Budget Update
Argyll and Bute Council · 26 November 2025
Back to Argyll and Bute Council — 26 November 2025 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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ARGYLL AND BUTE COUNCIL COUNCIL FINANCIAL SERVICES 26 NOVEMBER 2025 BUDGET UPDATE 1. INTRODUCTION 1.1 This report provides an update on the budget outlook and outlines a number of options towards closing the budget gap in 2026-27. Members are asked to consider all options and advise of those that they wish to remain as part of the budget considerations at this stage, to allow the statutory Trade Union consultation to commence. 2. RECOMMENDATIONS 2.1 It is recommended that Council: a) Endorse the management/operational savings outlined in Appendix 1 and note that these will be incorporated into the next budget outlook update due at Policy and Resources Committee in December 2025. b) Confirm that all savings options outlined in Appendix 2 and Appendix 3 will remain as part of the budget process to be considered by Council on 25 February 2026. c) Note that statutory Trade Union consultation will commence on 27 November 2025 and be concluded by 22 January 2026. d) Note that, where required, Integrated Impact Assessments for savings options will be published on the Council’s website by 28 January 2026. 3. DETAIL Updated Budget Gap 3.1 It is expected that Scottish Government will provide 3-year revenue and 5-year capital funding grant figures as part of their Scottish Budget which is very welcome and will provide a greater level of certainty in respect of our budget outlook planning assumptions. The Scottish Budget is due to be announced on 13 January 2026, much later than expected due to the delay in the UK Budget announcement which is scheduled for 26 November 2025. It is expected that Local Council individual allocations should be known on the same day as the Scottish budget, or the following day, however, due to the large amount of detail that needs to be worked through and checked, it is likely that we will not be able to update Elected Members on the impact for our Council until the end of that week. 3.2 The latest Budget Outlook report was presented to the Policy and Resources Committee on 9 October 2025. After accounting for previously agreed policy savings, assuming an increase in fees and charges at 6%, and assuming an increase in Council Tax of 5% across every year, the budget gap is £10.586m in 2026-27 rising to £33.858m by 2030-31 in the mid-range scenario. It should be noted that any increase to fees and charges and Council Tax will require to be approved by Council, at this stage these are only financial planning assumptions.
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3.3 The budget outlook is based on a number of assumptions. Those assumptions that could differ from the mid-range scenario are outlined below. • Level of Scottish Government Grant: Within the mid-range scenario this has been assumed to represent a 0.5% increase Scotland wide, which will result in ABC receiving a circa 0.25% reduction due to reliance on the floor mechanism which is currently set at 0.75% below the Scottish average. The Scottish Budget will confirm our allocation on 13 January 2026. • In respect of Packaging Extended Producer Responsibility, from 2026–27 onwards, a cautious assumption was made that only 50% of the 2025–26 funding will continue (2025-26 funding is £2.786m). Since the budget outlook was reported to the Policy and Resources Committee in October, the funding available for 2026-27 has been confirmed at £2.851m. It remains uncertain as to whether this funding will be recurring at this level in 2027-28 and future years without a reduction in Scottish Government grant. • £0.500m has been included for unidentified cost and demand pressures, as we move closer to budget time, this amount will be removed as all known cost and demand pressures should be incorporated in the budget pack and we do not budget for contingency. • Live Argyll are currently in a challenging financial position partly due to the loss of income as a result of closure of Helensburgh Leisure centre following the storm in January 2025 but also due to ongoing inflation pressures, particularly pay. The budget outlook already assumes a 10% reduction that was deferred from 2025-26 and any change to this position will change the Council’s budget gap. 3.4 In addition to the change in assumptions noted in the previous paragraph, the Council will need to agree the payment to the HSCP taking into consideration the significant financial challenges facing the HSCP and the impact that savings options will have on our communities. Within the Council’s budget outlook (mid-range scenario), the payment is in essence a flat cash amount (after re-instatement of the £3.053m non- recurring saving in relation to the Strathclyde Pension Fund contribution). Further information is provided on the Health and Social Care Partnership in paragraphs 3.19 to 3.25. Budget Approach 3.5 The budget approach for 2026-27 was approved at the Council meeting on 26 June 2025. The approach to savings planning was centred around developing a five-year pipeline of savings, acknowledging that there will also be a need to focus on the significant budget gap facing the Council in 2026-27. Four themes are being taken forward as follows: • Empowering Communities • Increasing Income • Right Sizing Council Asset Base • Delivering Services Differently. 