Revenue Budget Monitoring - for the year ending 31 March 25
Argyll and Bute Council · 26 June 2025
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ARGYLL AND BUTE COUNCIL COUNCIL FINANCIAL SERVICES 26 JUNE 2025 REVENUE BUDGET MONITORING – FOR THE YEAR ENDING 31 MARCH 2025 1. EXECUTIVE SUMMARY 1.1 The main purpose of this report is to advise Council on the revenue budget position of the Council as at the end of financial year 2024-25. The report also summarises the movement in the General Fund balance. 1.2 The performance against budget for the financial year 2024-25 was an overall underspend of £1.905m (0.6%) after accounting for automatic earmarking plus two earmarkings approved as part of the 2025-26 budget relating to loans fund and Island Cost Crisis funding. 1.3 The General Fund Balance has reduced by £3.036m in financial year 2024-25 from £115.741m at the end of 2023-24 to £112.705m at the end of 2024-25. 1.4 There is a separate report that details the earmarked reserves which outlines proposals to earmark a total of £105.162m, leaving £7.543m unallocated. Of this £6.539m is required to be held as the General Fund contingency, leaving an unallocated balance of £1.004m. 1.5 There are virements of revenue budget over £0.200m in the period January to March 2025 that require Council approval.
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ARGYLL AND BUTE COUNCIL COUNCIL FINANCIAL SERVICES 26 JUNE 2025 REVENUE BUDGET MONITORING – FOR THE YEAR ENDING 31 MARCH 2025 2. INTRODUCTION 2.1 This report summarises the revenue budget position of the Council as at the end of the financial year 2024-25. The overall revenue budget monitoring statement for the Council is attached as Appendix 1 and departmental outturn summaries are attached as Appendix 2. 3. RECOMMENDATIONS 3.1 It is recommended that Council: a) Consider the revenue budget monitoring position as at the end of financial year 2024-25. b) Note that the unallocated balance within the General Fund as at 31 March 2025, subject to approval of new earmarked reserves, amounts to £1.004m. This is in addition to the contingency amounting to £6.539m. c) Approve the revenue virements over £0.200m between January and March 2025. 4. DETAIL 4.1 Final Outturn Variance (Un-audited) 4.1.1 The performance against budget for the financial year 2024-25 was an overall underspend of £1.905m (0.6%) after accounting for automatic earmarkings plus two earmarkings approved as part of the 2025-26 budget relating to loans fund and Island Cost Crisis funding. 4.1.2 The final outturn is summarised in the table below. Final Revenue Outturn Statement 2024-25 Department Actuals £000 Adjusted Budget £000 Variance (Over) / Underspend £000 Variance % Chief Executive’s Unit 1,178 1,198 20 1.7% Executive Director (Douglas Hendry) 151,184 151,902 718 0.5% Executive Director (Kirsty Flanagan) 64,682 62,558 (2,124) (3.4%) Weather related costs 792 0 (792) - Total Departmental Expenditure 217,836 215,658 (2,178) (1.0%) Joint Boards 1,343 1,458 115 7.9% Loans Fund 9,576 12,892 3,316 25.7%
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Other 13,229 12,647 (582) 4.6% Total Central Expenditure 24,148 26,997 2,849 10.6% Social Work 80,874 80,874 0 0.0% Net Expenditure 322,858 323,529 671 0.2% Total Funding 334,104 332,870 1,234 0.4% OVERALL UNDERSPEND 1,905 0.6% 4.2 Council Departmental Outturn 4.2.1 The performance against budget shows departmental controllable expenditure being £2.178m (1.0%) over budget. 4.2.2 Within the Chief Executive’s Unit (Chief Executive’s Team and Community Planning) there was a small underspend of £0.020m which is outwith the current reporting criteria. 4.2.3 Within the remit of Executive Director Douglas Hendry (Education, Legal and Regulatory Support and Commercial Services), there was an underspend after accounting for automatic earmarkings of £0.718m. The main underspends were due to: • Favourable market conditions and good procurement leading to an underspend on Condition Surveys. • Staffing underspends due to delays in recruitment and staffing underspends within Cleaning, Early Learning and Childcare and Legal and Regulatory Support • Underspends within the Scheme of Devolved School Management where previous carry forwards were not fully utilised. 4.2.4 Within the remit of Executive Director Kirsty Flanagan (Roads and Infrastructure, Development and Economic Growth, Customer Support Services and Financial Services), there was a net overspend of £2.124m after accounting for automatic earmarkings. The main variances contributing to this overspend include: • Increase in bus contracts for school and public transport. • Increase in maintenance costs within general Piers and Harbours and in addition higher maintenance costs than estimated for Belnahua Ferry • Increased winter maintenance costs. • Saving unachieved during the year in respect of the RIS review due to a delay in appointing a contractor to take review forward. • Over recovery of vacancy savings. • Increase in Planning and Building Warrant income. 4.2.5 There was £0.792m of costs related to storm Darrah which occurred on 6-7 December 2024 and storm Eowyn which occurred on 24 January 2025 that could not be claimed for through the Scottish Government Bellwin Scheme so this is added to the overall departmental overspend. This includes the Council’s £0.558m Bellwin threshold and £0.234m of costs that were not eligible to be included in the Bellwin Claim. A Bellwin Claim was submitted amounting to £0.353m and the overspend is net of this claim. A separate report is on the agenda in relation to the storm costs.
