Budget Outlook 2026-27 to 2030-31

Argyll and Bute Council · 8 May 2025
Back to Policy and Resources Committee — 8 May 2025 and its agenda

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ARGYLL AND BUTE COUNCIL POLICY AND RESOURCES COMMITTEE
FINANCIAL SERVICES 8 MAY 2025
BUDGET OUTLOOK 2026-27 TO 2030-31  
1. EXECUTIVE SUMMARY 
1.1 This report summarises the Budget Outlook for the five year period 2026-27 to
2030-31, taking account of the budget decisions approved at the Council
meeting on 27 February 2025.  This is the first outlook report of the new
financial year, rolling forward previous forecasts and extending the period to
2030-31, as well as updating planning assumptions, as appropriate.  These
assumptions 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 focusses primarily
on the mid-range scenario, however, all three scenarios are outlined within
Appendix 1. 
1.3 
1.4 
There has been no change to assumptions in respect of future years’ Scottish
Government funding since those reported as part of the Budget Pack on 27
February 2025.  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%. At this
stage, a Scottish average increase of 0.5% for the mid-range, with a variation
of 0.5% for the best and worst case scenarios, are the suggested planning
assumptions.  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.   
At this stage, it continues to be deemed prudent not to assume that funding
received in respect of Packaging Extended Producer Responsibility from the
Department of Environment, Food and Rural Affairs (DEFRA) in 2025-26 will
be recurring in 2026-27 and future years, without a reduction in Scottish
Government grant funding.  Funding conditions and future years budget
pressures remain unclear and the final allocation for 2025-26 is not expected to
be confirmed until the autumn. 
1.5 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. 
1.6 Assumptions in respect of employee costs for council services are as follows:

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 The Public Sector Pay Policy, published alongside the Scottish Budget, sets
out a multi-year framework of a 9% pay envelope covering 2025-26, 2026-
27 and 2027-28.  A planning assumption of 3% across each of these years
has been applied 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 SJC and Chief Officers pay awards for 2025-26 have still to be agreed
and may have an impact on the base budget if the pay award is higher than
the 3% allowed for in the budget. The Teachers pay award now covers the
period August to July and for 2025-26 has already been agreed up to 31
July 2025, however, any increase beyond that date is still in the negotiation
stage.
 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. 
1.7 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.  Due to current market volatility
and prevalent levels of uncertainty, at this stage, there has been no change to
the inflationary assumptions included within the 2025-26 Budget Pack. 
1.8 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
 Election Costs
 Education ICT Network Infrastructure
 Planning (Local Development Plan)
 Universal Credit – HB Admin grant 
 Civica Revenue and Benefits Management System 
 Compliance with BMW Ban 
 Bus Transport Contracts
 Migration to Teams Telephony
 Valuation Joint Board 
1.9 In addition to the identified cost and demand pressures, a general allowance
for currently unforeseen or unquantifiable cost and demand pressures has
been included in each scenario (best case £0.250m, mid-range £0.500m and
worst case £1m per year). 
1.10 Political decisions will require to be made in respect of the allocation to the
Health and Social Care Partnership in future years.  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

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indicative allocation for 2026-27 represents an increase of £3.053m to flat
cash, reflecting the non-recurring saving in relation to the Strathclyde Pension
Fund contribution. 
1.11 The 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 £14.442m in 2026-27 and £58.195m over the five year period
2026-27 to 2030-31. 
1.12 The measures to balance the budget over the next five years are 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 for all scenarios.
 Management/Operational and Policy savings already agreed by Council in
February 2025 and previous years. 
1.13 The budget gap in the mid-range scenario, after measures to balance the
budget, is estimated at £9.568m in 2026-27 and £33.846m over the five year
period 2026-27 to 2030-31.   
1.14 The budget gap in the best case scenario is estimated at £6.068m in 2026-27
and £13.415m over five years, increasing to £16.159m in 2026-27 and
£67.384m over five years in the worst case scenario.  A summary of all three
scenarios is included within Appendix 1.  
1.15 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 8 MAY 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, taking account of the budget decisions approved at the Council
meeting on 27 February 2025.  This is the first outlook report of the new
financial year, rolling forward previous forecasts and extending the period to
2030-31, as well as updating planning assumptions, as appropriate.  These
assumptions will continue to be updated and refined on an ongoing basis
throughout the year. 
2.2 The Budget Outlook has been prepared using three different scenarios, best
case, worst case and mid-range.  Relatively small variations in assumptions can
lead to fairly significant changes in the outcome.  In the paragraphs that follow,
the mid-range outlook is shown, however, all three scenarios are detailed 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 
Estimates of future Scottish Government funding levels is one of the key
assumptions within 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 Scottish Government finance settlements.
Council’s will continue to lobby via COSLA for multi-year settlements to assist
with longer term financial planning. 
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%. There has been no change to
assumptions in respect of future years’ Scottish Government funding since
those reported as part of the Budget Pack on 27 February 2025.  At this stage, a
Scottish average increase of 0.5% for the mid-range, with a variation of 0.5% for
the best and worst case scenarios, are the suggested planning assumptions. As
this council relies on the floor mechanism to protect its funding level, our

