Reserves and Balances - Updated for Budget Pack 2026-27
Argyll and Bute Council · 19 February 2026
Back to Budget Pack — 19 February 2026 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 25 FEBRUARY 2026 RESERVES AND BALANCES – UPDATED FOR BUDGET PACK 2026-27 1 EXECUTIVE SUMMARY 1.1 The main purpose of this report is to advise Members of the overall level of reserves held by the Council as well as providing detail on the monitoring of the earmarked balances held within the General Fund. 1.2 The Council has a total of £405.561m unusable reserves that are not backed with resources. They are required purely for accounting purposes. 1.3 At 31 March 2025 the Council had a total of £121.235m usable reserves. Of this: £3.608m related to the Repairs and Renewals Fund; £3.358m related to Capital Funds; £1.564m Capital Grants Unapplied; and £112.705m was held in the General Fund with £105.162m of this balance earmarked for specific purposes. 1.4 The Council’s General Fund contingency remains at 2% of net expenditure. This monetary level has been adjusted to take account of the revised net revenue expenditure proposed for 2026-27. The revised contingency of 2% of net expenditure amounts to £7.174m. 1.5 As at 31 December 2025 the forecast outturn for 2025-26 was estimated to be an overspend of £0.627m, however, this is subject to change during the final quarter of the financial year. Taking this outturn into consideration alongside the forecast underspend on the Loans Fund, the contributions to standby budgets and the Royal National Mod, the forecast surplus over contingency at 31 March 2026 is estimated at £0.481m, however, this is an estimated position and subject to change. 1.6 Assessing the adequacy of reserves should take account of the strategic, operational and financial risks facing the Council and should consider both internal and external factors. There are 20 categories included in the risk analysis and 3 have been assessed as low, 4 low/medium, 6 medium and 7 medium/high. The medium/high risks are in respect of council wide cost risks, funding risks, inflation rates, world events, general financial climate, Health and Social care partnership, and the impact of climate change.
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ARGYLL AND BUTE COUNCIL COUNCIL FINANCIAL SERVICES 25 FEBRUARY 2026 RESERVES AND BALANCES – UPDATED FOR BUDGET PACK 2026-27 2. INTRODUCTION 2.1 This report outlines current balances on all of the Council’s reserves, both usable and unusable. It also provides detail on the monitoring of the earmarked balances within the General Fund. 3. DETAIL 3.1 Types of Reserves 3.1.1 Usable Reserves - Councils have powers to establish certain resource backed reserves which can be used to fund expenditure. The powers of councils to establish reserves are laid out in Schedule 3 of the Local Government (Scotland) Act 1975. These allow councils to establish a Renewal and Repairs Fund, Insurance Fund and Capital Fund. Councils can also establish a Useable Capital Receipts Reserve. The Council must also maintain a General Fund and can earmark balances for specific purposes within the General Fund. 3.1.2 Unusable Reserves – Councils are also required to establish certain reserves that are not backed by resources. They are required purely for accounting purposes and do not represent resources available for councils to utilise. The Pensions Reserve, Revaluation Reserve, Capital Adjustment Account, Financial Instruments Adjustment Account and Accumulated Absences Account fall into this latter category of accounting reserves. 3.2 Reserve Balances at 31 March 2025 3.2.1 The balances on each type of reserve at 31 March 2025 are set out in the two tables below, updated as per the Audited Accounts for 2024-25. Unusable Reserves £000 Revaluation Reserve 179,662 Capital Adjustment Account 255,558 Financial Instruments Adjustment Account (1,413) Pensions Reserve (16,984) Accumulated Absences Account (11,262) Total Unusable Reserves 405,561 Usable Reserves £000 Repairs and Renewals Fund 3,608 Capital Funds 3,358 Capital Grants Unapplied 1,564 General Fund 112,705 Total Usable Reserves 121,235 Total Reserves 526,796
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3.2.2 The Revaluation Reserve represents the unrealised gains in the valuation of fixed assets. The Capital Adjustment Account represents the difference between depreciation based on proper accounting practice and statutory charges for financing capital expenditure. The Financial Instruments Adjustment Account represents the difference between gains and losses on borrowing and statutory capital financing charges. The Pensions Reserve represents the difference between pension costs based on proper accounting practice and payments made for pension costs. The Accumulated Absences Account represents the costed difference between holiday pay entitlement and actual holidays taken at 31 March. 3.2.3 The Repairs and Renewals Fund was established to support funding of renewal and replacement of school equipment. Schools can only draw on the Repairs and Renewals Fund to the extent they have previously paid into the Fund and contributions must be contained within schools devolved budgets. 3.2.4 The Capital Fund was established to receive all capital receipts generated by the Council including accumulated unspent capital receipts from sale of council houses prior to transfer of the housing stock. This forms part of the Council’s Strategic Housing Fund and can be used for investment in social housing in accordance with the approach to investing in housing agreed by the Council in August 2012. The Council decides as part of the budget process each year how it wishes to draw the remaining funding from the Capital Fund which can be used to support the capital plan or meet the principal repayments on loan charges. 3.2.5 When a capital grant has yet to be used to finance capital expenditure, it is posted to the Capital Grants Unapplied Account where it is held until it has been applied to fund capital expenditure. 3.3 General Fund 3.3.1 The General Fund balance at 31 March 2025 can be analysed as follows: Balance 31/03/25 £000 Balance on General Fund as at 31 March 2024 115,741 Decrease to General Fund balance at end of 2024-25 (3,036) Earmarked Balances (105,162) Contingency allowance at 2% of net expenditure (6,539) Unallocated balance as at 31 March 2025 1,004 3.3.2 The General Fund includes balances that the Council has agreed to earmark for specific purposes. Some of these earmarked balances will be spent during the current financial year and some of them will be held over and spent in later years. The table below shows the balance at 31 March 2025, the new amounts earmarked in relation to Strathclyde Pension Fund savings, reserves already drawn down against spend, the movements between categories (see paragraph 3.3.3), the remaining balance at 31 December 2025 and finally any sums being
