Capital Plan Update 2026-28
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 CAPITAL PLAN UPDATE 2026-28 1. EXECUTIVE SUMMARY 1.1 A separate Review of Capital Arrangements Update report has been provided, as part of the 2026-27 Budget Pack, setting out the interim approach to capital planning for the 2026-27 budget process, pending the outcome of the wider review. This report outlines proposals for the required update for the remaining 2 years of the current Capital Plan, 2026-28. 1.2 Funding constraints continue to limit the ability to deliver capital investment. In addition, the global economic landscape has presented significant inflationary price increases, as well as disruptions to supply chains and longer lead in times. These impacts make it challenging to manage the delivery of the Capital Plan within available resources and target completion timescales. 1.3 The Local Government Finance Circular 1/2026 provided details of the updated capital funding allocations for 2025-26 and the provisional allocations for 2026- 27. This provided 2026-27 General Capital Grant of £9.975m, excluding effectively ring-fenced or directed funding of £6.099m. This represents £0.309m more general funding than previous planning assumptions for each of the years 2026-27 and 2027-28. In addition, the updated 2025-26 settlement provides a further £0.007m of available funding. 1.4 The ring-fenced or directed funding of £6.099m, included within the 2026-27 General Capital Grant, comprises £0.379m for Flooding, £0.270m for Nature Restoration and £5.450m for Island Connectivity. The Scottish Government has confirmed additional capital funding of £19.700m in total over the next 2 years (£5.450m 2026-27 and £14.250m 2027-28) to support investment in a new Jura Ferry (£12.000m) and Ferry Slips (£7.700m). This brings the total of notified ring-fenced or directed funding being made available through the General Capital Grant to £20.349m over 2026-28. In addition, as agreed in February 2025, an allocation from the General Capital Grant to Private Sector Housing Grant (PSHG) is provided for at £0.820m in 2026-27 and £0.819m in 2027-28. 1.5 The settlement also provides for additional capital grant funding of £20m across Scotland in 2026-27 for Climate Emergency, to be included within the General Capital Grant, assumed to be non-recurring. Given that project planning across the programme will already take cognisance of climate change, as a key consideration, it has not been necessary to augment planned project expenditure in this respect. As such, the authority’s share of this funding, estimated at £0.482m, represents additional available resources for 2026-27. This gives an overall net increase of £1.107m in available General Capital Grant funding over the remaining 2 years of the current Capital Plan, 2026-28.
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1.6 The current approved Capital Plan 2025-28 includes an updated asset sales target totalling £2.025m over these 3 years. A total of £1.500m is currently estimated to be achieved in 2025-26, with a remaining balance of £0.525m to be achieved over 2026-28. However, based on an updated assessment undertaken by Commercial Services on potential sales opportunities that may reasonably be achieved over the 2 years 2026-28, this target has been updated to £2.000m, representing an overall increase of £1.475m in available funding over the 2 years 2026-28. 1.7 As at 31 December 2025, there was a forecast overspend of £0.166m on the current 2025-28 Capital Plan, however, this is expected to be managed within existing available resources. No additional spend approvals are being sought in this respect, at this stage. However, there are spending requirements totalling £3.385m, deemed to be essential, either critical to maintain service delivery, or to comply with legislation or regulation (Red RAG status risks), that cannot be managed within existing available resources. 1.8 In addition to the new commitments associated with the ring-fenced or directed funding provided through the General Capital Grant, new capital commitments in respect of proposed recharges to capital, totalling £0.604m, require to be provided for within the Capital Plan, subject to member approval. 1.9 After taking account of the additional capital resources available from General Capital Grant and Asset Sales, there is a shortfall of £1.407m in the funding available to meet new capital commitments. However, work has been undertaken, as part of the Review of Capital Arrangements, to establish the capacity within existing available revenue resources (annual debt charges budget and reserves earmarked for capital purposes) to support new capital investment. There is also an opportunity for this to be further augmented by additional borrowing, with the revenue consequences, in terms of debt charges, accounted for as part of the annual revenue budget for 2026-27 and future years. 1.10 Additional investment priorities across council services have been identified, including in respect of the Roads programme for 2026-28, with an estimated shortfall of £9m each year to maintain the current standard. Council officers have brought forward investment proposals for members’ consideration, in line with the overall capacity to support additional capital expenditure, with no forecast impact on the revenue budget over the short to medium term. 1.11 A number of known risks, specifically related to the delivery of the Capital Plan, are documented within this report. These risks may impact the delivery of the plan within available resources and target timescales. 1.12 Opportunities to take a more strategic approach to capital planning and to enhance existing governance arrangements around capital investment activity will continue to be progressed during 2026-27.