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4.3 Council Central Outturn 4.3.1 Within Joint Boards, payments were £0.114m lower than budget and this budget has been right-sized for 2025-26. 4.3.2 The performance against budget for Loans Fund was a net underspend of £3.316m (25.7%). This underspend was a result of significant revenue balances and prevailing high bank rates beyond original budget assumptions resulting in increased investment income. The revenue balances together with significant slippage in the capital programme also reduced the need to borrow and much of the capital programme could be financed from cash balances rather than taking borrowing. This has been advantageous as it is anticipated that long term borrowing rates that are currently relatively high are forecast to steadily fall over the next few years. 4.3.3 Other costs were overspent by £0.582m. This relates, in the main, to two items that have been reported to Members during the year. An overspend as a result of the NDR poundage rate increase being unbudgeted during 2024-25 and inflationary pressures on insurance costs. 4.4 Social Work Outturn 4.4.1 Social Work Services, part of the Health and Social Care Partnership, were overspent in year, however, HSCP reserves were drawn down in addition to drawing down the full in-year Strathclyde Pension Fund saving of £3.053m to bring the position back to financial balance. 4.5 Funding Budget Outturn 4.5.1 The performance against budget for funding was a net over-recovery of income of £1.234m. This is after the automatic earmarking in respect of the Strategic Housing Fund and TIF. 4.5.2 The over-recovery of income is all in relation to Council Tax performance. Several factors contributed to this improved performance: • £0.504m was collected following the reclassification of self-catering units as domestic dwellings by the Assessor during the year. • £0.115m was generated through higher-than anticipated income from double charging Council Tax on second homes. • Our debt management partners, Walker Love, recovered £0.265m more than their contractual recovery target. • An additional £0.350m in income was collected, not directly attributable to specific recovery actions, reflecting broader improvements in billing and collection processes. 4.6 Unspent Budget Proposals 4.6.1 The overall favourable outturn position, together with the balance already held in the unallocated General Fund, has provided the opportunity to propose new
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earmarking for specific purposes and these are included in the ‘Earmarked Reserves – 2024-25 Year End’ report on this agenda. Unspent budget earmarkings will only be considered when the purpose is aligned to the objectives, priorities and targets of the Council, there is a business case to justify the expenditure, and the general reserve contingency is met. The detail of the proposed budget earmarkings and their associated business cases can be found in the Earmarked Reserves report. 4.7 Impact on the General Fund 4.7.1 The movement in the General Fund balance is different to the underspend noted above, as it also reflects earmarked reserve withdrawals and contributions. The General Fund balance as at 31 March 2024 was £115.741m and this has decreased by £3.036m to £112.705m as at 31 March 2025. The movement in the balance is summarised in the table below. £000 Balance on General Fund as at 31 March 2024 115,741 Funds used during 2024-25 (26,457) Earmarking previously agreed and created during 2024- 25 13,298 New automatic earmarking at the end of 2024-25 (as per policy on end of year flexibility) 8,278 Underspend in 2024-25 (as noted above) 1,905 Agreed at 2025-26 Budget – payment to food banks (60) Balance on General Fund as at 31 March 2025 112,705 4.7.2 The closing balance on the General Fund as at 31 March 2025 is £112.705m. Of this, £105.162m is earmarked for specific purposes and £6.539m is required to be held as the General Fund contingency, leaving an unallocated balance of £1.004m as shown in the table below. £000 Balance on General Fund as at 31 March 2024 112,705 Earmarked balances as at 31 March 2025 (as per Earmarked Reserves report) (105,162) Contingency balance (2.0% of 2025-26 budgeted net expenditure) (6,539) Unallocated balance as at 31 March 2025 1,004 4.7.3 The £1.004m unallocated balance as at 31 March 2025 represents a decrease of £1.255m on the £2.259m unallocated balance as at 31 March 2024. 