Budget Outlook 2026-27 to 2030-31
Argyll and Bute Council · 9 October 2025
Back to Policy and Resources Committee — 9 October 2025 and its agenda
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ARGYLL AND BUTE COUNCIL POLICY AND RESOURCES COMMITTEE FINANCIAL SERVICES 9 OCTOBER 2025 BUDGET OUTLOOK 2026-27 TO 2030-31 1. EXECUTIVE SUMMARY 1.1 This report summarises the Budget Outlook for the 5-year period 2026-27 to 2030-31 and provides an update to the position previously reported to the Policy and Resources Committee in August 2025. It is underpinned by planning assumptions that will continue to be updated and refined, on an ongoing basis, throughout the year. 1.2 The Budget Outlook has been prepared using three different scenarios, best case, worst case and mid-range. The detailed information contained within the report focusses primarily on the mid-range scenario, however, all three scenarios are outlined within Appendix 1. 1.3 1.4 1.5 1.6 There are no changes to suggested planning assumptions in respect of Scottish Government funding, ranging between an increase of 0.25% (best case) and a reduction of 0.75% (worst case), with a reduction of 0.25% in the mid-range scenario. Additional recurring Scottish Government funding to fully meet the increased cost of the 2025-26 pay award, in respect of both council and Social Work services, continues to be assumed for planning purposes, with additional funding in respect of the 2026-27 pay award assumed in the best case scenario only. Our current Budget Outlook also continues to assume that the Teachers pay award for 2025-26 and 2026-27 will be agreed at the same level as the agreed SJC and Chief Officers pay award, with additional match Scottish Government funding. However, this offer has initially been rejected by Trade Unions, representing a financial risk to our current planning assumptions. The Head of Local Government Finance recently confirmed the Scottish Government’s intention to provide multi-year budgets. This should provide a greater level of certainty in respect of our longer-term planning assumptions. However, it is also worth noting that, at the time of writing, the proposed timing of the Scottish Budget announcement is 15 January 2026. Although still to be confirmed, this prolongs the timescale for confirmation of the final budget gap. There are no changes to the previously reported updated planning assumptions in respect of Department of Environment, Food and Rural Affairs (DEFRA) funding available in respect of Packaging Extended Producer Responsibility. The funding allocation for 2025-26 has been confirmed at £2.786m, providing a reduced carry forward of £1.438m into 2026-27. It remains uncertain as to whether this funding will be recurring in 2026-27 and future years, without a reduction in Scottish Government grant. At this stage,
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funding is assumed to continue into 2026-27 and future years at the 2025-26 level in the best case, at 50% of the 2025-26 level in the mid-range and £nil in the worst case scenarios. Funding conditions and future years budget pressures remain unclear. 1.7 1.8 There are no changes to previous assumptions in respect of Council Tax growth. The Council Tax base is assumed to grow by 0.25% in the worst case, 0.5% in the mid-range and 0.75% in the best case scenarios. The 2024-25 final outturn included additional income of £1.234m in respect of 2024-25 and prior years, an element of which was expected to be recurring in 2025-26 and future years. A more sophisticated financial modelling tool has now been developed to assist with Council Tax income projections. However, there is currently a significant level of uncertainty in respect of the classification of self-catering units as either non-domestic or domestic dwellings, and the implications for council tax income, presenting a risk to financial planning assumptions. At this stage, a re-base of the current Council Tax budget, estimated at £0.500m in the mid-range scenario (£0.250m in the worst case and £0.750m in the best case scenarios) continues to be assumed within the Budget Outlook. This position will be subject to ongoing review and refinement throughout the year. 1.9 There has been no change to the following employee costs assumptions since last reporting: • An increase of 4% for 2025-26 and 3.5% for 2026-27 across all scenarios, 3% for 2027-28 in both the best case and mid-range scenarios, with 5% assumed in the worst case scenario. For 2028-29 and 2029-30, the best case scenario has been reduced to 2%, while the mid-range remains at 3% and worst case remains at 5%. • The Teachers pay award now covers the period August to July and has already been agreed up to 31 July 2025. At this stage, an increase for 2025-26 and 2026-27 has been assumed in line with the SJC agreed pay award. However, this is still at a negotiating stage. Any increase beyond planning assumptions will have a further impact on the base budget and Budget Outlook position. • The cost of pay increments for 2025-26 is estimated at £0.599m. For future years, an equivalent cost has been assumed in the mid-range and worst case scenarios, while half the estimated 2025-26 cost has been assumed in the best case scenario. 1.10 For non-pay inflation, only unavoidable inflation has been provided for within each scenario, with the mid-range scenario based on current market forecast data, where available. A further general inflation contingency has been built into the mid-range and worst case scenarios. This position continues to be monitored in light of market volatility. However, at this stage, given prevalent levels of uncertainty, there continues to be no change to the inflationary assumptions included within the 2025-26 Budget Pack.
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1.11 There are a number of cost and demand pressures for council services built into each scenario, across all five years, comprising the following: • ASN Support • School Clothing Grants • Schools Residential • Education ICT Network Infrastructure • Election Costs • Planning (Local Development Plan) • Universal Credit – HB Admin grant • Civica Revenue and Benefits Management System • Microsoft 365 Licenses • Compliance with BMW Ban • Bus Transport Contracts • Valuation Joint Board • Security Operations Centre Contract Renewal • Wi-Fi Network Subscription 1.12 In addition to the identified cost and demand pressures, a general allowance for currently unforeseen or unquantifiable cost and demand pressures continues to be included in each scenario (best case £0.250m, mid-range £0.500m and worst case £1m per year). 1.13 Political decisions will require to be made in respect of the allocation to the Health and Social Care Partnership in future years, subject to Scottish Government grant funding and the council’s overall financial position. As part of the 2025-26 budget process, indicative base allocations of £85.045m were agreed for 2026-27 and 2027-28, subsequently updated in respect of the 2025- 27 pay award and funding assumptions. The current and forecast financial position of the HSCP represents a significant risk to the council. 1.14 The updated budget gap in the mid-range scenario, prior to measures to balance the budget, either from previous savings decisions or new potential options, is estimated at £15.485m in 2026-27 and £58.346m over the five year period 2026-27 to 2030-31. 1.15 The measures to balance the budget over the next five years remain as follows: • Proposed increases to fees and charges of between 3% and 9% each year (6% mid-range). • Proposed increases to Council Tax at 5% each year across all scenarios. • Management/Operational and Policy savings already agreed by Council in February 2025 and previous years. 1.16 The updated budget gap in the mid-range scenario, after measures to balance the budget, is estimated at £10.586m in 2026-27 and £33.858m over the five year period 2026-27 to 2030-31.