3.6 Work has commenced on these themes that are focussed on medium to longer term options that will contribute to a pipeline of savings/efficiencies for future years, they will not deliver sufficient savings to address the 2026-27 estimated budget gap, given the
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lead times required. 3.7 There is also a need to consider savings options that can be delivered next year. Heads of Service were asked to identify savings equivalent to 15% of their controllable service budgets. This target was always intended as a guide, reflecting the fact that 15% of controllable expenditure across the Council broadly aligns with the current budget gap projected for 2026–27. The level of savings achievable will vary by service, as each contains a mix of statutory and non-statutory functions, and varying contractual obligations —meaning some may have the opportunity to deliver more, while others less. 2026-27 Service Savings 3.8 Officers have now identified a number of savings options and they have been presented to the Budget Working Group in the first instance, who agreed that they should go on to Council for further consideration. 3.9 The savings have been split into management/operational and policy. Management/operational savings are savings that officers can go ahead and implement with minimal impact on the services that the Council provides, in other words, efficiency savings. Policy savings are those that either impact staff and/or could change, reduce or stop a service that is currently provided. The policy savings have been split into policy with no staffing implications and policy with staffing implications. 3.10 The total savings identified at this stage for 2026-27 are £6.193m with an impact on 38.2FTE and 67head-count. Further detail is contained within the appendices to this report. Type of Saving £000 FTE Head-Count Management/Operational 3,134 0 0 Policy – no staffing implications 1,308 0 0 Policy – staff implications 1,751 38.2 67 Total 6,193 38.2 67 3.11 Savings options are still being further refined and integrated impact assessments will require to be carried out prior to any decision taken at Council in February. 3.12 In order to meet our statutory requirement to consult with the Trade Unions on potential redundancy, Council are being asked to agree the savings that will remain as part of the budget considerations at this stage, to allow officers to proceed with the statutory Trade Union consultation. We must allow a minimum of 30 days for consultation or if over 99 staff are affected, 45 days consultation period. It is good practice to ensure there is early engagement to allow employees and employee representatives to consider and suggest any alternatives to job reductions. All affected staff have been notified by their Manager prior to this report being in the public domain. 3.13 Council are asked to endorse the management/operational savings, noting that these will be incorporated into the next budget outlook update due at Policy and Resources
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Committee in December and to confirm the policy savings options that they wish to remain as part of the budget considerations at this stage, to allow the statutory Trade Union consultation to commence for any savings options that affect staff. It is not expected that decisions will be taken on any of the policy options until the February budget meeting, when Trade Union consultation is complete and integrated impact assessments have been undertaken. 3.14 The timeline for Trade Union consultation and integrated impact assessments is summarised below: Date Action 18 November 2025 All employees affected by savings proposals must be notified. 19 November 2025 Papers for Council meeting with details of all savings options to be discussed on 26 November go public. 26 November 2025 Council will confirm savings options that should be further developed. 27 November 2025 to 22 January 2026 Formal Trade Union consultation – exceeds statutory minimum accounting for Christmas period. 