources Committee of South Lanarkshire Council. The current trustees of South Lanarkshire Council Charitable Trusts are detailed below: Councillor Alex Allison Councillor Martin Hose Councillor Walter Brogan (Depute Chair) Councillor Ross Lambie Councillor Matthew Buchanan Councillor Katy Loudon Councillor Andy Carmichael Councillor Hugh Macdonald Councillor Maureen Chalmers Councillor Catherine McClymont Councillor Margaret Cooper Councillor Mo Razzaq (Chair) Councillor Andrea Cowan Councillor Elaine McDougall Councillor Maureen Devlin (Ex-Officio) Councillor Mark McGeever Councillor Mary Donnelly Councillor John Ross Councillor Grant Ferguson Councillor Graham Scott Councillor Gladys Ferguson-Miller Councillor Kirsty Williams Councillor Celine Handibode (Depute Chair) Councillor Gavin Keatt (from 27/05/26) Councillor Graeme Horne Appendix 3 4 211
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South Lanarkshire Council Charitable Trusts Trustees’ Annual Report – for the year ended 31 March 2026 ________________________________________________________________________ Organisational Structure The trustees delegate the day-to-day administration of the charities to officers of the Council through the Scheme of Delegation as approved by South Lanarkshire Council on 18 May 2022. The trustees (as elected members of the Council) meet to consider and approve the Annual Accounts for South Lanarkshire Council which includes the financial statements for all South Lanarkshire Council Trust Funds. An annual report on Governance of Trust Funds is presented to the Finance and Corporate Resources Committee. This report details expenditure for the preceding financial year. Related Parties Trustees hold this position because they are elected members of South Lanarkshire Council. South Lanarkshire Council provides administration services to the Trust. Risk Management It is recognised that there is a risk that the funds of the Trusts are not used for the purpose that they were intended. To mitigate this risk, the governance arrangements in place ensure that the Finance and Corporate Resources Committee are advised of the balance and distribution of funds. In addition, the Office of the Scottish Charity Regulator (OSCR) also receive an annual report on the Trusts and their purpose. Management of Funds and Investment Policy The trustees rely upon the expertise of South Lanarkshire Council to manage the investments to ensure the maximum return at least risk to the charity is achieved. The majority of the funds of the charity are managed on behalf of the Council by Barclays Wealth. The investment objective is to provide a sustainable level of income, along with the prospect of growth in both capital and income through investment in a diversified portfolio of investments. The market value of these funds as at 31 March 2026 was £1,103,664 (2024/2025: £1,032,450). The remaining fund of the charity is managed by South Lanarkshire Council. The interest received is shown in the Statement of Receipts and Payments. During 2025/2026 income of £44,569 (2024/2025: £42,055) was received and is shown in the Statement of Receipts and Payments. Trustee Indemnity Insurance No such insurance has been taken out. 212
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South Lanarkshire Council Charitable Trusts Trustees’ Annual Report – for the year ended 31 March 2026 ________________________________________________________________________ Reorganisation of South Lanarkshire Council Trust Funds South Lanarkshire Council established The South Lanarkshire Charitable Trust (Charity Number SC049819) in December 2019 for the purposes of reorganising existing trust funds, including those held under South Lanarkshire Council Charitable Trusts (Charity Number SC025089). The constitution of The South Lanarkshire Charitable Trust (SC049819) is a Trust Deed granted by South Lanarkshire Council. It provides a modern constitution with appropriate purposes, powers and governance arrangements. The process of transferring the funds from South Lanarkshire Council Charitable Trusts (SC025089) to The South Lanarkshire Charitable Trust (SC049819) is ongoing. One Charitable Trust Fund / Bequest established under previous local authorities remains. Objectives and Activities The remaining fund is the Loudon Bequest Trust Fund which was used to help finance holidays for elderly people within 12 Local Authority areas in the West of Scotland. Achievements and Performance During the year to 31 March 2026, no grants were paid out. Financial Review Overview Income during 2025/2026 came from income on external investments of £33,732 (2024/2025: £31,663); interest calculated on the Trust Funds’ revenue balances of £7,618 (2024/2025: £7,295). Proceeds from the sale of investments of £3,219 (2024/2025: £3,097) were received. Expenditure during 2025/26 included Investment Management costs of £3,219 (2024/2025: £3,097); External Audit Fee £2,000 (2024/2025: £2,000); and an Administration Charge of £2,124 (2024/2025: £2,115). The trust held cash and bank balances of £216,490 (2024/2025: £179,264) as at 31 March 2026 and investments with a book value of £813,325 (2024/2025: £814,442). 213