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1.17 The updated budget gap in the best case scenario is estimated at £4.543m in 2026-27 and £10.725m over five years, increasing to £15.706m in 2026-27 and £65.565m over five years in the worst case scenario. A summary of all three scenarios is included within Appendix 1. 1.18 It is recommended that the Policy and Resources Committee consider the current Budget Outlook position for the period 2026-27 to 2030-31.
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ARGYLL AND BUTE COUNCIL POLICY AND RESOURCES COMMITTEE FINANCIAL SERVICES 9 OCTOBER 2025 BUDGET OUTLOOK 2026-27 TO 2030-31 2. INTRODUCTION 2.1 This report summarises the Budget Outlook for the 5-year period 2026-27 to 2030-31 and provides an update to the position previously reported to the Policy and Resources Committee in August 2025. It is underpinned by planning assumptions that will continue to be updated and refined, on an ongoing basis, throughout the year. It should be noted that relatively small variations in planning assumptions can lead to fairly significant changes to the budget forecast outcome. 2.2 The Budget Outlook has been prepared using three different scenarios, best case, worst case and mid-range. The detailed information contained within the report focusses primarily on the mid-range scenario, however, all three scenarios are outlined within Appendix 1. 3. RECOMMENDATIONS 3.1 It is recommended that the Policy and Resources Committee consider the current Budget Outlook position for the period 2026-27 to 2030-31. 4. DETAIL 4.1 Funding Scottish Government Finance Settlement 4.1.1 4.1.2 Estimated future Scottish Government funding levels is one of the key assumptions under- pinning the Budget Outlook. Whilst council’s are recommended to prepare longer-term financial plans, with a focus on financial sustainability, this is more challenging with one year only finance settlements. Council’s have continued to lobby via COSLA for multi-year settlements to assist with longer-term financial planning. The Head of Local Government Finance recently confirmed the Scottish Government’s intention to provide 3-year revenue and 5-year capital grant figures, albeit the level of detail remains to be clarified. This is very welcome and should provide a greater level of certainty in respect of our Budget Outlook planning assumptions. However, it is also worth noting that, as a result of the delayed UK budget announcement (now confirmed as 26 November), at the time of writing, the proposed timing of the Scottish Budget announcement is 15 January 2026. Although this timescale has still to be confirmed, given that the level of government grant funding is a key assumption within our Budget Outlook, this prolongs the period of funding uncertainty and confirmation of the budget gap.
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4.1.3 4.1.4 There are no changes to Scottish Government grant funding assumptions since last reporting. As part of the 2025-26 budget setting process, members were advised that despite an unexpected effective increase of 1.47% in our 2025-26 settlement, it would be imprudent to assume similar increases in future years, with increases over the previous 3 years being as low as 0.01%. Current suggested planning assumptions are for a Scottish average increase in Scottish Government funding of 0.5% for the mid-range, with a variation of 0.5% for the best and worst case scenarios. As this council relies on the floor mechanism to protect its funding level, our settlement is lower than the Scottish average change. The floor was set at 0.75% below the Scottish average in 2025-26 and is likely to continue at this level. As such, funding assumptions for this council range between an increase of 0.25% (best case) and a reduction of 0.75% (worst case), with a reduction of 0.25% in the mid-range scenario. Additional recurring funding to fully meet the increased cost of the 2025-26 pay award, in respect of both council and Social Work services, continues to be assumed for planning purposes, with additional funding in respect of the increased cost of the 2026-27 pay award assumed in the best case scenario only. Our current Budget Outlook also continues to assume that the Teachers pay award for 2025-26 and 2026-27 will be agreed at the same level as the agreed SJC and Chief Officers pay award, with additional match Scottish Government funding. However, this offer has initially been rejected by Trade Unions, representing a financial risk to our current planning assumptions. 4.1.5 The table below summarises the mid-range scenario estimates based on a 0.25% settlement reduction year on year. This includes additional funding in respect of the agreed 2025-26 pay award for SJC and Chief Officers, and assumed for Teachers, in respect of both council and HSCP staff (Social Work services). 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 SG Funding - Base 261,058 260,406 259,755 259,106 258,459 2025-26 Pay Award 2,305 2,300 2,294 2,288 2,282 Total SG Funding 263,363 262,706 262,049 261,394 260,741 4.1.6 As part of the 2025-26 budget process, £2.499m of the estimated 2025-26 funding available in respect of Packaging Extended Producer Responsibility from the Department of Environment, Food and Rural Affairs (DEFRA) was carried forward into 2026-27. As previously reported, the funding allocation for 2025-26 has been confirmed at £2.786m, £1.061m less than the original estimate provided by DEFRA of £3.847m, reducing the carry forward into 2026-27 to £1.438m. It remains uncertain as to whether this funding will be recurring in 2026-27 and future years, without a reduction in Scottish Government grant. At this stage, funding is assumed to continue into 2026-27 and future years at the 2025-26 level in the best case, at 50% of the 2025-26 level in the mid-range and £nil in the worst case scenarios. Funding conditions and future years budget pressures remain unclear. Council Tax 4.1.7 The Council Tax base for 2025-26 is set at £70.204m, which reflects the 9.9% increase agreed by the Council on 27 February 2025.