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released to the general fund. Appendix 1 provides further details on the breakdown of unspent budget earmarkings. Officers have reviewed and updated the spending profiles. 3.3.3 A separate update report on the Review of Capital Arrangements has been provided, as part of the Budget Pack. It is anticipated that the Section 95 Officer will take a strategic and flexible approach to the use of reserves earmarked for capital purposes, in order to manage the impact of capital investment decisions on the annual revenue budget and to safeguard the council’s longer term financial sustainability. A review of earmarked reserves has been undertaken to confirm those held for capital purposes. In light of the proposed approach, it is recommended that these reserves are consolidated Earmarking Category Opening Balance New Earmarkings in Year Drawn-down to 2025-26 Budget as at 31 December 2025 Movement between categories Remaining Balance as at 31 December 2025 Released to General Fund / Tfr to R&R Fund * £ £ £ £ £ £ Strategic Housing Fund 10,141,692 10,141,692 Investment in Affordable Housing 3,024,000 3,024,000 277,000 Capital Projects 37,493,675 2,000,000 (29,657) (39,523,332) 0 Strategic Capital Finance Reserve 46,131,180 46,131,180 8,000,000 Lochgilphead and Tarbert Regeneration 288,579 288,579 Support for Rural Growth Deal 441,690 (441,690) 0 Piers and Harbours Investment Fund 5,303,977 5,303,977 Scottish Government Initiatives 1,156,530 556,249 600,281 DMR Schools 1,205,590 1,205,590 0 Energy Efficiency Fund 214,521 214,521 210,000 Unspent Grant 12,184,971 1,847,719 (767,905) 9,569,347 350,000 Unspent Third Party Contribution 408,975 42,582 (26,592) 339,801 Previous Council Decision - Other 4,274,925 257,764 (1,483,000) 2,534,161 Redundancy Provision 2,659,358 480,000 2,179,358 Connect for Success Fund 899,721 105,585 794,136 Fleet - Timing Delay 483,661 (483,661) 0 Hermitage Park 56,383 56,383 Priorities Investment Fund 1,426,800 138,550 1,288,250 Unspent Budget 14,294,911 7,053,000 2,636,026 (3,405,000) 15,306,885 390,242 SPF - Transformation/sp end to save 2,004,764 875,000 146,391 2,733,373 Severe weather related cost reserve 4,244,000 4,244,000 To balance 25/26 Budget 2,952,661 2,952,661 0 Totals 105,161,384 9,928,000 10,339,460 0 104,749,924 9,227,242
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into a Strategic Capital Finance earmarked reserve, as reflected in the table above. 3.3.4 * The table at paragraph 3.3.2 above shows a release of £9.227m from earmarking, as follows: As part of the Review of Capital Arrangements, it is proposed that £8m of the Strategic Capital Finance reserves are re-directed to a Corporate Property Repairs and Renewals Fund, supporting a more corporate and strategic approach to property maintenance, repairs and renewals from 2026-27. Investment in Affordable Housing – this earmarked balance provides cash backed reserves for the loans to registered social landlords. It is estimated that as at 31 March 2026, the balance on the remaining loans will be £2.747m, therefore £0.277m can be released back to the general fund. The savings proposals being presented to the Council as part of the budget pack include proposals to release existing earmarkings of £0.950m to balance the 2026-27 budget. The release of these earmarkings is reflected in the table above. 3.4 Unallocated General Fund Balance 3.4.1 The Council’s General Fund contingency is set at 2% of net expenditure for 2025-26 and amounts to £6.539m. This contingency is held to provide a working balance to help cushion the impact of uneven cash flows and cushion the impact of unexpected events. It is up to authorities to make their own judgement on the level of reserves taking local circumstances into account, for example, previous call on contingency and amount of unallocated reserves held. The contingency needs to be updated to reflect the updated budget for 2026-27. The budgeted net expenditure based on the proposed budget contained within the revenue budget overview report is £358.694m. 2% of this balance amounts to £7.174m. There is currently a contingency of £6.539m, therefore £0.635m will require to be moved from the unallocated General Fund balance to supplement the current contingency. 3.4.2 The revenue budget monitoring position as at 31 December 2025 is a forecast overspend of £0.627m. This is due to a forecast net overspend across services, totalling £0.927m, offset by a forecast over-recovery of Council Tax income, estimated at £0.300m. There is also a forecast overspend of £0.416m in respect of Social Work services, however, the HSCP expect this to be managed from within available HSCP reserves. 3.4.3 At its meeting of 26 November 2025, Council approved an increase to the current Standby Rate of pay to £130 per week from December 2025, at a cost of £0.013m in 2025-26, to be funded from the unallocated General Fund balance. The full year recurring implications of this approval from 2026-27 (£0.038m) is reflected within the current Budget Outlook.
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3.4.4 At Policy and Resources Committee on 4 December 2025, it was agreed that financial support be provided to the Royal National MOD, to be funded from the unallocated General Fund balance. This totals up to a maximum of £225k (up to £200k An Comunn + £25k LiveArgyll) over 4 years from 2025-26. 3.4.5 An in-depth review of the Loans Fund undertaken by Financial Services has estimated an underspend of £2.2m in 2025-26 due to a number of factors including slippage within the capital programme resulting in a delay in the need to borrow and new borrowing secured at lower interest rates than the existing debt portfolio average. £1.5m of this underspend has been put forward as a saving towards the 2026-27 budget leaving £0.700m as an underspend in 2025-26. 3.4.6 The table below summarises the position of the unallocated General Fund balance taking into consideration the points noted above. The estimated unallocated General Fund at the end of the financial year is a surplus of £0.481m. Heading Detail £000 Unallocated General Fund as at 31 March 2025 This is the balance that is unallocated over and above the 2% contingency, which amounts to £6.539m 1,004 Earmarked balances released to general fund and available for use See para 3.3.4 – earmarking released in relation to reduction in loans for affordable housing. 227 Transfer of contingency to maintain 2% level Per paragraph 3.4.1 (635) Current Forecast Outturn for 2025-26 as at 31 December 2025 Per paragraph 3.4.2 (627) Standby Rate Increase – 2025-26 Cost Per paragraph 3.4.3 (13) Royal National Mod Per paragraph 3.4.4 (225) Forecast Underspend on Loans Fund Per paragraph 3.4.5 700 Estimated Unallocated balance as at 31 March 2026 481 3.5 Review and risk Assessments 3.5.1 Assessing the adequacy of reserves should take account of the strategic, operational and financial risks facing the Council and should consider both internal and external factors. Appendix 2 to this report identifies the range of issues in terms of budget assumptions and financial standing and management that should be considered in assessing the level of reserves. It relates only to consideration of the contingency to be held in the General Fund balance. A separate financial risk analysis report has been prepared looking at the overall financial risks relating to revenue and capital.