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ARGYLL AND BUTE COUNCIL COUNCIL FINANCIAL SERVICES 25 FEBRUARY 2026 CAPITAL PLAN UPDATE 2026-28 2. INTRODUCTION 2.1 Council approved a rolling 3-year Capital Plan 2025-28 in February 2025. At the same time, it was agreed that opportunities to take a more strategic approach to capital planning and to enhance existing governance arrangements around capital investment activity would be further explored during 2025-26. 2.2 An update on the Review of Capital Arrangements is subject to a separate report to Council, as part of the 2026-27 Budget Pack. This sets out the interim approach to capital planning for the 2026-27 budget process, pending the outcome of the wider review. It is anticipated that recommendations from the review will have implications for the allocation of capital resources for future years beyond the current 2025-28 approved Capital Plan. As such, this report outlines proposals for the required update, including additional new spending proposals, for the remaining 2 years of the current Capital Plan 2026-28. 3. DETAIL 3.1 Capital Funding Updates 2026-28 3.1.1 Funding constraints continue to limit the ability to deliver capital investment. In addition, the global economic landscape has presented significant inflationary price increases, as well as disruptions to supply chains and longer lead in times. These impacts make it challenging to manage the delivery of the Capital Plan within available resources and target completion timescales. 3.1.2 The Local Government Finance Circular 1/2026, published on 13 January 2026, provides details of the updated capital funding allocations for 2025-26 and the provisional allocations for 2026-27. These provisional 2026-27 funding allocations form the basis for the annual consultation between the Scottish Government and COSLA, ahead of the Local Government Finance (Scotland) Order 2026 being presented to the Scottish Parliament. This is currently scheduled for the end of February 2026. 3.1.3 The 2025-28 Capital Plan, approved in February 2025, included future year General Capital Grant assumptions for 2026-27 and 2027-28 at the 2025-26 level of £9.666m. This excluded 2025-26 effectively ring-fenced or directed funding of £1.198m; specific grant of £0.383m; and £0.963m in respect of additional Climate Change funding, expected to be non-recurring. Council also agreed to effectively top-slice the General Capital Grant to provide an allocation to Private Sector Housing Grant at £0.820m in 2026-27 and £0.819m in 2027- 28.
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3.1.4 The Local Government Finance Settlement Circular 1/2026 provided 2026-27 General Capital Grant of £9.975m, excluding effectively ring-fenced or directed funding of £6.099m. This represents £0.309m more general funding than previous planning assumptions for each of the years 2026-27 and 2027-28. In addition, the updated 2025-26 settlement provides a further £0.007m of available funding. 3.1.5 The settlement also provides for additional 2026-27 capital grant funding of £20m across Scotland for Climate Emergency, to be included within the General Capital Grant, assumed to be non-recurring. Whilst the distribution across individual authorities has yet to be confirmed, based on the expected distribution formula, additional funding of £0.482m has been assumed for 2026- 27. Given that project planning across the programme will already take cognisance of climate change, as a key consideration, it has not been necessary to augment planned project expenditure in this respect. As such, this funding represents additional available resources for 2026-27. However, members may wish to consider specific additional investment in this respect. 3.1.6 Overall, there is an increase in available General Capital Grant funding of £0.007m in respect of 2025-26, £0.791m in respect of 2026-27 and £0.309m in respect of 2027-28. This gives a net increase of £1.107m in available capital resources over the remaining 2 years of the current Capital Plan, 2026-28. 3.1.7 The ring-fenced or directed funding of £6.099m, included within the 2026-27 General Capital Grant, comprises £0.379m for Flooding, £0.270m for Nature Restoration and £5.450m for Island Connectivity. In respect of Island Connectivity, following a bid for additional resources, the Scottish Government has confirmed additional capital funding of £19.700m in total over the next 2 years (£5.450m 2026-27 and £14.250m 2027-28) to support investment in a new Jura Ferry (£12.000m) and Ferry Slips (£7.700m). This brings the total of notified ring-fenced or directed funding being made available through the General Capital Grant to £20.349m over 2026-28. 3.1.8 There is a rolling 3-year target for capital receipts from asset sales, forming part of the overall capital funding framework. The current approved Capital Plan 2025-28 includes an updated asset sales target totalling £2.025m over these 3 years. A total of £1.500m is currently estimated to be achieved in 2025-26, with a remaining balance of £0.525m to be achieved over 2026-28. However, based on an updated assessment undertaken by Commercial Services on potential sales opportunities that may reasonably be achieved over the 2 years 2026-28, this target has been updated to £2.000m, profiled £1.500m 2026-27 and £0.500m 2027-28. This represents an overall increase of £1.475m in available funding over the 2 years 2026-28. However, it should be noted that this is largely predicated on a single significant sale value being delivered in 2026-27. Assets currently available for sale or declared surplus, expected to generate a future capital receipt are listed in Appendix 1. 3.2 New Capital Commitments 3.2.1 As at 31 December 2025, there is a total forecast overspend of £0.166m on the current 2025-28 Capital Plan. However, there is deemed to be capacity within the current approved Capital Plan to manage the forecast overspends within