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4.1.8 4.1.9 4.1.10 There are no changes to previous assumptions around the growth in Council Tax. It has been assumed that there will be 0.5% growth in the mid-range scenario for all years from 2026-27 (0.75% in the best and 0.25% in the worst case scenarios). Following the setting of Council Tax in February, the future years estimates have been updated reflecting the adjusted base Council Tax budget. The 2024-25 final outturn included additional income of £1.234m in respect of 2024-25 and prior years, an element of which was expected to be recurring in 2025-26 and future years. A more sophisticated financial modelling tool has now been developed to assist with Council Tax income projections. However, a significant element of the 2024-25 additional income (some £0.5m) related to the reclassification of self-catering units as domestic dwellings by the Assessor, following completion of both the 2022-23 and 2023-24 canvasses during the year, which saw the transfer of properties from the Non-domestic Rates to Council Tax registers. There is a significant level of uncertainty in respect of the regulatory environment in relation to self-catering units, with a risk of appeals being granted and properties returning to Non-domestic Rates. This uncertainty in respect of both timing and financial value, presents a risk to financial planning assumptions. At this stage, a re-base of the current Council Tax budget, estimated at £0.250m in the worst case, £0.500m in the mid-range and £0.750m in the best case scenarios, continues to be assumed within the Budget Outlook. This position will be subject to ongoing review and refinement throughout the year. 4.1.11 In the first instance, this report presents the budget gap, prior to any measures to balance the budget. For this purpose, Council Tax is assumed to remain at the same levels as 2025-26, with only growth in the Council Tax base reflected. General Fund 4.1.12 As reported in prior years, reduced employer contribution rates payable to Strathclyde Pension Fund will result in one-off savings in 2024-25 and 2025-26. It was agreed by Council in February 2024 that £2m of the pension fund gain would be released each year for a period of 3 years (2024-25 through to 2026-27), in order to help bridge the budget gap. Funding Summary 4.1.13 The following table summarises the estimated total funding in the mid-range scenario over the 5 years 2026-27 to 2030-31, unchanged from the previously reported position. 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 SG Funding 263,363 262,706 262,049 261,394 260,741 EPR – DEFRA Funding 1,393 1,393 1,393 1,393 1,393 EPR – 2025-26 Funding C/fwd 1,438 0 0 0 0 Released SPF Gain 2,000 0 0 0 0 Council Tax Base 70,204 70,204 70,204 70,204 70,204
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Council Tax Re-base 500 500 500 500 500 Council Tax Growth 354 709 1,066 1,425 1,786 Total Estimated Funding 339,252 335,512 335,212 334,916 334,624 4.2 Base Budget 4.2.1 The 2025-26 budget approved by Council on 27 February 2025 was £328.289m. This included the 2025-26 debt charge implications of approved borrowing for additional capital investment. There was also a decision to defer a policy saving in respect of Community Sports until 2026-27 onwards. As previously reported, the full year effect of these previous budget decisions on 2026-27 and future years are incorporated as base budget adjustments. 4.2.2 The revised base budget is unchanged from the previously reported position, as outlined in the table below. 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 Base Budget 2025-26 328,289 328,289 328,289 328,289 328,289 Debt Charges Increase 95 95 95 95 95 Approved Policy Savings (20) (20) (20) (20) (20) Revised Base Budget 328,364 328,364 328,364 328,364 328,364 4.3 Employee Cost Changes Pay Award 4.3.1 4.3.2 The Public Sector Pay Policy, published alongside the Scottish Budget, set out a multi- year framework of a 9% pay envelope covering 2025-26, 2026-27 and 2027-28. This underpinned our original planning assumption of 3% across each of these years. However, following agreement of the SJC and Chief Officers pay award for 2025-26 and 2026-27 at 4% and 3.5% respectively, these assumptions were subsequently updated. There have been no further changes to pay assumptions since last reporting. An increase of 4% for 2025-26 and 3.5% for 2026-27 across all scenarios, 3% for 2027-28 in both the best case and mid-range scenarios, with 5% in the worst case scenario has been assumed (at this stage, at 2025-26 prices). For 2028-29 and 2029-30, the best case scenario has been reduced to 2%, while the mid-range remains at 3% and worst case remains at 5%. 4.3.3 The Teachers pay award now covers the period August to July and has already been agreed up to 31 July 2025. At this stage, an increase for 2025-26 and 2026-27 has been assumed in line with the SJC agreed pay award. However, this is still at a negotiating stage and represents a financial risk to our planning assumptions. Any increase beyond planning assumptions will have a further impact on the base budget and Budget Outlook position.
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Increments 4.3.4 4.3.5 There remains a fairly regular turnover of staff within posts and when this happens, the cost of increments can, in some cases, be absorbed within the existing budget provision, as leavers who may be at the top their grade may be replaced by new starts at the grade entry point. The cost of pay increments for 2025-26 continues to be estimated at £0.599m. For future years, an equivalent cost has been assumed in the mid-range and worst case scenarios, while half the estimated 2025-26 cost has been assumed in the best case scenario. 4.3.6 Strathclyde Pension Fund As previously reported, the employer contribution rate paid to the Strathclyde Pension Fund fell from 19.3% to 6.5% in 2024-25 and 2025-26, rising to a sustainable long-term rate of 17.5% from 2026-27. The reduction in the first 2 years equates to reduced costs of £6.875m per annum relating to council employees (excluding HSCP). The increased cost to 17.5% from 2026-27 has been built into projections for 2026-27 and future years. Employee Costs Summary 4.3.7 The table below summarises the employee cost changes in the mid-range scenario, for council services, over the five years 2026-27 to 2030-31, unchanged from the previously reported position. Employee cost increases relating to Social Work within the Health and Social Care Partnership are summarised within paragraph 4.6.6. 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 Pay Award 7,346 12,124 17,046 22,115 27,337 Full Year Effect 2025-26 Teachers Pay Award 661 661 661 661 661 Increments 599 1,198 1,797 2,396 2,995 Reinstatement of SPF contribution 6,875 6,875 6,875 6,875 6,875 Total Employee Cost Changes 15,481 20,858 26,379 32,047 37,868 4.4 Non-Pay Inflation 4.4.1 4.4.2 Non-pay inflation is only provided for within budget plans, where it is deemed to be unavoidable, for example in respect of contractual obligations. As not all budget elements are subject to inflationary increases, inflationary budget pressures may arise in some other areas and in order to manage spend within available budget resources, service rationalisation or efficiencies may require to be delivered. The Budget Outlook provides for unavoidable non-pay inflation within each budget scenario. Market forecast data, where available, is used to inform the mid-range scenario. Officers continue to review inflation assumptions on an ongoing basis, however, due to prevalent market volatility and levels of uncertainty, at this stage, there continues to be no change to the inflationary assumptions included within the 2025-26 Budget Pack.