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3.5.2 There are 20 categories included in the risk analysis and 3 have been assessed as low, 4 low/medium, 6 medium and 7 medium/high. The medium/high risks are in respect of council wide cost risks, funding risks, inflation rates, world events, general financial climate, Health and Social care partnership, and the impact of climate change. 3.5.3 Based on the risk analysis in Appendix 2 and also taking cognisance of the financial risks classed as “likely” in the financial risks report it is recommended that the contingency for the General Fund balance should be retained at 2%. 4. CONCLUSION 4.1 The report outlines the overall reserves and balances for the Council covering the purpose and level of each reserve. It also provides detail as to expenditure against earmarked balances held within the General Fund. There is currently an estimated surplus over contingency of £0.481m after adjusting for the forecast outturn for 2025-26. 5. IMPLICATIONS 5.1 Policy Earmarked funds are set aside for specific priorities and where appropriate policy will be considered. 5.2 Financial Outlines the balances held with the Council’s usable and unusable reserves. 5.3 Legal None specifically from this report. 5.4 HR None specifically from this report. 5.5 Customer Service None specifically from this report. 5.6 Risk A contingency of £7.174m (equivalent to 2% of net expenditure) has been set aside as part of the general fund. This has been subject to a risk assessment. 5.7 Climate Change None specifically from this report. 5.8 Fairer Scotland Duty None specifically from this report. 5.9 Equalities (protected characteristics) None specifically from this report. 5.10 Consumer Duty None specifically from this report. 5.11 Island Communities None specifically from this report. 5.12 Children’s Rights and Wellbeing None specifically from this report. Kirsty Flanagan Executive Director/Section 95 Officer 11 February 2026 Councillor Ross Moreland, Policy Lead for Finance and Commercial Services APPENDICES Appendix 1 – Earmarked Reserves breakdown of unspent budget as at 31 December 2025 Appendix 2 – Risk Assessment for Review of Reserves
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For further information contact Anne Blue, Head of Financial Services anne.blue@argyll-bute.gov.uk
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Appendix 1 Earmarked Reserves - Unspent Budget As at 31 December 2025 Ref Department Service Description Opening Balance New earmarkings in year Budget Drawdown Movement between categories Released back to General Fund Remaining Balance Plans for Use Amount Planned to be Spent in 2025-26 Amount Planned to be Spent in 2026-27 Amount Planned to be Spent from 2027/28 onwards 001 Chief Executive's Unit Community Planning Service Concessions - Priorities Investment Fund (Area Plans) 108,793 88,115 20,678 As agreed by Policy and Resources Committee on 23 October 23 - drawdown of £200,000 from the Priorities Investment Fund to fund two temporary posts and associated costs to produce meaningful area plans 79,846 28,947 009 Executive Director (Douglas Hendry) Across Services / Education Digital Projects (Supply Staff Booking System) 5,300 5,300 0 To deliver a number of Digital Service Transformation Projects with a commitment of £0.035m towards a Supply Staff Booking system. Phase 1 of the project is nearing completion. 5,300 0 010 Executive Director (Douglas Hendry) Commercial Services Rothesay Pavilion Charity 1,159,204 0 1,159,204 Agreed at Council meeting February 2020,Unspent Budget Earmarking 010 of £750k additional revenue support subject to conditions which seek to minimise the risk to the Council as far as is reasonably practicable including requirement for adequate business and financial management and regular reporting by RPC. This funding is to support Rothesay Pavilion Charity in the first 2 years of the building being operational. Merged September 24 per Council decision with CHORD earmarking 094 £409k which was about building up a provision towards future Council commitment to provide up to £150,000 per annum running costs for Rothesay Pavilion. Additional revenue support subject to conditions which seek to minimise the risk to the Council as far as is reasonably practicable including requirement for adequate business and financial management and regular reporting by RPC. 0 0 1,159,204 014 Executive Director (Douglas Hendry) Commercial Services Commercial Investment Manager post and specialist consultant technical resource (previously Asset Management Fund) 79,242 0 79,242 0 The Asset Management Fund has been redirected to Capital going forward but the interest for 2023- 24 is to be used towards a Commercial Investment Manager Post. This is because funding of £200k from the Asset Management Fund was agreed at ELT in June 22 for the post, along with specialist consultancy and technical resources that will be required to support early projects. The post is now vacant and the funds are being put forward as a saving (COM09) to balance 2026-27 budget. 0 0 015 Executive Director (Douglas Hendry) Commercial Services Estates - NDR Revaluation Appeals 59,938 0 59,938 The Council agreed to make provision to meet the cost of appealing Non Domestic Rates (NDR) revaluations which were imposed from April 2017. The remaining funds were carried forward to the 2023/24 revaluation cycle however a recent change in position by the Scottish Government may restrict the appeals which can be made. This is still under discussion and Gerald Eve Surveyors have been appointed as specialist advisers on this matter, who are progressing 2023-26 appeals. In the event that appeals are limited there may be an opportunity to utilise Gerald Eve for more general valuation advice subject to Procurement approval. 50,000 9,938 018 Executive Director (Douglas Hendry) Commercial Services Site Investigation Works 33,710 0 21,000 12,710 For Site Investigation works and pre-development works exploring and developing commercial opportunities across Argyll and Bute. Having a procured supplier to provide floor plans at short notice is required to be able to react quickly to requests. If this isn't available Estates would need to go through the procurement process again which would delay any projects by several months. There isn’t a detailed plan to use this resource it is more about being able to react quickly and not delay projects. For 2026-27 budget, £21k is being put forward as a saving (COM10). 