4.8 VIREMENTS OVER £0.200M (REVENUE) 4.8.1 Virement is the process of transferring budget between cost centres, services or departments or between capital projects. The Council’s Constitution notes that virements over £0.200m require approval by Council. This section of the
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report will be used to outline revenue virements in the period that require approval. Capital virements are included within the capital monitoring report. 4.8.2 For the period January to March 2025, the virements over £0.200m requiring authorisation are: • £1.293m transfer to repairs and renewals fund in line with the Devolved Schools Management arrangements. This allows schools to save for items that they are unable to purchase from the annual revenue budget. • £1.992m transfers between service budgets, reserves and loans funds as part of year end procedures. This includes Piers and Harbours infrastructure funded by fees and charges, fleet prudential borrowing, energy efficiency savings, service concessions and contributions to capital expenditure. • £0.875m moved from Other Income and Expenditure to Executive Director Kirsty Flanagan £0.390m, Executive Director Douglas Hendry £0.297m and £0.189m to Social Work to right size utilities budgets that were previously held centrally. 5. CONCLUSION 5.1 The performance against budget for the financial year 2024-25 was an overall underspend of £1.905m (0.6%) after accounting for automatic earmarking plus two earmarkings approved as part of the 2025-26 budget relating to loans fund and Island Cost Crisis funding. The General Fund balance as at 31 March 2024 was £115.741m and this has decreased by £3.036m to £112.705m as at 31 March 2025 as a result of the change in the level of earmarked sums within the General Fund. 6. IMPLICATIONS 6.1 Policy Automatic earmarking as per the policy have been taken into consideration within the final reported outturn position. 6.2 Financial Report notes the underspend against budget during 2024-25 and the movement in the General Fund balance. 6.3 Legal None 6.4 HR None 6.5 Customer Service None 6.6 Risk None 6.7 Climate Change None 6.8 Fairer Scotland Duty None 6.9 Equalities – protected characteristics None 6.10 Consumer Duty None 6.11 Island Communities None 6.12 Children’s rights and Wellbeing None
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Kirsty Flanagan Executive Director/Section 95 Officer 16 June 2025 Councillor Ross Moreland, Policy Lead for Finance and Commercial Services APPENDICES Appendix 1 – Overall Revenue Budget Monitoring Statement 2024-25 Appendix 2 – Department 2024-25 Outturn Summaries For further information contact Carolyn Earl, Interim Head of Financial Services Carolyn.Earl@argyll-bute.gov.uk
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# ARGYLL AND BUTE COUNCIL - SUMMARY OF ACTUAL AND BUDGET COMPARISON 2024/25 Appendix 1 Actual 2024/25 Budget 2024/25 Council Tax Income Ringfenced for SHF Unspent Grant monies Third Party Contributions DMR School Carry Forwards Previous Council Decision Scottish Government Initiatives Piers and Harbours Surplus NEW Unspent Budget Previously agreed Adjusted Budget 2024/25 "Real Variance" (Over)/undersp end Comment Expenditure £ £ £ £ £ £ £ £ £ £ £ £ Chief Executive's Unit 1,177,941 1,232,945 35,000 0 0 1,197,945 20,004 Outwith reporting criteria Executive Director (Douglas Hendry) 151,184,491 153,784,153 576,262 42,582 1,205,590 0 57,867 151,901,852 717,361 The underspend is mainly due to delays in recruitment within Cleaning, ELC and across Legal and Regulatory Support. Additionally, due to favourable market conditions and good procurement, there was an underspend in Condition Surveys. Additionally, within the