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4.4.3 4.4.4 4.4.5 In addition, due to prevailing levels of economic uncertainty, it continues to be deemed prudent to include a further general inflation contingency within the mid-range and worst case scenarios at £250k and £500k each year respectively. This contingency will either be required, reduced or removed to reflect changing circumstances before the 2026-27 budget is set. The estimated cumulative inflation over the five years 2026-27 to 2030-31 in the mid-range scenario is outlined in the table below. Non-Pay Inflation (Unavoidable) 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 2,745 5,632 8,676 11,890 15,140 An analysis of the 2026-27 cost estimate in respect of the mid-range scenario across key inflationary drivers is given in the table below. The non-pay inflationary increases relating to Social Work within the Health and Social Care Partnership are summarised within paragraph 4.6.6. Inflation Category 2026-27 Estimate £000 Premises and Utilities (Rates, Electricity, Gas, Oil, Water) 280 Waste/Landfill Tax 335 NPDO/HUB Schools 382 Other Contracted Services 883 Insurance 414 Other Supplies and Services 201 General Contingency 250 Total 2,745 4.5 Cost and Demand Pressures 4.5.1 4.5.2 For a number of years, services have been required to manage any cost and demand pressures within current budgetary resources, as far as possible. However, there are several cost and demand pressures, already identified for future years, which cannot be contained without a detrimental impact on service provision. These continue to be monitored on an ongoing basis and reported within the Budget Outlook. Since last reporting in August, the cost and demand pressures have been updated to include emerging and increasing budget pressures identified in respect of Bus Transport Contracts, Security Operations Centre Contracts and Wi-Fi Network Subscription License Costs. In addition, it has been possible to remove the previously reported budget pressure in respect of Migration to Teams, confirmed as superseded by the existing Microsoft 365 Licenses budget pressure. 4.5.3 When creating a longer-term budget outlook beyond the current year, there is a greater
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risk that currently unforeseen or unquantifiable cost and demand pressures will emerge across future years. It is, therefore, deemed prudent to continue to include a general contingency, proposed at £0.250m, within the best case, £0.500m within the mid-range and £1m within the worst case scenarios year on year. This contingency will either be required, reduced or removed to reflect changing circumstances before the 2026-27 budget is set. 4.5.4 The cost and demand pressures within the mid-range scenario are detailed in Appendix 2 and summarised in the table below. These will continue to be subject to ongoing review throughout the financial year. 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 ASN Support 208 422 422 422 422 School Clothing Grants 56 56 56 56 56 Schools Residential 800 800 800 800 800 Education ICT Network Infrastructure 0 53 53 53 53 Election costs 0 350 0 0 0 Planning (Local Development Plan) 50 0 0 0 0 Universal Credit – HB Admin Grant 40 80 120 160 200 Civica Revenue and Benefits System 0 63 63 63 63 Microsoft 365 Licenses 30 380 380 380 380 Compliance with BMW Ban 2,479 3,051 3,051 3,051 3,051 Bus Transport Contracts 400 400 400 400 400 Valuation Joint Board Requisition 255 301 301 301 301 Security Operations Centre Contracts 43 43 43 43 43 Wi-Fi Network Subscription License 15 58 58 58 58 Allowance for pressures in future years 500 1,000 1,500 2,000 2,500 Total Cost and Demand Pressures 4,876 7,057 7,247 7,787 8,327 4.5.5 The cost and demand pressures relating to Social Work within the Health and Social Care Partnership are summarised within paragraph 4.6.6. 4.6 Health and Social Care Partnership 4.6.1 As part of the 2025-26 budget process, indicative base allocations of £85.045m were agreed for 2026-27 and 2027-28, with future years’ allocations being subject to Scottish Government grant funding and the council’s overall financial position. The indicative base allocation for 2026-27 represents an increase of £3.053m, reflecting the non-recurring
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4.6.2 saving in relation to the Strathclyde Pension Fund contribution. As previously reported, the base allocations have been updated to reflect the impact of the agreed pay award for 2025-26 in respect of Social Work services, on the planning assumption that these additional costs, estimated at £0.411m, will be met by the council, with additional Scottish Government grant funding assumed in this respect. An update to the allocation in respect of the 2026-27 pay award (estimated at £0.206m), funded by additional Scottish Government grant funding, continues to be reflected in the best case scenario only. 4.6.3 4.6.4 4.6.5 4.6.6 Political decisions will require to be made in respect of the allocation to the Health and Social Care Partnership (HSCP) in future years. For the purposes of the Budget Outlook, flat cash allocations, adjusted for the Strathclyde Pension Fund saving and the 2025-27 pay award, continue to be assumed across all scenarios. These are only indicative planning assumptions and it will be a matter for Council to consider any changes, as part of the budget process. The HSCPs approved 2025-26 budget in respect of Social Work services included £0.500m of ‘unallocated savings’. In order to safeguard the financial position of the council, the council’s Section 95 Officer sought a financial recovery plan from the IJB, under the terms of the Integration Scheme, seeking assurance in respect of its current and future financial position. This recovery plan was approved by the IJB and reported to Council in June. The HSCP is currently forecasting an overspend of £0.668m for 2025-26 in respect of Social Work services. This includes assumptions on the delivery of savings totalling around £3m, including £0.500m in respect of previously ‘unallocated savings’. At this stage, the HSCP expect the forecast overspend to be maintained within available HSCP reserves, however, there is little headroom in this respect. The potential use of reserves in the current year will also have an impact on the forecast budget gap for 2026-27 and future years, not currently reflected within the HSCPs financial planning assumptions. In respect of the budget outlook for 2026-27 and future years, the HSCP is currently forecasting a budget gap in respect of Social Work services of £6.210m in 2026-27, rising to £11.248m by 2028-29. This reflects the required replacement of the £3.050m use of reserves in 2025-26 in respect of the pension fund saving, non-recurring in 2026-27, but does not yet reflect any further required use of remaining available reserves in 2025-26. The HSCP budget outlook also takes account of cost and demand pressures identified in respect of Social Work services and these are included as Appendix 3, with the mid-range scenario summarised below. These are provided for information purposes and extend to three years, rather than the five years of the council’s Budget Outlook. It is expected that the HSCP will manage these budget pressures within the funding allocated. 2026-27 £000 2027-28 £000 2028-29 £000 Pay Inflation 1,450 2,737 4,063 Pay Increments 198 396 594 Non-Pay Inflation 818 1,616 2,446 Adult Care - Older People 464 935 1,414 Adult Care – Mental Health 73 148 224