0 12,710 021 Executive Director (Douglas Hendry) Education ASN Review 967,574 0 (967,574) 0 Transferred from Education to fund ASN review upgrades in Islay High School, Castlehill Primary School, Tobermory High School and Hermitage Academy 0 0 0 036 Executive Director (Douglas Hendry) Education MCR Pathways Pilot 80,000 0 80,000 0 Funding to support implementation of MCR Pathways mentoring programme within three secondary schools for 2025-26 academic year. Funding will allow the employment of a dedicated Co- ordinator within each setting to develop and implement the programme which is designed to benefit care experienced and other disadvantaged pupils through targeted mentoring support. For 2026-27 budget, the balance is being put forward as a saving (EDU07). 0 0 0 042 Executive Director (Douglas Hendry) Education Gaelic Specific Grant 30,000 30,000 0 Gaelic Specific Grant £30k - This earmarking refers to the Council contribution towards the Gaelic grant for 22-23 and will fund the costs of Gaelic Language Principal Teacher in 25-26 academic year. 30,000 0 043 Executive Director (Douglas Hendry) Education (2023 Digital Projects) Cashless Catering 5,004 0 5,004 To support the ongoing implementation of the new cashless catering system during the testing and roll out phase. £20k released back to General Fund September 24 per Council decision as no longer required. 0 5,004 059 Executive Director (Douglas Hendry) Legal and Regulatory Support Education Purchasing Officers 210,000 0 210,000 0 The earmarked funds will be used to fund an education purchasing team within the Procurement Service for two years. The team will embed good procurement practice, train headteachers on current procurement process requirements, develop spend plans that evidence best value. For 2026-27 budget, the balance is being put forward as a saving (LRS02). 0 0 0 061 Executive Director (Douglas Hendry) Legal and Regulatory Support Information Management (Digitalisation of Title Deeds) 92,000 0 92,000 To support a number of initiatives in respect of improving the Council's information management in line with the transformation agenda and increasing the pace of change as outlined in the BV Review. The planned initiatives include: Digitalisation of Title Deeds £92k - document management. Staffing now in place for this project to be completed. 0 92,000
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Ref Department Service Description Opening Balance New earmarkings in year Budget Drawdown Movement between categories Released back to General Fund Remaining Balance Plans for Use Amount Planned to be Spent in 2025-26 Amount Planned to be Spent in 2026-27 Amount Planned to be Spent from 2027/28 onwards 063 Executive Director (Douglas Hendry) Legal and Regulatory Support (2023 Digital Projects) Replacement of Council Chambers Online Meeting Equipment 44,718 7,219 37,499 Current online meeting system is less than resilient and has failed on a number of occasions, leading to issues at strategic committees. A condition assessment by the incumbent maintenance contractor has highlighted that the current equipment is now at end of life and unsupportable due to the obsolescence of the system. Discussions with ICT have taken place to identify a simpler more robust solution to be procured. NUWAY system and maintenance, system installed, ongoing maintenance contract to 2030 7,219 7,219 30,280 064 Executive Director (Douglas Hendry) Legal and Regulatory Support Councillor IT Equipment 44,557 22,000 22,557 There is currently no budget for the provision and renewal of IT equipment for members. The earmarking identifies a resource to utilise spend for that purpose to ensure that members have continued support in maintaining and replacing vital IT equipment. 22,000 22,557 0 066 Executive Director (Douglas Hendry) Legal and Regulatory Support Debt Counselling & Welfare Rights 735 735 0 To meet the cost of a Debt Counselling and Welfare Rights Management System. Balance of £15k released back to General Fund per Council decision September 24 and an associated cost pressure built in to 2025-26 budget cover the routine annual costs. 735 0 0 068 Executive Director (Kirsty Flanagan) Across Services / Customer Support Services Digital Projects (Increase in Schools Bandwidth) 63,455 0 63,455 To complete one of a number of Digital Service Transformation projects with a commitment of £0.064m to increase Schools Bandwidth. Committed for MS 365 project - D Logan/I Jackson. Paper went to ELT in Dec 24. 0 63,455 069 Executive Director (Kirsty Flanagan) Across Services / Customer Support Services Digital Projects (Replacement Learning Management System) 11,470 0 11,470 To deliver a number of Digital Service Transformation Projects with an original commitment of £0.030m towards a replacement Learning Management System £0.030m. This money will be used to pay for consultancy for an interface between iTrent and totara. Profiled for 24/25 based on decision to do a phased implementation of itrent. Update: Due to sickness in a key project role and other factors including prioritising resource for itrent, our HROD project is now behind schedule and will not complete by the planned date of March 2026. The HROD Digital project will need to be extended into the next financial year and will involve profiling the digital earmarking’s beyond April 2026. It is intended that the project will be completed, and all earmarking’s drawn down by the end of September 2026. 0 11,470 070 Executive Director (Kirsty Flanagan) Across Services / Development and Economic Growth Information Management (Document Management and Workflow for Planning, Building Standards and Environmental Health) 21,177 0 21,177 Hoping to implement the replacement for IDOX in March 2024 but there have been severe issues/delays with the new programme . Dec 24 Project has been scrapped as it was not working. Awaiting procurement to write termination of contract legal documents, until this is completed we will not know if any further cost are due. Amount moved to 2026-27 0 21,177 075 Executive Director (Kirsty Flanagan) Customer Support Services Growing our Own and Modern Apprentices 69,150 29,157 39,993 Funding earmarked to support trainee development and modern apprenticeship opportunities based on priority workforce risk areas. A Trainee Regulatory Services post has been proposed by the manager who was unable to secure a suitable candidate for the original advert. The spend will be in 25/26 once a suitable candidate is in post. Post interviewed for, awaiting references. Successful candidate unlikely to start before April 25. Balance of £40k released back to General Fund per Council decision September 24 as only £69k is still required for the intended purpose. 29,157 39,993 076 Executive Director (Kirsty Flanagan) Customer Support Services Security Operations Centre Subscription 71,188 42,406 28,782 There is a requirement to pay for a 3-year subscription at £60,000 per annum with a cost pressure being added to the ICT revenue budget to cover the costs from 2026-27 onwards. Sept 25 update - Invoice for year 3 for Quorum Cyber Security is 42,405.87. 28,782 will be used in 26-27 towards next year's expected cost 42,406 plus inflation. 