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existing available resources. An allocation of additional resources in respect of the forecast overspend as at 31 December 2025 is therefore not being sought, at this stage. 3.2.2 There are spending requirements totalling £3.385m, deemed critical to maintain service delivery or to comply with legislation or regulation (Red RAG status risks), that cannot be managed within existing available resources. The Capital Plan Gross Expenditure therefore requires to be increased by £3.385m in 2026- 27, in respect of the following: Red RAG Status Risk Description Cost Estimate £m Replacement of temporary Depot Building at County Yard, Lochgilphead following demolition of condemned building. (Initial high level working cost estimates were received on 15 January from the council’s internal quantity surveyor. The costs of the building only have been extracted from the overall cost estimate.) 1.159 Essential works at Kilmory Castle to comply with legislative requirements (Health and Safety, DDA compliance). (Cost estimates were presented to ELT in January for total castle refurbishment. The estimated costs of essential works only, including re-wiring, accessibility upgrades and replacement of end of life air system, extracted from the overall cost estimate, total £3.771m. Existing available resources of £1.545m have been confirmed, with a funding shortfall of £2.226m.) 2.226 Total 3.385 3.2.3 New expenditure commitments require to be reflected, where ring-fenced or directed funding has been made available within the General Capital Grant, as set out within paragraph 3.1.7. The Capital Plan gross expenditure budget requires to be increased by £20.349m in respect of these specific projects over the 2 years 2026-28. 3.2.4 The 2026-27 revenue budget savings options, subject to member approval, include recharges to capital of £60k per annum from 2025-26 in respect of Financial Services support to capital and £112k per annum from 2026-27 in respect of project management support to the Rural Growth Deal. In addition to required assumed recharges of £200k over 2026-28, recharges totalling £0.544m over the 2 years 2026-28 (£0.604m over the 3 years 2025-28), require to be reflected within the Capital Plan. 3.3 Updated Capital Plan 3.3.1 Updated gross expenditure totalling £179.239m has been profiled over 2026-27, 2027-28 and future years. At this stage, gross expenditure profiled within future years is wholly in respect of the Harbour Investment Programme. 3.3.2 Project specific grant funding and other capital contributions are accounted for within specific projects. Estimated project specific income totals £0.165m over the 2 years 2026-28. This comprises £0.075m in 2026-27 in respect of Oban
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Airport Business Park and £0.090m in 2026-27 in respect of Harbour Investment Programme – Coastal Community Fund. After accounting for project specific income, the Capital Plan net expenditure that requires to be financed totals £179.074m. 3.3.3 The updated Capital Plan, subject to member approval of new spending commitments outlined within Section 3.2, is summarised in the table below. This is prior to any additional investment, within available resources, explored within Sections 3.5 – 3.6 of this report. A more detailed analysis of gross expenditure at capital project level is given within Appendix 2. 2026-27 £m 2027-28 £m Future Years £m Total £m Forecast Gross Expenditure as at Qu.3 2025-26 50.936 60.801 43.390 155.127 Forecast Overspend to be managed within available resources -0.166 -0.166 New Commitments - Notified Ring- fenced/Directed GCG Funding 6.099 14.250 20.349 New Commitments – Recharges to Capital 0.272 0.272 0.544 New Commitments – Red RAG Status Risks 3.385 3.385 Total Gross Expenditure 60.526 75.323 43.390 179.239 Project Specific Income 0.165 0.165 Net Expenditure 60.361 75.323 43.390 179.074 Executive Directorate (Douglas Hendry): Education 3.515 9.988 13.503 Facility Services - Shared Offices 7.045 0.382 7.427 Major Projects/CHORD 11.541 11.541 Executive Directorate (Kirsty Flanagan): ICT 0.820 0.688 1.508 Roads and Infrastructure 32.094 63.229 43.390 138.713 Development and Economic Growth 3.023 0.112 3.115 Non-departmental 0.160 0.160 0.320 Health and Social Care Partnership 1.880 0.382 2.262 Live Argyll 0.468 0.382 0.850 Total Gross Expenditure 60.526 75.323 43.390 179.239 Project Specific Income 0.165 0.165 Net Expenditure 60.361 75.232 43.390 179.074