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4.6.7 Looked After Children 75 152 230 General Contingency 700 900 1,100 Total Social Work Cost and Demand Pressures 3,778 6,884 10,071 This financial outlook is extremely challenging, particularly given the significant depletion of HSCP reserve balances as at 31 March 2026. In engaging with the HSCP on the current and forecast financial position, the HSCPs Chief Financial Officer has advised in relation to the budget gap for 2026-27 and future years ‘Savings of the magnitude required cannot be delivered without recourse to reductions in employment and the scope and scale of services offered and supported by the HSCP. Savings proposals on this scale are anticipated to be damaging to services, communities and care capacity at a time when we know that demand is increasing and staffing shortages in some areas may also increase. There is a significant risk that implementation of many of the savings proposals will have impacts upon future statutory provision and could be counter productive in the medium term.’ 4.6.8 There is a significant risk to the council in respect of failure to manage the delivery of Social Work services within available resources. Under the terms of the Integration Scheme, any overspend on Social Work services, which cannot be met from existing reserve balances, may fall to be met by the council. In order to safeguard the council’s position, the financial position of the HSCP and related financial risk to the council will be closely monitored throughout the year. This will continue to form part of the regular reporting to Policy and Resources Committee in respect of the current year revenue budget monitoring and financial risks, as well as future iterations of this Budget Outlook report. 4.7 LiveArgyll 4.7.1 Political decisions will require to be made in respect of the allocation to LiveArgyll in future years. For the purposes of the Budget Outlook, flat cash allocations continue to be assumed across all scenarios, with the exception of previous budget decisions in respect of the Strathclyde Pension Fund adjustment relating to the cessation of the one-off employer contribution rate saving (£0.118m increase) and deferral of the 2025-26 proposed saving in the service fee to 2026-27 (£311k reduction). These are only indicative planning assumptions and it will be a matter for Council to consider any changes, as part of the budget process next year. 4.8 Estimated Budget Gap PRIOR to Measures to Balance the Budget 4.8.1 The updated budget gap in the mid-range scenario over the five years 2026-27 to 2030- 31, after allowing for the considerations outlined above and prior to measures to balance the budget, is outlined in the table below. This is the budget gap prior to factoring in any previous savings decisions or potential options towards balancing the budget. 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 Base Budget 328,289 328,289 328,289 328,289 328,289
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Base Budget Adjustments 75 75 75 75 75 Employee Cost Changes 15,481 20,858 26,379 32,047 37,868 Non-Pay Inflation 2,745 5,632 8,676 11,890 15,140 Cost and Demand Pressures 4,876 7,057 7,247 7,787 8,327 Adjustment to HSCP Payment 3,464 3,464 3,464 3,464 3,464 Adjustment to LiveArgyll Payment (193) (193) (193) (193) (193) Total Estimated Net Expenditure 354,737 365,182 373,937 383,359 392,970 Estimated Funding 339,252 335,512 335,212 334,916 334,624 Estimated Budget Surplus / (Gap) Cumulative (15,485) (29,670) (38,725) (48,443) (58,346) 4.9 Measures to Balance the Budget 4.9.1 In 2025-26, a general inflationary increase of 6% was applied to relevant fees and charges. For the Budget Outlook, a range of between 3% (worst case) and 9% (best case), with a mid-range of 6% continues to be assumed each year over the five years 2026-27 to 2030-31. Further, as a result of 2025-26 budget decisions taken by Council on 27 February 2025 to freeze fees on council-run ferries, as previously reported, the forecast income from fees and charges in future years has been slightly reduced. 4.9.2 As previously reported, some of the management/operational and policy savings options agreed at the Council meeting on 27 February 2025 and in previous years will impact the 2026-27 and future years budgets. These are reflected within the Budget Outlook over the five years 2026-27 to 2030-31. 4.9.3 In terms of Council Tax, a 5% increase continues to be assumed each year in all scenarios. The average increase in Council Tax across all Scottish councils in 2025-26 was 9.3%, with 13 increasing theirs by at least 10%. With a focus on longer term financial sustainability and in light of the significant forecast budget gap over the next five years, the level of Council Tax increases in 2026-27 and in future years will require due consideration by Members, as part of the budget setting for 2026-27 and future years. 4.9.4 The table below summarises the proposed measures to balance the budget in the mid- range scenario, unchanged from the previously reported position. 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 Fees and Charges Increase 382 787 1,217 1,672 2,155 Council Tax Increase 3,553 7,319 11,292 15,480 19,897 Management/Operational Savings (48) (9) (9) (9) (9) Policy Savings 1,012 1,748 2,217 2,331 2,445
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Total Measures to Balance the Budget 4,899 9,845 14,717 19,474 24,488 4.10 Estimated Budget Gap AFTER Measures to Balance the Budget 4.10.1 The table below summarises the updated estimated budget gap in the mid-range scenario. 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 Estimated Budget Gap Prior to Measures to Balance Budget (15,485) (29,670) (38,725) (48,443) (58,346) Measures to Balance Budget 4,899 9,845 14,717 19,474 24,488 Estimated Budget Surplus / (Gap) Cumulative (10,586) (19,825) (24,008) (28,969) (33,858) Estimated Budget Surplus / (Gap) In Year (10,586) (9,239) (4,183) (4,961) (4,889) 4.10.2 In the mid-range scenario, the updated budget gap is estimated at £10.586m in 2026-27 and £33.858m over the five year period 2026-27 to 2030-31. 4.10.3 The updated budget gap in the best case scenario is estimated at £4.543m in 2026-27 and £10.725m over five years, increasing to £15.706m in 2026-27 and £65.565m over five years in the worst case scenario. A summary of all three scenarios is included within Appendix 1. 4.10.4 The changes from the previous Budget Outlook in the mid-range scenario, reported to the Policy and Resources Committee in August 2025, are summarised in the table below. 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 Previously reported Budget Surplus / (Gap) Cumulative (10,459) (19,892) (24,075) (29,036) (33,925) Updates to Cost and Demand Pressures (127) 67 67 67 67 Revised Budget Surplus / (Gap) Cumulative (10,586) (19,825) (24,008) (28,969) (33,858) 5. CONCLUSION 5.1 In the mid-range scenario, the budget gap is now estimated at £10.586m in 2026-27 and £33.858m over the five year period 2026-27 to 2030-31. Council officers are continuing to explore budget savings options during 2025-26 and these will be presented to Members in due course.