42,406 28,782 077 Executive Director (Kirsty Flanagan) Customer Support Services (2023 Digital Projects) Resilient Website Project 46,000 29,500 16,500 Cybersecurity action to move to a cloud based website platform that would improve resilience and enable service continuity in the event of a cyber attack. Procurement in progress for resilient website solution and Scotgov Cloud Services Project providing input. Contract Award expected by end 2023. Procurement in progress for resilient website solution. Contract Award expected FQ1 2024-5. 3 year contract has been awarded to BigBlueDoor. 14k spend 24/25, 29.5k in 25/26 and 16.5k in 26/27. 29,500 16,500 078 Executive Director (Kirsty Flanagan) Customer Support Services (2023 Digital Projects) Digital Project Officer 34,121 0 34,121 Employ a temporary Digital Project Officer as part of OD changes - additional member of staff required to action changes, unable to recruit so existing staff increasing hours. Update: Due to sickness in a key project role and other factors including prioritising resource for itrent, our HROD project is now behind schedule and will not complete by the planned date of March 2026. The HROD Digital project will need to be extended into the next financial year and will involve profiling the digital earmarking’s beyond April 2026. It is intended that the project will be completed, and all earmarking’s drawn down by the end of September 2026. 0 34,121 079 Executive Director (Kirsty Flanagan) Customer Support Services Implementation of Gaelic Language Plan 30,000 0 30,000 Agreed at Council Meeting February 2021. Provision of funding for delivery and implementation of the council’s Gaelic Language Plan in recognition of the contribution that Gaelic makes to economic growth and to the tourism sector, and to enable delivery of key activities within the plan which currently receive no revenue funding. In discussion with Bord na Gaidhlig about a 3-year Gaelic Plan funding programme as opposed to individual grant applications for specific projects. This earmarking would be used to provide match funding for that 3 year programme of projects. 3 year match funding approved December 2024. Sept 2025 confirmed no spending in 25-26, moved on one year 0 30,000
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Ref Department Service Description Opening Balance New earmarkings in year Budget Drawdown Movement between categories Released back to General Fund Remaining Balance Plans for Use Amount Planned to be Spent in 2025-26 Amount Planned to be Spent in 2026-27 Amount Planned to be Spent from 2027/28 onwards 080 Executive Director (Kirsty Flanagan) Customer Support Services Business Development Training 11,214 11,214 0 £27k budget from original Business Development Training earmarking 080 remaining at 31/03/24. This budget is funding ongoing leadership development, coaching, action learning sets and commissioned training including Priority Management. Agreed by Council September 24 to merge with 24-25 EMR 082 - In order to maximise the opportunities and efficiencies of digital learning, this funding will be used to support the extension of digital learning in order to deliver the Digital Learning Strategy, which was approved in FQ4 20/21. This money is to support the additional digital learning capacity required to build online elements of AB365 and other key digital learning as we increase our digital learning offering linked to the digital skills survey and review of corporate training. 11,214 0 105 Executive Director (Kirsty Flanagan) Development & Economic Growth Service Concessions - Priorities Investment Fund (Project Officer for Housing Emergency) 200,000 64,329 135,671 As agreed by Policy and Resources Committee on 15 February 2024 - drawdown of £200,000 from the Priorities Investment Fund to fund a Project Officer to assist in accelerating the work of the Housing Emergency. 65,000 135,000 107 Executive Director (Kirsty Flanagan) Development & Economic Growth Strategic Events & Festivals 1,460 0 1,460 At the Council meeting on 25 February 21, a decision was taken to agree £90k funding for Events and Festivals for 22/23, in order that the application process can commence during 21/22 and that this agreed figure be augmented by any underspend remaining from the 20/21 financial year. At 24 February 22, decision made to agree £90k for 23/24, in order that the application process can commence during 22/23 and that this agreed figure be augmented by any underspend remaining from the 21/22 financial year. Applications have been received and payments will be made in 23- 24. Final balance (£41,260) to be spent in 24/25 remaining balance £1460 to be spent in 25/26 1,460 0 112 Executive Director (Kirsty Flanagan) Development & Economic Growth Screen Machine 5,000 5,000 0 At the Council Budget meeting on 22 February 2024, the Council committed to a one-off investment of £0.028m to Screen Machine in response to an external funding request. Dec 24 Grant offer has now been sent out but payment now not due until Q1 25/26 5,000 0 124 Executive Director (Kirsty Flanagan) Financial Services Revenue and Benefits BPR - extra staff to implement savings targets 86,955 0 86,955 On 23 February 2023, the Council agreed to the implementation of savings option FIS2324-002 in relation to the Revenue and Benefits - Income Generation and Business Process Review. This included an extra 4 FTE of staff. Delays in recruitment have caused slippage in the allocated budget for these posts. Consultancy costs in relation to the BPR review of Income Max and Care Financial Assessments committed from here (£15k). 0 86,955 129 Executive Director (Kirsty Flanagan) Financial Services Financial Systems 33,748 0 33,748 The council is required to implement the IFRS16 Leases accounting standard from the 1st April 2024. 33,748 0 130 Executive Director (Kirsty Flanagan) Financial Services Accounting and Budgeting Team Resilience 36,055 5,284 30,771 Training and examination fees for 6 staff who are currently undertaking their professional CIPFA/ACCA training. In addition funding the further training of 1 of our auditors and providing finance business partner training to a group of our existing professional staff. 8,000 28,055 134 Executive Director (Kirsty Flanagan) Roads and Infrastructure Services Waste Variation Monies 1,000,043 215,512 3,500,000 4,284,531 Waste Variation Monies remaining of - £1m, to be used to assist with the Council's compliance with the 2026 ban on the Landfill of Biodegradable Municipal Waste and supporting the overall Waste Strategy) £886K in 2025-26 consisting of:- Island restoration/capping, waste PPP conversion of sites (including consultants for waste PPP MBT conversion monitoring and sign off), consultancy costs relating to additional monitoring data for SEPA and Recycling Improve Fund design works. £113K in 2026-27 consisting of:- consultancy costs relating to additional monitoring data for SEPA and island restoration/capping. 