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3.4 Capital Financing 3.4.1 There is an overall funding framework available to meet the capital financing requirement. This framework comprises the following: • General Capital Grant; • General Capital Receipts from Asset Sales; • Capital Financed from Current Revenue / Earmarked Reserves; and • Borrowing. 3.4.2 As outlined within the separate Review of Capital Arrangements Update report, it is appropriate to retain an element of flexibility within the capital funding framework. The Section 95 Officer requires to take a strategic approach and exercise flexibility within the capital funding framework, including the use of reserves earmarked for capital purposes, in order to manage the impact of investment decisions on the annual revenue budget and in the context of safeguarding the council’s longer term financial sustainability. 3.4.3 The annual debt charges arising from borrowing require to be managed within available revenue resources. In addition to the revenue budget for debt financing costs; this includes reserve balances earmarked for capital purposes; and additional revenue income related to prudential borrowing projects, such as the Harbour Investment Programme, and Tax Increment Financing (TIF). 3.4.4 The potential impact on borrowing arising from the ongoing monitoring of the Capital Plan delivery is reported to the Audit and Scrutiny Committee and Council throughout the year, as part of the Treasury Management governance requirements. For example, slippage in planned capital expenditure into future years may have an impact on the council’s forecast borrowing requirements. 3.4.5 The funding framework for the capital net expenditure outlined in paragraph 3.3.3, prior to any additional investment explored within Sections 3.5 to 3.6 of the report, is given in the table below. This includes the updated capital planning assumptions in respect of General Capital Grant and Capital Receipts from Asset Sales set out at paragraphs 3.1.6 and 3.1.8. 2026-27 £m 2027-28 £m Future Years £m Total £m Net Capital Expenditure 60.361 75.323 43.390 179.074 Funded by: General Capital Grant 15.736 23.406 39.142 General Asset Sales 1.500 0.500 2.000 Borrowing/Earmarked Reserves 43.125 51.417 43.390 137.932 Total Funding 60.361 75.323 43.390 179.074 3.4.6 There are projects where the annual debt charges are expected to be fully offset by revenue budget savings, either through increased income or reduced expenditure, over the useful life of the project deliverables, with no impact on Council Tax. This is generally referred to as prudential borrowing and accounts for £101.165m of the overall borrowing requirement in the above table, in respect of the Harbour Investment Programme.
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3.5 Additional Investment Priorities 3.5.1 As part of the approach to capital for the 2026-27 budget process, Services were requested to provide details of any unfunded priorities for 2026-27. The Head of Roads and Infrastructure Services has advised of a 2026-27 estimated funding shortfall in Roads investment of £9m, compared to a planned level of investment from the previously approved block allocation of £2m. This is the estimated additional level of investment that would be required to maintain roads to the current standard (steady state), based on an estimated cost of £11m, at the lower end of the £11m - £14m range provided by SCOTS. 3.5.2 A business case is currently being progressed for the redevelopment of Kilmory Castle, which will include the essential Health and Safety works outlined at paragraph 3.2.2 but will also provide an opportunity to generate future income streams. However, there is currently no provision within the current Capital Plan for the enhanced level of investment. 3.5.3 The council’s funding bid to the Scottish Government’s Learning Estate Investment Programme (LEIP) for a new school campus on Mull was successful. While this is good news and will provide welcome investment in the school estate, it will not meet the full cost of the project. The Scottish Government will fund up to 50% of eligible costs, with the balance of circa. £20m to be funded by the council. To date, the council has earmarked reserves totalling £9m in this respect. However, consideration requires to be given to augmenting the current level of provision towards the council’s potential funding contribution, based on current affordability. 3.5.4 The wider capital review is expected to include the development of a longer term Capital Strategy from 2028-29, aligned to the strategic priorities of the council. However, members may wish to consider other investment priorities for the current planning period 2026-28, for example, specifically in relation to Climate Change or in respect of potential commercial opportunities. 3.6 Capacity for Additional Investment 3.6.1 After taking account of the additional capital resources available from General Capital Grant and Asset Sales, there is a shortfall of £1.407m in the funding available to meet new capital commitments. This is summarised in the following table. £000 Increase to 2025-26 GCG 7 Increase to 2026-27 GCG 309 Increase to 2027-28 GCG Assumption 309 2026-27 Climate Emergency Fund (Non-recurring) 482 Additional Asset Sales 1,475
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Current Capital Plan Forecast Overspend 0 Red Risks (Regulatory, Critical) (3,385) Additional Commitments – Recharges to Capital (604) Net Funding Shortfall (1,407) 3.6.2 Work has been undertaken, as part of the Review of Capital Arrangements, to establish the capacity within existing available revenue resources (annual debt charges budget and reserves earmarked for capital purposes) to support additional capital investment. Detailed information in this respect is included within the Capital Arrangements Review Update report. 