22 January 2026 All Trade Union consultation meetings concluded. 23 January 2026 to 28 January 2026 Budget papers prepared for pre-agenda and Integrated Impact Assessment published on the Council’s website. Other Considerations to bridge the Budget Gap 3.15 Officers will continue to explore further opportunities within services for savings or increased income and bring forward other proposals at a future date. Officers are also considering any earmarked reserves that could be released to the General Fund, in addition to those included within the appendices, which could create some one-off opportunities. There are a number of Council wide options that could be considered, and these are noted in the paragraphs below. 3.16 The level of Council tax increase assumed within the mid-range scenario is a 5% increase. The average Council Tax increase across all Local Authorities in 2025-26 was 9.3%. If we increased our Council Tax estimate for 2026-27 to match the average increase in 2025-26 then this would reduce our budget gap by circa £3m. 3.17 It is anticipated that savings in debt interest costs will be achieved during 2025-26 providing an opportunity to redirect resources to future council priorities or to help balance the budget in 2026-27 on a one-off basis. Estimates will be provided later this year once a review of the loans fund has been carried out. 3.18 An option exists to use a portion of Crown Estate funding to support existing revenue expenditure. Any such approach would need to be carefully assessed to ensure compliance with the terms of the Crown Estate grant. While this would reduce the level of funding available for projects across Argyll and Bute, it could provide a short-term measure while medium to longer-term savings are developed. In 2024–25, the Crown Estate grant amounted to £1.8m, and confirmation of the 2025–26 allocation is still awaited; however, £1.4m has already been committed. Around £0.110m is allocated annually to staff costs supporting Crown Estate-funded projects, and, subject to a
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successful funding bid, approximately £0.115m will be required over the next four years to match-fund the Tarbert Heritage and Place Programme. A prudent example would be that Members consider up to £1m per year to be used to support existing revenue expenditure over 1-2 years. Health And Social Care Partnership 3.19 Health and Social Care Partnerships in Scotland continue to face significant financial pressures. Rising demand for services, workforce shortages and the increasing complexity of care are pushing costs upward at a pace that exceeds available funding. At the same time, inflationary pressures and the need to maintain safe staffing levels are stretching already constrained budgets. Our HSCP is no different to those across Scotland and will require to make difficult decisions about service prioritisations, transformation and efficiency savings to ensure long-term sustainability. 3.20 The most recent budget outlook for 2026-27 for Social Work forecasts a £6.2m gap between the expected cost of delivering the current level of service and the resources available to support Social Work and Social Care services. This is equivalent to 7% of the budget provided by Council. Additionally, the NHS services provided by the HSCP are forecasting a £10m shortfall with Greater Glasgow and Clyde seeking a substantial step increase to the cost of acute services provided by them. 3.21 The process of developing proposals to address the scale of the deficit is challenging, as all options have significant adverse impacts on the care services provided, and will result in a mixture of: • Increased risk to vulnerable clients. • Increased delayed discharges from hospital, which can be permanently damaging to individuals involved. • Reduced staffing and care capacity throughout Argyll & Bute. • Potential for further third sector and commissioned services to close services due to financial unsustainability. • Inability to provide 24-hour coverage to support frail people at home, in emergency situations (where they are not injured). • Closure of valuable, preventative services such as community transport and day care services. • Reduction in support provided to unpaid carers. 3.22 The HSCP recently implemented a threshold of care which places a limit on care at home services; this is anticipated to save £0.5m in 2026-27. It has also already cut its Mobile teams and Responder Service by £0.7m which, along with commissioning restrictions, is resulting in increased delays from hospital, which now exceed previous peaks and compare unfavourably with the rest of Scotland. 3.23 The specific proposals for 2026-27 under consideration are summarised in the table below.