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South Lanarkshire Council Charitable Trusts Trustees’ Annual Report – for the year ended 31 March 2026 ________________________________________________________________________ Reserves Policy The trusts are managed in order to allow the full potential benefit of the trusts to be realised. By ensuring distributed funds are of sufficient value to make a beneficial impact to recipients, there may be some erosion of capital. The Reserves of the Trust will be used in line with the specific requirements of the Trust. External Audit The auditor with responsibility for the audit of the accounts of South Lanarkshire Council Charitable Trusts for the year ended 31 March 2026 is: Audit Scotland 4th Floor 102 West Port Edinburgh EH3 9DN Declaration The trustees declare that they have approved the trustees’ report above. Signed on behalf of the charity’s trustees Signature(s): Full Name(s): MO RAZZAQ Position: CHAIR OF FINANCE AND CORPORATE RESOURCES COMMITTEE Date: 23 JUNE 2026 214
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South Lanarkshire Council Charitable Trusts Statement of Receipts and Payments for the year ended 31 March 2026 ___________________________________________________________________________________________________________________ Note Unrestricted Funds Restricted Funds Expendable Endowment Funds Permanent Endowment Funds Total Funds (current year) Total Funds (last year) £ £ £ £ £ £ Receipts Donations - - - - - - Income from investments other than land and buildings 4 - 41,350 - - 41,350 38,958 Sub Total - 41,350 - - 41,350 38,958 Receipts from Assets and Investments sales Proceeds from sale of investments 4 - 3,219 - - 3,219 3,097 Sub Total - 3,219 - - 3,219 3,097 Total Receipts - 44,569 - - 44,569 42,055 Payments External Audit Fee 8 - 2,000 - - 2,000 2,000 Investment Management Costs 7 - 3,219 - - 3,219 3,097 Administration Charge 9 - 2,124 - - 2,124 2,115 Grants and Donations 5 - - - - - - Purchase of Investments 4 - - - Total Payments - 7,343 - - 7,343 7,212 Net Receipts - 37,226 - - 37,226 34,843 Surplus / (Deficit) for the year - 37,226 - - 37,226 34,843 215
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South Lanarkshire Council Charitable Trusts Statement of Balances as at 31 March 2026 ___________________________________________________________________________________________________________________ Note Unrestricted Funds Restricted Funds Expendable Endowment Funds Permanent Endowment Funds Total Funds (current year) Total Funds (last year) £ £ £ £ £ £ Cash and Bank Balances Opening Balance - 179,264 - - 179,264 144,421 Transfer of Assets to the South Lanarkshire Charitable Trust - - - Surplus shown on receipts and payments account - 37,226 - - 37,226 34,843 Closing Balance - 216,490 - - 216,490 179,264 Investments Market Value of Investments (Managed by Barclays Wealth) 7 - 1,103,664 - - 1,103,664 1,032,450 Total Investments - 1,103,664 - - 1,103,664 1,032,450 Signed on behalf of the charity’s trustees Signature(s): Full Name(s): MO RAZZAQ Position: CHAIR OF FINANCE AND CORPORATE RESOURCES COMMITTEE Date: 23 JUNE 2026 216
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South Lanarkshire Council Charitable Trusts Notes to the Financial Statements ___________________________________________________________________________________________________________________ 1. Basis of Accounting These financial statements have been prepared on the Receipts and Payments basis in accordance with the Charities & Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006 (as amended). 2. Fund Accounting Restricted funds are those funds that can only be applied for particular purposes. 3. Taxation The charity is not liable to income or capital gains tax on its charitable activities. 4. Trustee Remuneration, Expenses and Related Party Transactions • No remuneration or expenses were paid to charity trustees or persons connected to a trustee during the year. • The trust received income from external investments of £33,732 (2024/2025: £31,663) and £7,618 (2024/2025: £7,295) from South Lanarkshire Council. All transactions incoming and outgoing are made via South Lanarkshire Council’s accounts. • Proceeds from the sale of the Loudon Bequest investment of £3,219 (2024/2025: £3,097) were received. • There were no transactions between the charity and any trustee or any connected person during the year. 5. Grants In the year to 31 March 2025, there were no grants were paid out as the process of transferring the funds from South Lanarkshire Council Charitable Trusts (SC025089) to The South Lanarkshire Charitable Trust (SC049819) was ongoing. During 2023/2024 no grants were paid out. 217
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South Lanarkshire Council Charitable Trusts Notes to the Financial Statements ___________________________________________________________________________________________________________________ 6. Cash and Bank Balances During the year the Trust’s balances were held by South Lanarkshire Council, which manages the administration of the funds on behalf of the Trustees. South Lanarkshire Council also acts as the banker for the charity and as detailed above, all transactions incoming and outgoing are made via the Council’s accounts. The balances are repayable on demand and interest is payable on balances. 7. Investments The charity has one investment managed by Barclays Wealth £1,103,664 (2024/2025: £1,032,450) on behalf of the Council with an objective of achieving a balance between income and capital growth subject to a medium level of risk. Barclays Wealth charged a portfolio management fee of £3,219 (2024/2025; £3,097). 8. External Audit Fee The external audit fee for 2025/2026 £2,000 (2024/2025: £2,000) is paid to Audit Scotland. 9. Administration Charge A charge for administration of the Trust Fund for 2025/2026 £2,124 (2024/2025: £2,115) is paid to South Lanarkshire Council. 218