3.6.3 Council officers have considered the investment priorities set out at Section 3.5, in light of the overall remaining capacity to support additional capital expenditure, after providing for the funding shortfall outlined at paragraph 3.6.1. New investment proposals in this respect, as outlined within the Capital Arrangements Review Update report, for consideration by members, are as follows: • £18m Continued additional investment in Roads Infrastructure across 2026-27 and 2027-28 (£9m each year), to maintain the current standard; • £2.5m Depot Rationalisation, in addition to essential building replacement works, outlined at paragraph 3.2.2; subject to business case approval; • £1.8m Provision for Kilmory Redevelopment, in addition to the essential legislative compliance works, outlined at paragraph 3.2.2, subject to business case approval; • £7m Increased provision, based on current affordability, in respect of the authority’s contribution to a potential LEIP funded school; and • £1.9m A816 Millbrae Landslip from existing Severe Weather earmarked reserves and Capital Plan resources. 3.6.4 These proposals, together with the funding shortfall outlined at paragraph 3.6.1, would be funded from a combination of new borrowing and the use of existing reserves earmarked for capital purposes, in line with the flexibility exercised by the Section 95 Officer within the capital funding framework, as outlined within the Capital Arrangements Review Update report. There is no forecast impact on the revenue budget over the short to medium term in this respect. 3.6.5 The estimated gross capital expenditure and borrowing requirement over 2026- 27 and future years, arising from the updated Capital Plan and providing for new investment proposals, are reflected within the Capital and Prudential Indicators, set out within the council’s 2026-27 Treasury Management Strategy. Revenue implications of borrowing in respect of future debt repayments are provided for within the council’s revenue budget forecasts for 2026-27 and future years 3.6.6 There is also an opportunity to fund further capital investment through additional borrowing. However, the revenue consequences, in terms of increased debt charges, would require to be accounted for as part of the annual revenue budget for 2026-27 and across future years. For illustrative purposes, every
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£1m of additional borrowing for capital purposes creates an annual revenue budget pressure of circa. £0.065m, on average. Measures to manage a resulting increased budget gap would include additional revenue budget savings or a greater increase in Council Tax levels. 3.7 Capital Plan Risks 3.7.1 The Finance Circular 1/2026 received on 13 January 2026 provided details of Scottish Government grant funding for 2026-27. There is, therefore, a degree of certainty in respect of General Capital Grant funding for 2026-27, with 2027-28 funding assumed at the same level. At the time of writing, the council’s share of an additional £20m Climate Emergency Fund, to be paid as General Capital Grant in 2026-27, has still to be confirmed. The Capital Plan has assumed additional funding of £0.482m in this respect for 2026-27 only. Any variation in the allocation of 2026-27 Climate Emergency Funding, or in the available 2027- 28 General Capital Grant, from these assumptions will require to be managed within the overall Capital Plan resources. 3.7.2 The funding framework for the approved Capital Plan includes capital receipts from asset sales, estimated at £2.0m over the 2 years 2026-28, profiled £1.5m 2026-27 and £0.5m 2027-28. This is based on an assessment provided by the Estates Team in January 2026. However, it should be noted that this is largely predicated on a single significant sale value being delivered in 2026-27. The level of receipts that may reasonably be achieved will be kept under review, to reflect changing market conditions and due diligence undertaken on asset condition. Any variation from this assumption will require to be managed within the overall Capital Plan resources. It is generally the case that the capital programme experiences slippage throughout the year and as such, this risk is expected to be manageable. 3.7.3 The overall funding framework for capital and the affordability of capital investment is based on a set of assumptions in respect of several variables, which will continue to be subject to change on an ongoing basis, for example, slippage in the delivery of capital projects or changes to interest rate forecasts. The Section 95 Officer will require to take a strategic approach and exercise flexibility within the capital funding framework, in order to manage the impact of investment decisions on the annual revenue budget and in the context of safeguarding the council’s longer term financial sustainability. 3.7.4 As capital project approvals are based largely on early indicative cost estimates, there is a risk that actual costs will be more than originally planned, particularly in the current economic climate and where there has been unavoidable project delays. The capital programme continues to be subject to significant inflationary price increases, supply chain issues and longer lead in times, due to the impact of world events on the global economy. Whilst these impacts have been managed to date within available resources, there are likely to be other significant cost pressures in respect of projects, where contracts have yet to be entered into, which are not quantifiable, at this stage. It will be challenging to manage these impacts within available resources and target completion timescales. Actions to manage financial risk within available resources may include re-profiling, project redesign, re-engineering or curtailment, and the re- prioritisation of uncommitted resources across the programme.