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Project £000 Impact Threshold of Care 500 Approved already – will progressively result in reduced commissioning and reduced services. Increasing sustainability risk for all care at home providers. Reduced staffing is a consequence. Reduced Children & Families Social Work Staffing 225 4 FTE removed from structure. Will result in delays and increased focus on Child Protection at expense of other services. Reduced Adult Services Social Work Staffing 288 5 FTE removed from structure. Will result in delays to assessments and increased workload for remaining staff. Further reduction to cancellation of the Responder Service 1,800 Contractor will be forced to make circa 40-50 FTE posts redundant. HSCP will no longer be able to respond to calls from older adults, on an emergency basis. The Service currently responds to around 3,800 calls per month, asking for help. Options short of cancellation are being considered, but saving will be reduced. Contracts and Grants 700 End or reduce non-statutory provisions such as community transport, support for Care and Repair, and support for carers centre. Total budget for such services is £3m; some are statutory and cannot be easily ended. Close Lorn Campbell Court 300 Small number (4) of clients remaining in the facility, can either be managed as care at home clients, or potentially cared for within KCC. Staff would be re- deployed to the care at home service in Kintyre to reduce agency staffing. Close all Day Services 400 A review is underway, closure is one option, the other option would be to charge for these services and move them towards operating on a self-funding basis. Savings from Learning and Physical Disability Budgets 600 This will result in reductions in care packages and / or staffing structures. It is equivalent to around 2% of the budget. It is not possible to protect these budgets from cuts. Total 4,813 3.24 The HSCP does not consider that these proposals align to national policy and would damage capacity for care, as employment levels permanently reduce. This would be in the context of increasing need, as the elderly population increases. The ability of the HSCP and the care sector to respond to future demand would be impaired. There are also severe management capacity constraints which make the delivery of several of these proposals by 1 April 2026 difficult. Even if all the above was able to be implemented there is still a requirement for additional funding. Further work is on-going in respect of fees and charges, increasing charges for care services where legally feasible. The next phase of the strategic care-home work provides an opportunity to consider closure of facilities in 2027-28 and beyond.
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3.25 Any increase to the payment to the Health and Social Care Partnership will increase the Council’s budget gap. It remains to be seen if any additional funding will come forward from Scottish Government as part of the Scottish Budget, but what is clear, is that there are very few easy options to balance the budget for 2026-27. 4. CONCLUSION 4.1 This report provides detail on savings options identified to contribute to the estimated budget gap for 2026-27. Work will continue to progress on the budget themes to deliver a pipeline of savings over the next 5 years, but the savings identified at this stage are those that can be delivered in 2026-27. 4.2 The estimated budget gap in the mid-range scenario is currently £10.586m and the savings identified amount to £6.336m. If all savings were accepted, there would still be an estimated gap of £4.393m and officers will continue to look to identify further options for Council to consider, whilst awaiting the Scottish Budget in January. 4.3 This report asks Council to endorse the management/operational savings, noting that these will be incorporated into the next budget outlook update due at Policy and Resources Committee in December and to confirm the policy savings options that they wish to remain as part of the budget considerations at this stage, to allow the statutory Trade Union consultation to commence for any savings options that affect staff. 5. IMPLICATIONS 5.1 Policy – Some savings options may have implications for current policy. The savings options have been categorised as management/operation and policy. 5.2 Financial - Sets out the budget gap as reported to the Policy and Resources Committee and potential options to assist in balancing the budget in 2026-27. 5.3 Legal – It is not expected that the savings options identified will have legal implications, but further work is required. 5.4 HR – Post reductions have been summarised against each saving option and it is the intention commence the Trade Union consultation following Council. 5.5 Customer Service - Some savings options will impact customer service. 5.6 Risk – Risks will be considered as savings options develop. 5.7 Climate Change - The Council is committed to addressing climate change and reviews how Services are delivering this on an ongoing basis, within the available budget resources. 5.8 Fairer Scotland Duty - Integrated Impact Assessments will require to be undertaken. 5.9 Equalities – protected characteristics - Integrated Impact Assessments will require to be undertaken. 5.10 Consumer Duty - Integrated Impact Assessments will require to be undertaken. 5.11 Islands Communities - Integrated Impact Assessments will require to be undertaken. 5.12 Children’s Rights and Wellbeing - Integrated Impact Assessments will require to be undertaken. Kirsty Flanagan Executive Director/Section 95 Officer 19 November 2025
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Councillor Ross Moreland, Policy Lead for Finance and Commercial Services Appendices: Appendix 1 – Management/Operational Savings Appendix 2 – Policy Options – no staffing implications Appendix 3 – Policy Options – with staffing implications Appendix 4 – All Savings Options templates