886,643 113,400 3,500,000 138 Executive Director (Kirsty Flanagan) Roads and Infrastructure Services Service Concessions - Priorities Investment Fund (Strategic Development Framework) 433,804 72,035 361,769 As agreed by Policy and Resources Committee on 15 February 2024 - drawdown of £450,000 to procure consultancy support to assist in driving forward the Strategic Development Frameworks. 433,804 0 141 Executive Director (Kirsty Flanagan) Roads and Infrastructure Services 3G pitches / Tarbert Sports Pitches 213,769 0 213,769 In November 2018, the Council agreed to a maintenance funding package to be progressed for a number of 3G pitches including Tarbert. This funding was proposed to provide an estimated 6.5 years’ worth of ongoing maintenance up to 2025-26. There is the potential to extend the continued upkeep of the pitches until 2026-27 given the earmarking available will not be fully utilised by the end of 2025-26. However, there will be potential redundancy costs for 1 employee that will need to be covered from the remaining balance. Paper on proposed extension to be prepared. Sept update - Note comment earmark may not be fully utilised 96,072 117,697 146 Executive Director (Kirsty Flanagan) Roads and Infrastructure Services Climate Change 40,942 0 40,942 At the Council meeting on 27 February 2020, it was agreed to input £500k budget to mitigate the impacts of weather related damage and climate change with specific emphasis on gully cleaning and drainage improvements. Spend has been delayed due to COVID and the intention is to spend the funds on 2 Gully Motors plus staff over next 2 years. Vehicles have been received and budget will be drawn down to cover their cost. The remaining budget will be used towards running the vehicles. Sept 25 exercise moved on 1 year 40,942 151 Executive Director (Kirsty Flanagan) Roads and Infrastructure Services Weather Incident costs not covered by Bellwin claim. 198,000 0 198,000 £839k was set aside at budget meeting in February 2024 as part of the unallocated general fund balance workings to cover the weather incident costs not covered by the Bellwin Claim. As £641k was utilised during 23-24, the balance of £0.198m is being earmarked for costs unexpected weather events in the future. 0 198,000 154 Non Departmental Non Departmental Service Concessions - Replace previous loans fund principal repayment holiday 5,400,000 0 (5,400,000) 0 As agreed at Council meeting 23 February 2023 - The one-off retrospective benefit will be used to replace exercising the principal repayment holiday that was previously agreed by Council. 0 0 0
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Ref Department Service Description Opening Balance New earmarkings in year Budget Drawdown Movement between categories Released back to General Fund Remaining Balance Plans for Use Amount Planned to be Spent in 2025-26 Amount Planned to be Spent in 2026-27 Amount Planned to be Spent from 2027/28 onwards 164 Non Departmental Non Departmental Pay Inflation Contingency 1,297,550 0 1,297,550 Contingency built in to cover pay increases beyond budget. In 2025-26, £0.039m to be used to cover in-year impact of Chief Officers pay award and the balance to offset impact of 2026-27 pay award. 39,000 1,258,550 171 Non Departmental Non Departmental Oban TIF (Tax Incremental Financing - Excess NDR) 875,651 0 875,651 This is the surplus NDR after paying all Loans Charges in respect of TIF infrastructure projects. This fund will be used in the future as TIF projects are delivered. Discussions in place on future ff the next TIF project (Oban Airport) which will utilise this reserve. If the project does not go ahead, we will need to return NDR to Scottish Government 0 875,651 184 Non Departmental Non Departmental Information Management (Balance of Funding) 200,469 0 200,469 To support a number of initiatives in respect of improving the Council's information management in line with the transformation agenda and increasing the pace of change as outlined in the BV Review. This was the balance of funding to explore information management solutions in a strategic and coherent way £209k. Committed for MS 365 project - D Logan/I Jackson. Paper went to DMT in Dec. 0 0 200,469 186 Non Departmental Non Departmental Engagement with Hub North re provision of services for older adults and vulnerable people across Argyll and Bute 95,005 0 95,005 At the Council budget meeting February 23, an allocation of £0.1m from the Unallocated General Fund balance for the Health and Social Care Partnership to engage, in partnership with the Council, with Hub North to develop a strategic business case in relation to the provision of services for older adults and other vulnerable people across Argyll and Bute. It is intended that this will be spent on an on-going business case and options appraisal work with Hub and it will be fully utilised in 2025- 26. 95,005 0 187 Non Departmental Non Departmental Spend to Save Route Optimisation Software 55,484 3,220 52,264 One-off re-profiling gain as a result of the loans fund review to fund known liabilities/cost pressures as agreed at budget setting meeting in February 2020. The route optimisation project has been delayed due to staff turnover and absences, recent meetings involving the Council and Routeware have set out future objectives and the project has been extended to 2025-26. Further delays anticipated due to our GIS system and Routeware system compatibility issues. 3,220 52,264 188 Non Departmental Non Departmental CHARTS 5,000 5,000 0 At the Council Budget meeting on 22 February 2024, the Council committed to £0.075m one-off investment in CHARTS in response to an external funding request will be spent in 24-25. There remains £0.005m from a COVID earmarking for CHARTS as well. 0 5,000 198 Executive Director (Douglas Hendry) Education ASN Review Upgrades - Capital 287,426 0 (287,426) 0 Transferred from Education to fund ASN review upgrades in Islay High School, Castlehill Primary School, Tobermory High School and Hermitage Academy 0 0 0 200 Executive Director (Kirsty Flanagan) Roads and Infrastructure Services Gartbreck Cell - Capital 250,000 0 (250,000) 0 £250k transferred from Waste Variation ER 134 to fund capital cost relating to Gartbreck Cell 0 0 0 204 Executive Director (Kirsty Flanagan) Development & Economic Growth Planning Services 300,000 0 300,000 Depending on the outcome of a number of S36 Windfarm planning applications, this earmarking will be used to cover consultation advice and a potential public inquiry if applications are refused. 150,000 150,000 0 223 Non Departmental Non Departmental Strathclyde Pension Fund Saving 25- 26 - Planned Allocation to 2025-26 2,000,000 2,000,000 0 £2m allocation from 2025-26 SPFO saving to be allocated to balance the 2025-26 budget. 