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3.7.5 The council’s funding bid to the Scottish Government’s Learning Estate Investment Programme (LEIP) for a new school campus on Mull was successful. While this is good news and will provide welcome investment in the school estate, it will not meet the full cost of the project. The funding gap requires to be met by the council and presents a financial pressure. The Scottish Government will fund up to 50% of eligible costs, with the balance of circa. £20m to be funded by the council. To date, the council has earmarked reserves totalling £9m in this respect. Further consideration will be given to augmenting the current level of provision towards the council’s funding contribution, as part of the 2026-27 budget process. 3.7.6 There is a risk of further severe weather incidents, requiring both revenue and capital expenditure to be incurred. Whilst there may be additional funding available through the Bellwin Scheme, this is limited to eligible revenue expenditure only. As part of the 2025-26 budget process, £2.9m was provided for in respect of Severe Weather, with £0.9m specially reflected within the current approved Capital Plan. However, the Capital Plan 2026-28 Update includes proposals for the use of these resources in respect of the A816 Millbrae Landslip (£1.9m), subject to member approval, which would significantly deplete the current level of provision. This risk is considered as part of the council’s policy on the level of the general contingency balance held within the unallocated General Fund reserve. 3.7.7 The monitoring and review of these risks will continue to be undertaken on an ongoing basis, with actions put in place to continue to mitigate or manage these risks, as far as possible. Actions to manage financial risk within available resources may include re-profiling; project redesign, re-engineering or curtailment, and the re-prioritisation of uncommitted resources across the programme. An update on risks will be reported regularly to Policy and Resources Committee, as part of future Capital Plan monitoring reports. 3.8 Opportunities for Improvement 3.8.1 As part of the 2025-26 Budget Pack reported to Council in February 2025, members noted that a review of capital arrangements would be undertaken during the year. A separate Capital Arrangements Review Update report, outlining progress to date, has been provided as part of the 2026-27 Budget Pack. Whilst a number of elements have progressed, further work will be required during 2026-27, subject to available resources, to deliver the full range of desired outcomes, as set out in the February 2025 report. Details of further opportunities still to be progressed are outlined in the Review Update report. 4. CONCLUSION 4.1 An update to the previous 3 year Capital Plan 2025-28 has been provided in respect of the remaining 2 years, 2026-28. Proposals for future years beyond 2027-28 have not been brought forward, at this stage, pending the outcome of the wider review of current capital arrangements. Updated funding assumptions and new spend commitments have been reflected in the updated Capital Plan 2026-28.
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4.2 After taking account of the additional capital resources available from General Capital Grant and Asset Sales, there is a shortfall of £1.407m in the funding available to meet new capital commitments. However, a review of the capacity within existing resources to support further investment has been undertaken and it will be possible for this to be managed within existing resources. It has also been possible to bring forward proposals for additional investment in council service priorities, in light of the capacity within existing resources, for consideration by members. There is also an opportunity to augment the level of new investment in the highest priorities through additional borrowing, as set out at paragraph 3.6.6 of the report. 4.3 There are a number of Capital Plan risks that require to be monitored and reviewed on an ongoing basis, and which will require to be managed within available resources. 4.4 Further opportunities to enhance current capital arrangements will continue to be progressed throughout 2026-27. 5. IMPLICATIONS 5.1 Policy – Sets out the approach to capital planning. 5.2 Financial – Outlines the planned capital investment and funding for the capital planning period 2026-28. 5.3 Legal - Statutory and Regulatory requirements in relation to Health and Safety have been provided for within capital spending plans. 5.4 HR - There are risks that the funding available will have an impact on the sustainability of the Property Design Team and the design team within Roads and Amenity Services. 5.5 Customer Service – None specifically from this report. 5.6 Risk - There are a number of risks impacting the delivery of the Capital Plan within available resources and target timescales, which require to be monitored on an ongoing basis. 5.7 Climate Change – The council is committed to addressing climate change, within the available budget resources. 5.8 Fairer Scotland Duty - Impacts will be considered, as appropriate. 5.9 Equalities – Protected characteristics - Impacts will be considered, as appropriate. 5.10 Consumer Duty – Impacts will be considered, as appropriate. 5.11 Island Communities – Impacts will be considered, as appropriate. 5.12 Children’s Rights and Wellbeing - None specifically from this report.