Scheme of Devolved School Management the school carry forward was not fully utilised. These are partially offset by overspends in Commercial Cafes and Residential Schools Budgets Executive Director (Kirsty Flanagan) 64,681,551 66,147,083 1,642,767 0 203,009 1,178,946 564,000 62,558,361 (2,123,190) The overspend is mainly due to increased bus contract costs for school and public transport, increased costs for internal pupil transport, maintenance of the Belnahua Ferry, general maintenance of Piers & Harbours, Winter Maintenance increased costs and an unachieved saving as part of the RIS Review. These are partially offset with over recovery of vacancy savings and Planning and Building Warrant income Weather Related Costs (Belwin) 792,165 0 0 (792,165) Bellwin threshold £558k. Non-Bellwin eligible unbudgeted costs £234k. Total Departmental Expenditure 217,836,148 221,164,181 0 2,254,029 42,582 1,205,590 203,009 57,867 1,178,946 564,000 215,658,158 (2,177,990) Joint Boards 1,343,324 1,457,812 1,457,812 114,488 Paymentsto Boards were lower than expected. Budget right-sized for 2025/26. Loans Fund 9,575,521 13,391,705 500,000 12,891,705 3,316,184 Interest earned on significant revenue balances beyond original budget assumptions. Other 13,228,528 12,646,979 0 0 0 0 0 0 0 0 12,646,979 (581,549) Overspend mainly relations to two items, NDR poundage rate increase being unbudgeted during 2024-25 and inflationary pressures on insurance costs. Total Central Expenditure 24,147,373 27,496,496 0 0 0 0 0 0 0 500,000 26,996,496 2,849,123 Social Work 80,874,453 80,874,453 80,874,453 0 Outwith reporting criteria Total Social Work Expenditure 80,874,453 80,874,453 0 0 0 0 0 0 0 0 80,874,453 0 Total Expenditure 322,857,974 329,535,130 0 2,254,029 42,582 1,205,590 203,009 57,867 1,178,946 1,064,000 323,529,107 671,133 Funding GRG & NDR Income 252,749,895 251,975,074 774,821 252,749,895 0 Outwith reporting criteria Council Tax 67,071,833 63,278,000 2,560,088 65,838,088 1,233,745 Over recovery in 2024/25 due to the transfer of self- catering units from NDR to Council Tax, following in year conclusion of canvasses undertaken by the Assessor, taking cognisance of changes to regulations. This is in respect of current year and prior years (2022/23 and 2023/24) due to back-dating of assessments. Also, additional income recovered through Walker Love debt recovery and higher than budgeted income from second homes double charge Budgeted/withdrawn from Earmarked Reserves 26,456,056 26,456,056 26,456,056 0 Outwith reporting criteria Budgeted Contribution to General Fund Balance (12,174,000) (12,174,000) (12,174,000) 0 Outwith reporting criteria Total Funding 334,103,784 329,535,130 2,560,088 0 0 0 774,821 0 0 0 332,870,039 1,233,745 Under/(Overspend) 11,245,810 0 2,560,088 2,254,029 42,582 1,205,590 977,830 57,867 1,178,946 1,064,000 9,340,932 1,904,878 Adjustment for Funds Earmarked in General Fund Reserve
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# REVENUE BUDGET MONITORING 2024-25 - DEPARTMENTAL OUTTURN SUMMARIES (including Social Work) Appendix 1 Appendix 2 Department Service Actual 2024/25 Budget 2024/25 Unspent Grant monies Third Party Contributions DMR School Carry Forwards Previous Council Decision Scottish Government Initiatives Piers and Harbours Surplus NEW Unspent Budget Previously agreed Adjusted Budget 2024/25 (Over)/ Underspend Variance %age Comment Expenditure £ £ £ £ £ £ £ £ £ £ £ Chief Executive's Unit Chief Executive 1,177,941 1,232,945 35,000 0 0 1,197,945 20,004 1.67% Outwith reporting criteria Chief Executive's Unit Total 1,177,941 1,232,945 35,000 0 0 0 0 0 0 1,197,945 20,004 0 Executive Director (Douglas Hendry) Executive Director (Douglas Hendry) 399,050 589,927 589,927 190,877 32.36% Over recovery of vacancy savings due to delays in recruitment. Executive Director (Douglas Hendry) Head of Commercial Services 10,017,127 10,421,700 13,867 10,407,833 390,706 3.75% The underspend is due to a lower than anticipated spend on catering purchases, reduced use of bank staff in catering and cleaning and favourable market conditions and good procurement of