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5.2 This is a very challenging Budget Outlook position. Variations to the assumptions, particularly in respect of future Scottish Government grant funding levels, would have a significant impact on the Budget Outlook. All assumptions will be kept under review, with the Budget Outlook updated, as and when further information becomes available. 6. IMPLICATIONS 6.1 Policy - Sets out the Budget Outlook that provides the financial envelope for policy decisions. 6.2 Financial - Sets best, worst and mid-range scenarios in respect of the Budget Outlook. The council are actively continuing to pursue opportunities to mitigate against future budget gaps. 6.3 Legal - None directly from this report but the Council requires to set a balanced budget. 6.4 HR - None directly from this report but there is a strong link between employee numbers and budgets. 6.5 6.6 Customer Service – Risk - None directly from this report but any proposals to address the estimated budget gap will require to consider customer service. None directly from this report but any proposals to address the estimated budget gap will require to consider risk. 6.7 6.8 6.9 Climate Change - Fairer Scotland Duty - Equalities – protected characteristics - The Council is committed to addressing climate change and reviews how Services are delivering this on an ongoing basis, within the available budget resources. None directly from this report but any proposals to address the estimated budget gap will require to consider fairer Scotland issues. None directly from this report but any proposals to address the estimated budget gap will require to consider equality issues. 6.10 Consumer Duty - None directly from this report but any proposals to address the estimated budget gap will require to consider any consumer specific issues. 6.11 6.12 Island Communities - Children’s Rights and Wellbeing - None directly from this report but any proposals to address the estimated budget gap will require to consider any island specific issues. None directly from this report but any proposals to address the estimated budget gap will require to consider any children’s rights and wellbeing specific issues. Kirsty Flanagan Executive Director/Section 95 Officer 9 September 2025 Councillor Ross Moreland, Policy Lead for Finance and Commercial Services
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APPENDICES: Appendix 1 – Budget Outlook - Best, Worst and Mid-range Scenarios Appendix 2 – Cost and Demand Pressures (Council Services) Appendix 3 – Cost and Demand Pressures (Social Work) For further information contact Carolyn Earl, Interim Head of Financial Services Carolyn.earl@argyll-bute.gov.uk
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BUDGET OUTLOOK 2026-27 to 2030-31 APPENDIX 1 Policy and Resources Committee - October 2025 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 Base Budget 328,289 328,289 328,289 328,289 328,289 328,289 328,289 328,289 328,289 328,289 328,289 328,289 328,289 328,289 328,289 Base Budget Adjustments 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 Revised Base Budget 328,364 328,364 328,364 328,364 328,364 328,364 328,364 328,364 328,364 328,364 328,364 328,364 328,364 328,364 328,364 Pay Award 7,346 12,124 15,405 18,752 22,166 7,346 12,124 17,046 22,115 27,337 7,346 15,353 23,761 32,589 41,859 Full year effect of 2025-26 pay award for teachers in 2026-27 661 661 661 661 661 661 661 661 661 661 661 661 661 661 661 Pay Increments 300 599 899 1,198 1,498 599 1,198 1,797 2,396 2,995 599 1,198 1,797 2,396 2,995 Re-instate Employers Superannuation Rate 6,875 6,875 6,875 6,875 6,875 6,875 6,875 6,875 6,875 6,875 6,875 6,875 6,875 6,875 6,875 Total Employee Cost Changes (Council Services) 15,182 20,259 23,840 27,486 31,200 15,481 20,858 26,379 32,047 37,868 15,481 24,087 33,094 42,521 52,390 Non-Pay Inflation - Council Services 1,771 4,011 6,381 8,893 11,871 2,745 5,632 8,676 11,890 15,140 3,692 7,259 11,012 14,968 18,968 ASN Support 208 422 422 422 422 208 422 422 422 422 208 422 422 422 422 School Clothing Grants 32 32 32 32 32 56 56 56 56 56 79 79 79 79 79 Schools Residential 800 800 800 800 800 800 800 800 800 800 800 800 800 800 800 Education ICT Network Infrastructure 0 53 53 53 53 0 53 53 53 53 0 53 53 53 53 Election Costs 0 327 0 0 0 0 350 0 0 0 0 370 0 0 0 Planning (Local Development Plan) 50 0 0 0 0 50 0 0 0 0 50 0 0 0 0 Housing Benefits Admin Grant 40 80 120 160 200 40 80 120 160 200 40 80 120 160 200 Civica Revenue and Benefits System 0 37 37 37 37 0 63 63 63 63 0 137 137 137 137 Microsoft 365 Licenses 30 380 380 380 380 30 380 380 380 380 50 400 400 400 400 Compliance with BMW Ban 2,231 2,746 2,746 2,746 2,746 2,479 3,051 3,051 3,051 3,051 2,727 3,356 3,356 3,356 3,356 Bus Transport Contracts 360 360 360 360 360 400 400 400 400 400 440 440 440 440 440 Valuation Joint Board 255 301 301 301 301 255 301 301 301 301 255 301 301 301 301 Security Operations Centre - Quorum Cyber Contract Renewal 43 43 43 43 43 43 43 43 43 43 43 43 43 43 43 Wi-Fi Network Subscription License Costs 15 58 58 58 58 15 58 58 58 58 15 58 58 58 58 Allowance for Cost and Demand Pressures Future Years 250 500 750 1,000 1,250 500 1,000 1,500 2,000 2,500 1,000 2,000 3,000 4,000 5,000 Total Cost and Demand Pressures 4,314 6,139 6,102 6,392 6,682 4,876 7,057 7,247 7,787 8,327 5,707 8,539 9,209 10,249 11,289 Adjustment to Health and Social Care Partnership Payment 3,670 3,670 3,670 3,670 3,670 3,464 3,464 3,464 3,464 3,464 3,464 3,464 3,464 3,464 3,464 Adjustment to Live Argyll Management Fee (193) (193) (193) (193) (193) (193) (193) (193) (193) (193) (193) (193) (193) (193) (193) Total Estimated Expenditure PRIOR to measures to balance the budget 353,108 362,250 368,164 374,612 381,594 354,737 365,182 373,937 383,359 392,970 356,515 371,520 384,950 399,373 414,282 Scottish Government Grant 265,742 266,406 267,072 267,740 268,409 263,363 262,706 262,049 261,394 260,741 262,054 260,089 258,139 256,203 254,281 Packing Extended Producer Responsibility Funding - DEFRA 2,786 2,786 2,786 2,786 2,786 1,393 1,393 1,393 1,393 1,393 0 0 0 0 0 Transfer from Reserves - EPR funding carried forward from 2025-26 1,438 0 0 0 0 1,438 0 0 0 0 1,438 0 0 0 0 Transfer from Reserves - SPF Gain agreed February 2024 2,000 0 0 0 0 2,000 0 0 0 0 2,000 0 0 0 0 Council Tax 71,486 72,022 72,562 73,106 73,654 71,058 71,413 71,770 72,129 72,490 70,630 70,807 70,984 71,161 71,339 Total Funding 343,452 341,214 342,420 343,632 344,849 339,252 335,512 335,212 334,916 334,624 336,122 330,896 329,123 327,364 325,620 Budget Surplus / (Gap) PRIOR to measures to balance the budget (9,655) (21,036) (25,744) (30,980) (36,745) (15,485) (29,670) (38,725) (48,443) (58,346) (20,393) (40,624) (55,827) (72,009) (88,662) Measures to Balance the Budget: Fees and Charges 574 1,199 1,880 