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Kirsty Flanagan Section 95 Officer 11 February 2026 Councillor Ross Moreland - Policy Lead for Finance and Commercial Services APPENDICES: Appendix 1 - Proposed Asset Disposals Appendix 2 - Proposed Capital Plan Gross Expenditure 2026-28 For further information please contact: Carolyn Earl, Head of Financial Services (Consultant) carolyn.earl@argyll-bute.gov.uk
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Appendix 1 - Proposed Asset Disposals 2026-28 Property Land at Former Police Station, Garelochhead Ground at Baliscate Roads Depot, Tobermory Former Erray Road Depot, Tobermory Shop, 3 Montague Street, Rothesay Rothesay Academy (former) Ardchonnel Primary School Hill Street Office, Dunoon Former Registrar Office, Witchburn Road, Campbeltown Former Finance Office, Witchburn Road site, Campbeltown Former Lochgilphead Primary School and Whitegates, Lochgilphead Land at Broom Road, Rosneath Former Girl Guide Hut, Dunclutha Lane, Dunoon Blairvadach site, Shandon, Helensburgh (Phase 2) Minard Primary School Hermitage Primary School, Helensburgh - Annex site Lorn House, Oban Helensburgh Waterfront - Commercial area Kilchrenan Primary School Area of ground adjoining Pier House Fionnphort, Isle of Mull Dolphin Hall, Dunoon Sites on Tiree / Coll Luing Primary School Ground at 125 Frederick Crescent, Bowmore Dunclutha Children's Home (former), Dunoon Note: Estimated sale values are not separately disclosed due to commercial sensitivity.
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APPENDIX 2 Proposed Capital Plan Gross Expenditure Service Category Project 2026-27 £000s 2027-28 £000s Future Years £000s Total £000s Central Asset Sustainability Central Storm Provision 0 0 0 0 Financial Services - Recharges for Capital Plan Delivery 160 160 0 320 Asset Sustainability Total 160 160 0 320 Central Total 160 160 0 320 CHORD Strategic Change CHORD - Rothesay 11,523 0 0 11,523 Kilmory Business Park Phase 2AA 18 0 0 18 Strategic Change Total 11,541 0 0 11,541 CHORD Total 11,541 0 0 11,541 DEG Service Development Arinagour, Coll - Site Investigation -20 0 0 -20 Dunoon STEM Hub 1,750 0 0 1,750 Nature Restoration Fund 270 0 0 270 Rural Growth Deal 112 112 0 224 Active Travel Route Design and Planning 367 0 0 367 Service Development Total 2,479 112 0 2,591 Strategic Change 01 TIF - Lorn/Kirk Road 0 0 0 0 09 TIF - Oban Airport Business Park 0 0 0 0 Oban Business Park - Buliding Costs (Not TIF Funded) 0 0 0 0 TIF - Halfway House Roundabout 524 0 0 524 Strategic Change Total 524 0 0 524 DEG Total 3,003 112 0 3,115 Education Asset Sustainability Block Allocation - Education 1,988 1,988 0 3,976 Free School Meals 297 0 0 297 Primary Schools 0 0 0 0 Secondary Schools 0 0 0 0 Asset Sustainability Total 2,285 1,988 0 4,273 Service Development Bowmore Primary School - Gaelic Medium Grant 0 0 0 0 Early Learning and Childcare - 1140 Hours 174 0 0 174 Service Development Total 174 0 0 174 Strategic Change Campbeltown Schools Redevelopment 38 0 0 38 Dunoon Primary School 220 0 0 220 Kirn Primary School 34 0 0 34 Mull Joint Campus 358 0 0 358 Replacement of Oban High School 406 0 0 406 Learning Estate Investment Fund 0 8,000 0 8,000 Strategic Change Total 1,056 8,000 0 9,056 Education Total 3,515 9,988 0 13,503 HSCP Asset Sustainability Ardfenaig 0 0 0 0 Block Allocation - HSCP 0 382 0 382 Eadar Glinn 0 0 0 0 Glencruitten Hostel 0 0 0 0 Greenwood/Woodlands 0 0 0 0 East King Street 0 0 0 0 Kintyre Care Home 519 0 0 519 Lochgilphead Resource Centre 0 0 0 0
