Budget Approach 2026/27 and Beyond
Argyll and Bute Council · 26 June 2025
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ARGYLL AND BUTE COUNCIL COUNCIL FINANCIAL SERVICES 26 JUNE 2025 BUDGET APPROACH 2026-27 AND BEYOND 1. INTRODUCTION 1.1 Councils across Scotland are continuing to face significant financial pressures and this is set to continue in the years ahead. In a recent Audit Scotland report on Local Government budgets, it states that “at a time of constrained public finances and growing demand, not all cost increases can be met from central government funding and Councils need to take local action to achieve budget balance over the short and medium term”. 1.2 This report outlines a budget approach that recognises the financial challenges facing the Council in the next financial year but also outlines an approach to transformation, opportunities and savings over the medium term. 2. RECOMMENDATIONS 2.1 Council is recommended to approve the budget approach for 2026-27 and beyond, noting that this provides a more strategic approach to savings planning. 3. DETAIL 3.1 At the budget meeting in February the Council motion requested that officers make the necessary arrangements to formally commence the planning process for the 2026-27 budget from June 2025. 3.2 The latest Budget Outlook report was presented to the Policy and Resources Committee on 8 May 2025. The budget gap in 2026-27 is estimated at £14.442m rising to £58.195m by 2030-31 in the mid-range scenario, prior to any savings to balance the budget. 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 reduces to £9.568m in 2026-27 rising to £33.846m 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 assumptions. 3.3 Over the last few years the Council, in the main, has focused on delivering savings for the year ahead in response to the single year settlements for Local Government. The Accounts Commission Best Value Report of Argyll and Bute Council published in April 2025 noted the following findings: “Given its remote and rural characteristics, the council is ahead of the game in terms of achieving efficiencies, including through its use of digital technology, with exciting examples of innovation within service areas. However, the potential for further management efficiency savings may now be limited. In line with our
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forthcoming Best Value reporting on transformation, we will expect the council to build on its culture of innovation and provide evidence of a more strategic approach to transformation and service redesign, aligned to its new corporate priorities and required savings. The council has comprehensive structures for managing and reporting financial matters and for budget-setting, and a strong track record of delivering recurring savings. However, given the budget gap projected over the next five years, we expect the council to adopt a more strategic approach to savings planning, driven by its new corporate priorities.” 3.4 Considering the estimated budget gap over the next 5 years and the need to have a more strategic approach to savings planning, officers have now developed a longer term approach to balancing the budget whilst acknowledging that there is a significant gap in 2026-27 that will need to be addressed in the short term. The budget approach has been named “Enabling the Council of the Future to Thrive”. 3.5 The approach includes developing a five-year pipeline of savings that is visible to officers and Members. It should be noted that the pipeline will not have a comprehensive list of every saving, however, it will demonstrate the direction of travel/forward vision for some service areas, savings and preparatory work for future transformation. The pipeline will allow for any required lead in time for transformation and savings and ensures that savings are planned so that those taken in the short term take into consideration future service delivery requirements. The proposals will also align to the Councils set of priorities. 3.6 Members are reminded that the Council has a legal obligation to set a balanced budget so whilst a five-year pipeline of savings is being developed, there will need to be a focus on the significant budget gap facing the Council in 2026-27. However, it is important to understand the relationship between short and medium term options as this may allow some flexibility in terms of when savings are delivered and whether there is an opportunity to smooth savings across the years. 3.7 Four themes have been created as part of the budget approach. The themes are noted in the table below along with some suggestions of the options to be considered as part of each theme. Theme Options for consideration Empowering Communities • Take over Council assets (possibly provide seedcorn funding, community asset transfers) • Enable communities to pursue funding from other sources • Funding from renewables • Community Benefits from Planning Gain • Community Benefits from Procurement (more targeted approach, possible links to Aspiring Places programme) Increasing Income • Not realistic to expect generation of £Ms from