2,623 3,433 382 787 1,217 1,672 2,155 191 388 591 800 1,015 Council Tax Increase 3,574 7,354 11,350 15,573 20,034 3,553 7,301 11,255 15,424 19,820 3,532 7,249 11,161 15,277 19,608 Council Tax Increase (Growth element) 0 27 55 85 117 0 18 37 56 77 0 9 18 28 38 Policy Savings Agreed Feb 2023 476 1,112 1,581 1,695 1,809 476 1,112 1,581 1,695 1,809 476 1,112 1,581 1,695 1,809 Management/Operational Options Agreed Feb 2025 (48) (9) (9) (9) (9) (48) (9) (9) (9) (9) (48) (9) (9) (9) (9) Policy Options 2025 536 636 636 636 636 536 636 636 636 636 536 636 636 636 636 Total Measures to Balance the Budget 5,112 10,319 15,493 20,603 26,020 4,899 9,845 14,717 19,474 24,488 4,687 9,385 13,978 18,427 23,097 Budget Surplus / (Gap) Cumulative AFTER measures to balance the budget (4,543) (10,717) (10,251) (10,377) (10,725) (10,586) (19,825) (24,008) (28,969) (33,858) (15,706) (31,239) (41,849) (53,582) (65,565) Budget Surplus / (Gap) In Year AFTER measures to balance the budget (4,543) (6,174) 467 (127) (348) (10,586) (9,239) (4,183) (4,961) (4,889) (15,706) (15,533) (10,610) (11,733) (11,983) Mid-Range ScenarioBest Case Scenario Worst Case Scenario
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COUNCIL COST AND DEMAND PRESSURES 2026-27 to 2030-31 Department Service Cost/Demand Pressure 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 Executive Director - Douglas Hendry Education The demand for ASN support in Argyll and Bute has continued to grow with a significant increase in, and early identification of children and young people presenting with complex additional support needs, including mental health difficulties which manifests often in dysregulated behaviours. IScottish Government statistics show that the number of pupils identified with ASN has increased markedly since 2010 and there continue to be year on year increases. These increases are likely due to continue as we see the impact of the Covid 19 pandemic on children and young people who were born from 2020 onwards and as we work with partners to streamline assessment processes which help us to understand need more thoroughly. Scottish Government statistical datasets show that the percentage of school roll in mainstream schools of pupils with ASN has increased by approximately 3% year on year. Within many authorities, this means increased numbers of children accessing specialist provision. As Argyll and Bute do not have equitable access to Specialist provision in all areas, the cost pressure associated with offering appropriate support within our local schools continues to increase in line with need. 208 422 422 422 422 208 422 422 422 422 208 422 422 422 422 Executive Director - Douglas Hendry Education Rightsize of School Clothing Grant Budget - Argyll and Bute Council pay the national minimum rate for School Clothing Grants. The payment is currently £120 for Primary School Children and £150 for Secondary School children. Over the past two years the number of clothing grants issued has increased and left Education with a demand pressure. 32 32 32 32 32 56 56 56 56 56 79 79 79 79 79 Executive Director - Douglas Hendry Education Rightsize the Schools Residential Budget - The Education Service contribute 38% towards the cost of jointly funded out of area Residential Placements with Social Work contributing 62%. Education also have a number of out of area day placements which they pay 100% of the cost. Over recent years the cost of these placements has risen significantly due to a reduction in subsidy for Grant Aided Special Schools (GASS) by the Govenment, along with the increase in demand for these type of placements. This has led to a cost pressure of £800k. 800 800 800 800 800 800 800 800 800 800 800 800 800 800 800 Executive Director - Douglas Hendry and Kirsty Flanagan Education and ICT The Education ICT Network required transformative technology upgrade, with improved security and reconfiguration to support in-school and at home learning, was approved as part of the budget for 2025- 26. However, the recommended cost plan included additional revenue consequences from 2027-28, estimated at £53k per annum, in respect of network equipment licencing costs. 0 53 53 53 53 0 53 53 53 53 0 53 53 53 53 Executive Director - Douglas Hendry Legal and Regulatory Services Estimated cost (to be borne by the Council) of carrying out local Government elections in May 2027 (and in financial year 2027/28). Operating approx. 100 polling stations and carrying out poll and count for 11 Multi member wards – requiring 11 separate counts 0 327 0 0 0 0 350 0 0 0 0 370 0 0 0 Executive Director - Kirsty Flanagan Development & Economic Growth Local development plan will require to be done under the new Planning legislation which is a revised process from the current one and will have a 10 year life. The new process has 2 stages where there is likely to be a cost pressure - a gate check followed by an examination some time later. 50 0 0 0 0 50 0 0 0 0 50 0 0 0 0 Executive Director - Kirsty Flanagan Financial Services Universal Credit “Full” Service went live in Sept 2018, managed migration for working age claimants began in August 2023 and will be completed by December 2025. Details of the migration of Pension age Housing Benefit claimants have not yet been released initial indications was that the overall migration to Pension Credit will be completed in 2028/2029 although that looks unlikely now. The DWP will reduce the Housing Benefit Administration Subsidy they pay to the Council as some claimants come off of Housing Benefit processed by Council staff and go onto Universal Credit processed by the DWP. The Council’s caseload has reduced since implementation of Universal Credit but it is hard to predict just how quickly the rest of the caseload will migrate from Housing Benefit to Universal Credit between now and 2028/2029. These figures represent our best estimates at this time. 40 80 120 160 200 40 80 120 160 200 40 80 120 160 200 Executive Director - Kirsty Flanagan Financial Services The Council has been engaged in discussions with the supplier of the Revenues and Benefits Management System and also the Electronic Document Management System. We expect cost increases in the future as the supplier moves the systems to the Cloud. The cost presure is an estimate at this time and will be refined as we get nearer to 2027-28. 0 37 37 37 37 0 63 63 63 63 0 137 137 137 137 Executive Director - Kirsty Flanagan ICT Migration from Skype for Business to Teams Telephony to ensure those staff who need to make and receive external calls can do so. This was agreed at Policy & Resources Committee on 15 August. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Executive Director - Kirsty Flanagan ICT Microsoft 365 License Costs. An earmarked reserve, set up to contribute towards the licensing and set-up costs for the Microsoft 365 rollout, is projected to be fully depleted during 2026-27, with an estimated budget pressure of £30k in 2026-27, increasing to £380k in 2027-28. These estimates are subject to change, should licence upgrades be required for Power BI or Teams Telephony. 30 380 380 380 380 30 380 380 380 380 50 400 400 400 400 Best Case Mid-Range Worst Case APPENDIX 2