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Proposed Capital Plan Gross Expenditure Service Category Project 2026-27 £000s 2027-28 £000s Future Years £000s Total £000s Shellach View 0 0 0 0 Struan Lodge 641 0 0 641 Thomson Home Rothesay 720 0 0 720 Tigh An Rudha HFE 0 0 0 0 Asset Sustainability Total 1,880 382 0 2,262 Service Development Dunclutha Childrens Home 0 0 0 0 Service Development Total 0 0 0 0 HSCP Total 1,880 382 0 2,262 ICT Asset Sustainability Block Allocation - ICT 820 688 0 1,508 PC Replacement 0 0 0 0 Server Sustainability 0 0 0 0 Telecomms Network 0 0 0 0 Asset Sustainability Total 820 688 0 1,508 ICT Total 820 688 0 1,508 Live Argyll Asset Sustainability Aqualibrium 0 0 0 0 Block Allocation - Live Argyll 382 382 0 764 Corran Halls Gaelic Centre 86 0 0 86 Lochgilphead Community Ed Centre 0 0 0 0 Queen's Hall - Legionella Works 0 0 0 0 Riverside Leisure Centre 0 0 0 0 Rothesay Swimming Pool 0 0 0 0 The Moat Centre 0 0 0 0 Victoria Halls, Helensburgh 0 0 0 0 Asset Sustainability Total 468 382 0 850 Service Development Riverside Leisure Centre Refurbishment 0 0 0 0 Service Development Total 0 0 0 0 Strategic Change Carbon Management 0 0 0 0 Strategic Change Total 0 0 0 0 Live Argyll Total 468 382 0 850 RIS Asset Sustainability Block Allocation - RIS 3,677 3,823 0 7,500 Bridge Strengthening 773 0 0 773 Coastal Change Adaptation 250 0 0 250 Coastal Protection 0 0 0 0 Environmental Projects 597 0 0 597 EV Quick Chargers 0 0 0 0 Flood Prevention 379 156 0 535 Footway Improvements 0 0 0 0 Gartbreck - Capping 0 0 0 0 Helensburgh Flood Mitigation 0 0 0 0 Lighting 0 0 0 0 Local Bridge Maintenance Fund 4,344 0 0 4,344 Play Park Renewal 379 0 0 379 POPs Waste 0 0 0 0 Public Convenience Upgrades 0 0 0 0 Roads Reconstruction 0 0 0 0 Roads Safety and Improvement Fund 0 0 0 0
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Proposed Capital Plan Gross Expenditure Service Category Project 2026-27 £000s 2027-28 £000s Future Years £000s Total £000s Tobermory Car Park 96 0 0 96 Asset Sustainability Total 10,495 3,979 0 14,474 Service Development Bus Infrastructure Fund 414 0 0 414 Depot Rationalisation 0 0 0 0 EV Infrastructure Fund 0 0 0 0 Fleet Management 0 0 0 0 Fleet Management - Prudential Borrowing 0 0 0 0 Lochgilphead Depot Rationalisation 1,159 0 0 1,159 Oban Depot Development 0 0 0 0 Weather Incident 1,000 0 0 1,000 Service Development Total 2,573 0 0 2,573 Strategic Change Campbeltown Flood Scheme 711 0 0 711 Harbour Investment Programme Non PB 5,540 14,250 0 19,790 Harbour Investment Programme PB 12,775 45,000 43,390 101,165 Street Lighting LED Replacement 0 0 0 0 Strategic Change Total 19,026 59,250 43,390 121,666 RIS Total 32,094 63,229 43,390 138,713 Shared Offices Asset Sustainability 5-7 East Clyde Street - Coastal Communities Fund 384 0 0 384 Argyll House, Dunoon 0 0 0 0 Block Allocation - Shared Offices 746 382 0 1,128 Burnett Building 0 0 0 0 Graham Williamson IT Building 0 0 0 0 Helensburgh and Lomond Civic Centre 0 0 0 0 Kilmory Castle 3,763 0 0 3,763 Our Modern Workspace 218 0 0 218 Asset Sustainability Total 5,111 382 0 5,493 Strategic Change Campbeltown Office Rationalisation 0 0 0 0 Clean Energy - NDEEF1 238 0 0 238 Clean Energy - NDEEF2 1,140 0 0 1,140 Helensburgh Office Rationalisation (FPB,REC) 300 0 0 300 Net Zero 256 0 0 256 Strategic Change Total 1,934 0 0 1,934 Shared Offices Total 7,045 382 0 7,427 Overall Total 60,526 75,323 43,390 179,239