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existing Council asset base. • Commercial opportunities (Oban Airport Business Park, Kilmory Business Park, HWD, Colgrain Business Park already identified) • Benchmark Fees and Charges • What services can become self-funding (or close to it) • Modelling of Council tax growth (based on presumption that number of houses in Argyll and Bute increase materially) • Explore other opportunities for Council tax on second homes if legislation permits (possibly zoned) • Visitor Levy, subject to Council decision. Right Sizing Council Asset Base • Community Asset Transfers • Our Modern Workspace taken to conclusion • Further income generation from Council land and buildings • Fleet Strategy Delivering Services Differently • Re-visit duty/power/discretionary services • Review the way we provide services • Link to Council Priorities • Sharing Services • Use of AI and other Digital Tools • Different focus for Customer Service Centre (as opposed to simply reducing existing activities) • Reducing Services to Statutory Minimum • Stop Services • Review relevant Council Policies (e.g. redundancy, flexitime) that may enable savings proposals 3.8 The review of Roads and Infrastructure services is continuing and £1m of savings have already been taken into consideration as part of the budget outlook, but it is hoped that there are further opportunities as the review work progresses. The review of Education has now commenced, and a report should be available for Members consideration later this financial year, Members will be aware that a saving of £200k in respect of Education has been built into the current years budget. 3.9 At the Council meeting in June 2024, the Council approved the permanent creation of a cross party Budget Working Group (BWG) to support the budget process and the BWG has already met to consider the budget approach. The intention is to have regular BWG meetings and any savings that emerge during the year will be brought forward when developed and not necessarily held until the budget meeting in February. 3.10 It would be the intention to bring forward a more detailed budget timetable after summer recess but some key dates are noted in the table below:
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Date Event Purpose 26 June 2025 Council Agree budget approach. August & monthly thereafter Budget Working Group Consider budget proposals and make recommendations to Council. 24 September 2025 Council Consider budget proposals that could be agreed in advance of budget meeting. 26 November 2025 Council Consider budget proposals that could be agreed in advance of budget meeting. Mid December Scottish Budget Announced Prior to Christmas Break Briefing for all Members Briefing issued to all Members summarising the impact the Scottish Government Settlement has on the budget. 12 February 2026 Budget Pack published Budget pack included in release of Policy and Resources Committee Papers. 25 February 2026 Council Set 2026-27 budget and 2026-27 Council Tax and agree pipeline of proposals for future years. 3.11 Officers are also considering how we carry out any budget consultation which could include a high level overarching budget simulator exercise. A report will be brought forward to the Budget Working Group in this respect. 4. CONCLUSION 4.1 This report outlines a budget approach that recognises the financial challenges facing the Council in the next financial year but also outlines an approach to transformation, opportunities and savings over the medium term. 5. IMPLICATIONS 5.1 Policy - Sets out a budget approach that will develop options to be considered to balance the budget in 2026-27 and in future years. 5.2 Financial - Sets out the budget gap as reported to P&R. 5.3 Legal - None directly from this report but the Council will need to balance the budget. 5.4 HR - None directly from this report but there is a strong link between HR and
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budgets. 5.5 Customer Service – None directly from this report but any proposals to address the estimated budget gap will need to consider customer service. 5.6 Risk - None directly from this report but any proposals to address the estimated budget gap will need to consider risk. 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 be required for any budget proposals. 5.9 Equalities – protected characteristics - Integrated Impact Assessments will be required for any budget proposals. 5.10 Consumer Duty - Integrated Impact Assessments will be required for any budget proposals. 5.11 Islands Communities - Integrated Impact Assessments will be required for any budget proposals. 5.12 Children’s Rights and Wellbeing - Integrated Impact Assessments will be required for any budget proposals. Kirsty Flanagan Executive Director/Section 95 Officer 10 June 2025 Councillor Ross Moreland, Policy Lead for Finance and Commercial Services