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COUNCIL COST AND DEMAND PRESSURES 2026-27 to 2030-31 Department Service Cost/Demand Pressure 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 2026-27 £000 2027-28 £000 2028-29 £000 2029-30 £000 2030-31 £000 Best Case Mid-Range Worst Case APPENDIX 2 Executive Director - Kirsty Flanagan Roads & Infrastructure Services Achieving compliance with ban on biodegradable municipal waste (BMW) which comes into place on 1 January 2026. The costs are the best estimates at this stage and consultants have assisted in producing the estimates. The best case and worst case scenarios are based on the mid-range with a +/- 10% change 2,231 2,746 2,746 2,746 2,746 2,479 3,051 3,051 3,051 3,051 2,727 3,356 3,356 3,356 3,356 Executive Director - Kirsty Flanagan Roads & Infrastructure Services Bus Transport contracts have seen a siginificant increase in new contract prices due to increased costs for fuel, insurance, maintenance, regualtory compliance and driver wages. New contracts have seen a combined annual increase of £975k across Argyll and Bute during 2024-25 with further contract renewals due in 2025-26 and 2026-27. The cost pressure reflects the estimated increased costs of future renewals beyond budgeted levels. An options appraisal is currently being carried out to assess the best and most cost effective solution for future delivery of the school and public transport service. Increased certainty around the value of the budget pressure is expected following the renewal of a number of significant value contracts during October 2025. 360 360 360 360 360 400 400 400 400 400 440 440 440 440 440 Council Wide Council Wide A letter from the Dunbartonshire and Argyll and Bute Valuation Joint Board was received on 30 January 2025 advising of the financial challenges facing the Board and the estimated 2025-26 to 2027-28 budget gaps along with a request to increase the level of contribution that we make to the Board. Since 2012-13 the core constituent funding to the Board has either reduced or been flast cash for the past 7 years with the Board heavily reliant on reserves. As the reserves will be fully depleted by 2025-26 there is a required for the requisitions to increase. 255 301 301 301 301 255 301 301 301 301 255 301 301 301 301 Executive Director - Kirsty Flanagan ICT The Security Operations Centre (SOC) contract with Quorum Cyber provides constant monitoring of the council’s networks and 24/7/365 protection by proactively monitoring, detecting and analysing data, and providing incident response and recovery. It works alongside the council’s internal security posture to ensure we can operate securely, at all times. It is now an essential service for the Council and was funded for the first three years from earmarkings but will require a cost pressure from 2026/27 of £43k per annum. 43 43 43 43 43 43 43 43 43 43 43 43 43 43 43 Executive Director - Kirsty Flanagan ICT The Council’s Wi-fi network is based on a subscription licensing model from CISCO. Our current subscription was paid from excess capital and revenue but expires in January 2027 and will need renewed at a cost of £175k. This will cover a three year subscription. 15 58 58 58 58 15 58 58 58 58 15 58 58 58 58 Council Wide Council Wide General provision for unidentified Cost and Demand Pressures 250 500 750 1,000 1,250 500 1,000 1,500 2,000 2,500 1,000 2,000 3,000 4,000 5,000 TOTAL 4,314 6,139 6,102 6,392 6,682 4,876 7,057 7,247 7,787 8,327 5,707 8,539 9,209 10,249 11,289
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Classification: OFFICIAL# SOCIAL WORK COST AND DEMAND PRESSURES - 2026-27 to 2028-29 Service Cost/Demand Pressure 2026-27 £000 2027-28 £000 2028-29 £000 2026-27 £000 2027-28 £000 2028-29 £000 2026-27 £000 2027-28 £000 2028-29 £000 All Social Work Estimated Pay inflation reflecting a best case at 3% up to 2027/28 reflecting the Scottish Government Public Sector Pay Policy before reducing to 2% in 2028/29, a mid-range of 3% and a worst case of 5%. Adjusted for the impact of the increase in the employer's pension contribution rate from 6.5% to 17.5% in 2026/27. 1,450 2,737 3,621 1,450 2,737 4,063 1,450 3,595 5,847 All Social Work Estimated Pay increments, best case is that 50% of the incremental changes based on 2025/26 are absorbed and in the mid-range and worst case, the increase is in line with the increase in 2025/26. 99 198 297 198 396 594 198 396 594 All Social Work Inescapable non-pay inflation across a range of activities and activity specific inflation rates with a 0.5% tolerance for the best and worst cases. 569 1,127 1,703 711 1,416 2,150 844 1,698 2,595 All Social Work Non-pay inflation impact of payroll inflation on NHS posts which are recharged to Social Work. 93 169 248 107 200 296 122 231 344 Adult Care Older People Demand Growth: The number of older people is increasing and older people are living longer with significant health and support needs and significant expectations of the support they are entitled to receive. Best case assumes that this will be offset by efficiency improvement and increasing unmet need / demand. The mid range allows for a 1.5% increase each year. Worst case is 3% per year on the older adult services budget. 0 0 0 464 935 1,414 928 1,885 2,872 Adult Care Mental Health Demand Growth - As above, services operating within budget overall. The best case assumes a 0% increase in spending reflecting the limited service capacity in the area, the mid-range reflects 2% growth in 26/27 and 27/28 and the worst case reflects 3% growth. 0 0 0 73 148 224 110 223 340 Children and Families Looked After Children Demand Growth - there is a continuing demand for placements of children who are cared for by the HSCP. The best case scenario is that the expected additional demand can be funded from within existing resources as a result of planned improvements to the service delivery model (eg shift away from high cost external residential care to local foster and kinship care), the mid case reflects that additional demand in 26/27 be funded from existing resource with £250k per annum thereafter and the worst case reflects £250k per annum. 38 76 114 75 152 230 113 229 349 All Social Work Allowance for unknown cost and demand pressures which could arise. Per James Gow this is to reduce to £200k pa 0 0 0 700 900 1,100 700 900 1,100 TOTAL UNFUNDED COST AND DEMAND PRESSURES 2,249 4,307 5,983 3,778 6,884 10,071 4,465 9,157 14,041 Worst CaseMid RangeBest Case