2,000,000 224 Non Departmental Non Departmental Strathclyde Pension Fund Saving 25- 26 - Planned Allocation to 2026-27 2,000,000 2,000,000 £2m allocation from 2025-26 SPFO saving to be allocated to balance the 2026-27 budget. 2,000,000 225a Non Departmental Non Departmental Social Work Strathclyde Pension Fund Saving 25-26 2,553,000 2,553,000 This is part of the revenue budget for 25-26 and is the saving on Social Work pension budgets resulting from the drop in employers pension rate. Total of £3.053m but £500k split out for transformation projects per Council decision Feb 25. 2,553,000 225b Non Departmental Non Departmental Social Work Strathclyde Pension Fund Saving 25-26 (Per Motion Feb 25, £500k for transformation) 500,000 500,000 This is part of the revenue budget for 25-26 and is the saving on Social Work pension budgets resulting from the drop in employers pension rate. Agreed at Council February 25 to set aside £500k for transformation projects. 500,000 14,294,911 7,053,000 2,636,026 (3,405,000) 390,242 14,916,643 6,677,329 5,985,387 4,889,953
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APPENDIX 2 Risk Assessment for Review of Reserves Risk Category Comment Assessment Cost and Demand Pressures As part of maintaining the medium term budgetary outlook, cost and demand pressures for 2026-27 and beyond have been kept under review. The cost and demand pressures for 2026-27 amount to £4.496m for Council services. A general allowance for unidentified cost and demand pressures has been built into the budget outlook for 2027-28 and future years: £0.250m in the best case scenario, £0.500m per annum in the mid- range, and £1m per annum in the worst case scenario. Medium (2025-26 Medium) Service Income Service income levels have been reviewed as part of constructing the budget. In addition fees and charges have been reviewed. Medium (2025-26 Medium) Council Wide Cost Risks The financial risk analysis identified 6 council wide cost risks currently amounting to £7.1m as follows: Description Likelihood Assessed Financial Impact £m Unbudgeted Severe Weather costs 4 3.0 Energy costs increase by 5% greater than budgeted 3 0.4 IJB refer to Council for additional funding to deliver social work services 3 2.0 1% variation in Council Tax Income 2 0.8 10% shortfall on Savings delivery 2 0.6 Medium/High (2025-26 Medium/High)
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Risk Assessment for Review of Reserves Risk Category Comment Assessment 10% variation on General Inflation 3 0.3 Total 7.1 Funding Risks The Scottish Budget was announced on 13 January 2026 included additional funding that was uncommitted. The like for like cash increase was Although there has been a cash increase was £6.059m (2.3%), however, after accounting for settlement commitments this reduces to £2.485m (0.9%). The Scottish Spending Review published alongside the Scottish Budget suggests limited real-terms growth, effectively a very tight or flat cash outlook for the Finance and Local Government portfolio. It is expected that detailed estimates at Local Authority level will be available in the Spring. The mid-range scenario includes a 0.5% decrease in funding for future years, reflecting the fact that we rely on the floor mechanism which is currently set at 0.5% below the average change in funding therefore the budget outlook assumes flat cash in future years. There is a proposed increase to Council Tax of 6% to balance the budget. Collection rates remain good at circa 96%. It would be prudent for this risk to remain at Medium/High. Medium/High (2025-26 Medium/High) Savings Risks The 2026-27 budget includes new Operational/Management and Policy savings options, totalling £6.090m. Whilst the council has a good track record in delivering savings, there is a risk that this target will not be fully delivered. Risk remains at medium. Medium (2025-26 Medium)
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Risk Assessment for Review of Reserves Risk Category Comment Assessment Inflation Rates CPI Inflation was 3.4% in December 2025, compared to 3.2% in November 2025, the first increase in the rate for several months. The latest Bank of England forecast for CPI inflation suggests that the rate will reduce during 2026/27 however this is uncertain and not consistent with the increase in the December 2025 rate. Given the ongoing challenges facing the UK economy, including potential disruption due to the developing situation between the United States of America and Europe in relation to Greenland, it would be prudent to consider the risk that inflation will be higher than forecast and a Council wide risk has been identified of £0.300m. For 2025-26, despite the overall rate of inflation being forecast to be relatively stable over the year, officers expect that inflationary pressures will continue to be a point of financial pressure throughout the year and Finance staff will work in conjunction with Services to monitor the situation very closely. Medium/High (2025-26 Medium/High) Interest Rates The council’s debt portfolio is largely long term borrowing for capital purposes at fixed interest rates, with a mixed maturity profile, minimising exposure to interest rate risk in terms of interest rate volatility, over future years. The council holds both short term or temporary borrowing and investment balances to manage day to day cashflow requirements. The treasury position is actively managed to reduce debt interest costs and maximise the return on investments, commensurate with the council’s risk appetite and within the limits of the approved Treasury Management and Annual Investment Strategies. Further, the council continues to hold significant reserve balances, which has allowed the deferral of new external borrowing, in favour of internal borrowing. This is a prudent strategy, where interest rates are forecast to fall across future years, which both provides an Low (2025-26 Low)
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Risk Assessment for Review of Reserves Risk Category Comment Assessment opportunity for longer term interest cost savings and minimises investment risk. The council continues to monitor interest rate markets and forecasts and undertakes borrowing and investment decisions based on advice from its treasury advisors, MUFG (formerly Link). Investment risks The authority will aim to achieve the optimum return (yield) on its investments, commensurate with proper levels of security and liquidity. The risk appetite of the council is low, prioritising security and liquidity. In the current economic climate, it is considered appropriate to keep investments short term to cover cash flow needs. Investments are placed with high credit quality financial institutions, using the MUFG suggested creditworthiness approach, including a minimum sovereign credit rating and Credit Default Swap (CDS) overlay information. As outlined above, the level of internal reserve fund balances has provided an opportunity to defer new external borrowing, whilst also minimising exposure to investment risk. Low (2025-26 Low) Strategic risks The strategic risk register is subject to a formal review by Executive Leadership Team (ELT) bi-annually, and these reviews have already taken place in April and October of 2025. ELT have agreed the current actions to address the risks. Medium (2025-26 Medium) Operational risks Operational risks are reviewed formally each quarter by the Senior Leadership Team. Any operational risks that are identified as high are reported to the Executive Leadership Team as part of the bi-annual review of the Strategic Risk Register. Medium (2025-26 Medium)