condition surveys. This is offset slightly by an overspend in Commercial Catering and Events. Executive Director (Douglas Hendry) Head of Education 119,723,634 121,550,452 503,832 42,582 1,205,590 44,000 119,754,448 30,814 0.03% Outwith reporting criteria Executive Director (Douglas Hendry) Head of Legal & Regulatory Support 21,044,679 21,222,074 72,430 21,149,644 104,965 0.50% The underspend is mainly due to a lower inflation rate uplift on the NPDO and DBFM contract than was built into the budget for 2024-25, The rate is based on RPI in February each year which is published after budget setting. The base budget was realigned for 2025-26. The remainder is due to delays in recruitment. Executive Director (Douglas Hendry) Total 151,184,491 153,784,153 576,262 42,582 1,205,590 0 57,867 0 0 151,901,852 717,361 0.47% Executive Director (Kirsty Flanagan) Executive Director (Kirsty Flanagan) 291,868 534,603 534,603 242,735 45.41% Underspend due to over-recovery of vacancy savings as well as a reduction in bad debt provision. Executive Director (Kirsty Flanagan) Head of Customer Support Services 9,715,193 9,686,961 9,686,961 (28,232) -0.29% Outwith reporting criteria Executive Director (Kirsty Flanagan) Head of Development & Economic Growth 10,285,467 12,266,464 954,239 203,009 564,000 10,545,216 259,749 2.46% Underspend due to over-recovery of Planning and Building Warrant Income, partially offset by an overspend on Homeless Temporary Accommodation. Executive Director (Kirsty Flanagan) Head of Financial Services 6,238,099 7,090,822 688,528 6,402,294 164,195 2.57% The underspend is mainly due to lower than planned expenditure on staffing and third party payment costs. Executive Director (Kirsty Flanagan) Head of Roads & Infrastructure Services 38,150,924 36,568,233 1,178,946 35,389,287 (2,761,637) -7.80% Overspend mainly due to increased bus contracts for school and public transport, increased costs for internal pupil transport, maintenance of the Belnahua Ferry, general maintenance of Piers & Harbours, Winter Maintenance increased costs and an unachieved saving as part of the RIS Review. Executive Director (Kirsty Flanagan) Total 64,681,551 66,147,083 1,642,767 0 0 203,009 0 1,178,946 564,000 62,558,361 (2,123,190) -3.39% Weather Related Costs (Belwin) Weather Related Costs (Belwin) 792,165 0 0 (792,165) 0.00% Additional costs caused by the impact of Storm Eowyn in late January 2025 which are not recoverable under the Bellwin Scheme. Weather Related Costs (Belwin) Total 792,165 0 0 0 0 0 0 0 0 0 (792,165) 0.00% Total Departmental Expenditure 217,836,148 221,164,181 2,254,029 42,582 1,205,590 203,009 57,867 1,178,946 564,000 215,658,158 (2,177,990) -1.01% Social Work Chief Officer Integration 507,907 2,440,133 2,440,133 1,932,226 79.19% The underspend is due to an over recovery of vacancy savings and the drawdown from pension reserves held within the council to balance the budget for the year. Social Work Head of Acute and Complex Care 20,636,556 20,983,589 20,983,589 347,033 1.65% The underspend is due to a decrease in demand for services primarily in Learning Disability services. Social Work Head of Health and Community Care 43,599,213 41,695,172 41,695,172 (1,904,042) -4.57% The overspend is due to the high demand for care at home services and the impact on costs of the increased use of agency staff within the care at home and service and the HSCP's care homes. Social Work Head of Children & Families 15,694,590 15,326,695 15,326,695 (367,896) -2.40% The overspend is due to high demand for residential care placements along with increased staffing costs as a result of a re-grading in childrens homes. These overspends are partially offset by underspends in fostering and adoption services. Social Work Head of Strategic Planning & Performance 436,185 428,864 428,864 (7,321) -1.71% Outwith reporting criteria Total Social Work Expenditure 80,874,453 80,874,453 0 0 0 0 0 0 0 80,874,453 0 0.00% Total Expenditure 298,710,601 302,038,634 2,254,029 42,582 1,205,590 203,009 57,867 1,178,946 564,000 296,532,611 (2,177,990) -0.73% Funds carried forward to 2023/24