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Risk Assessment for Review of Reserves Risk Category Comment Assessment World Events World events are likely to continue to affect the global economy (Russian invasion of Ukraine, United States of America action in Venezuela and their intentions towards Greenland) causing market and price instability through, for example, tariffs and disruptions to supply chains which lead to delays and reducing the availability of goods and services which increases prices. Medium/High (2025-26 Medium/High) General financial climate The Scottish Budget included multi-year spending plans, however, the Circular only gives details of the provisional Local Government settlement (revenue and capital) at Council level for 2026-27 only. It is expected that information at Council level for 2027-28 and 2028-29 will be available around the Spring. The Scottish Spending Review published alongside the Scottish Budget suggests limited real-terms growth, effectively a very tight or flat cash outlook for the Finance and Local Government portfolio. A prudent approach to estimating income from council tax has been taken. Risks arising from inflation, interest rates, cost pressures and demand led pressures have been outlined above. Due to ongoing uncertainties regarding the level of funding from Scottish Government, the risks to the UK economy and the sensitivity of interest rates to world events, it would be prudent to retain this risk at medium/high. Medium/High (2025-26 Medium/High) Availability of contingency funds The Council currently has sufficient contingency funds to meet its target. Low/Medium (2025-26 Low/Medium) Overall financial standing The Council has managed to achieve its contingency target in previous years. Actual costs are normally contained within budget. Borrowing costs are largely fixed at the moment, as the Council’s need to borrow is currently low due to the high levels of funds it is holding. In addition to the contingency there are significant earmarked funds. Cost and demand pressures are identified and provided for if necessary and the impacts of Low/Medium (2025-26 Low/Medium)
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Risk Assessment for Review of Reserves Risk Category Comment Assessment inflationary changes are continually monitored and adjusted for in the Council’s financial forecasts. Track record in budget management The Council has a good track record of containing expenditure within budget, however, this year as at the end of December 2025 the Council is forecasting an overspend due to some unforeseen costs. Following a review of the loans funds, a further forecast underspend of £0.700m has been identified. The outturn is of course still subject to change as there are still 3 months of the financial year left and additional costs associated with weather incidents can have a considerable impact on budgets. As a result this risk remains at Medium. Medium (2025-26 Medium) Financial information and reporting arrangements Revenue and capital budgets are monitored on a monthly basis with budget allocated to responsible managers. A risk-based approach is taken to budget monitoring and the budget monitoring process is continually being reviewed to identify ongoing improvements. Low/Medium (2025-26 Low/Medium) Insurance cover The Council has adequate insurance cover. Low (2025-26 Low) Internal controls The statement of internal controls identifies a generally adequate control framework although there are areas for improvement. An audit plan is approved and delivered each year to monitor internal controls. The Council’s Audit and Scrutiny Committee continues to actively develop and adopt good practice. Low/Medium (2025-26 Low/Medium)
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Risk Assessment for Review of Reserves Risk Category Comment Assessment Health and Social Care Partnership Financial Position It is prudent to have a factor in terms of the Health and Social Care Partnership financial position. It is the responsibility of the Chief Officer and Chief Financial Officer to manage the HSCP financial position. If an overspend is forecast, a budget recovery plan will be prepared and submitted to the IJB, the Council and NHS Highland. Where recovery plans are unsuccessful and an overspend occurs at the financial year end, and there are insufficient reserves to meet the overspend, then the partners will be required to make additional payments to the HSCP. The Council would have to contribute towards any overspend related to Social Work. Whilst any additional payments by the Council and NHS Highland will be deducted from future years funding, there is still a financial risk that the Council may have to pay out additional monies in year. The financial situation facing Social Work is extremely challenging due to increases in demand, complexity of cases, increasing costs and difficulty recruiting permanent staff and therefore having to rely on agency staff. At the time of writing this report, the forecast budget for 2026-27 has a £2.872m gap after savings and utilisation of reserves. Medium/High (2025-26 Medium/High) Impact of Climate Change Climate change is expected to have an increasingly significant and damaging impact on coastal communities in the West of Scotland with changes in sea level and weather patterns, through a combination of more frequent and intense storms, increasing the risk of flooding and damage to homes and infrastructure. With its unique geography, numerous islands and exposed coastline, Argyll and Bute is especially vulnerable with severe storms in October 2023 and January 2025 causing substantial damage to infrastructure and property and jeopardising the safety of residents. Medium/High (2025-26 Medium/High)
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Risk Assessment for Review of Reserves Risk Category Comment Assessment The Councils plays a crucial role in reducing the impact of climate change by implementing sustainable policies, enhancing infrastructure resilience and promoting community awareness.