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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, our funding assumptions range between an increase of 0.25%
(best case) and a reduction of 0.75% (worst case), with a reduction of 0.25% as
the mid-range scenario.         
4.1.3  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 increased Employer’s National Insurance Contributions. 
2026-27
£000
2027-28
£000
2028-29
£000
2029-30
£000
2030-31
£000
Estimated SG Funding 261,058 260,406 259,755 259,106 258,459 
4.1.4 At this stage, it continues to be deemed prudent not to assume that funding
received in respect of Packaging Extended Producer Responsibility from the
Department of Environment, Food and Rural Affairs (DEFRA) in 2025-26 will be
recurring in 2026-27 and future years, with no reduction in Scottish Government
grant funding.  Funding conditions and future years budget pressures remain
unclear and the final allocation for 2025-26 is not expected to be confirmed until
the autumn. It was agreed as part of the 2025-26 budget process that £2.499m
of the estimated 2025-26 funding of £3.847m would be carried forward for use in
2026-27. 
Council Tax 
4.1.5 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. 
4.1.6 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. 
4.1.7  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 
4.1.8 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.

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Funding Summary 
4.1.9  The table below summarises the estimated total funding in the mid-range
scenario over the 5 years 2026-27 to 2030-31. 
2026-27
£000
2027-28
£000
2028-29
£000
2029-30
£000
2030-31
£000
Estimated SG Funding 261,058 260,406 259,755 259,106 258,459
EPR – 2025-26 DEFRA
Funding C/fwd
2,499 0 0 0 0
Released Strathclyde
Pension Fund Gain
2,000 0 0 0 0
Council Tax Base 70,204 70,204 70,204 70,204 70,204
Council Tax Growth 351 704 1,059 1,415 1,773
Total Estimated
Funding
336,112 331,314 331,018 330,725 330,436 
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.  The full
year effect of these previous budget decisions on 2026-27 and future years are
now incorporated as base budget adjustments. 
4.2.2 The revised base budget is 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  The Public Sector Pay Policy, published alongside the Scottish Budget, sets out
a multi-year framework of a 9% pay envelope covering 2025-26, 2026-27 and
2027-28.  A planning assumption of 3% across each of these years has been
applied 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%, mid-range remains at 3% and worst case remains at 5%.   
4.3.2 The SJC and Chief Officers pay awards for 2025-26 have still to be agreed and
may have an impact on the base budget if the pay award is higher than the 3%
allowed for in the budget. The Teachers pay award now covers the period
August to July and for 2025-26 has already been agreed up to 31 July 2025,
however, any increase beyond that date is still in the negotiation stage.  It is
worth noting that a pay offer has been made to the NHS Agenda for Change

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workforce.  The offer comprises 4.25% for 2025-26 and 3.75% for 2026-27, with
an inflation guarantee, whereby the increase in pay for each year of the deal will
be above the CPI inflation rate. 
Increments 
4.3.3 
4.3.4
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 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. 
4.3.5
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). From 2026-27 the costs will rise again to 17.5%
therefore this increase is required to be built into projections from 2026-27
onwards. 
Employee Costs Summary 
4.3.6  The table below summarises the employee cost movements in the mid-range
scenario for council services over the five years 2026-27 to 2030-31.  The future
years estimates have been further refined, following approval of the 2025-26
budget in February 2025.  The employee cost increases relating to Social Work
within the Health and Social Care Partnership are summarised within paragraph
4.6.3. 
2026-27
£000
2027-28
£000
2028-29
£000
2029-30
£000
2030-31
£000
Pay Award 4,752 9,530 14,452 19,521 24,743
Full Year Effect 2025-26
Teachers Pay Award
496 496 496 496 496
Increments 599 1,198 1,797 2,396 2,995
Reinstatement of 
Strathclyde Pension Fund
contribution
6,875 6,875 6,875 6,875 6,875
Total Employee Cost
Changes
12,722 18,099 23,620 29,288 35,109 
4.4 Non-Pay Inflation 
4.4.1  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

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4.4.2 
4.4.3 
4.4.4 
4.4.5
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. 
Non-pay inflation assumptions within the mid-range scenario are based on
current market forecast data, where available.  Officers continue to review
inflation assumptions on an ongoing basis. However, due to current market
volatility and prevalent levels of uncertainty, at this stage, there has been no
change to the inflationary assumptions included within the 2025-26 Budget
Pack. 
The Budget Outlook provides for unavoidable non-pay inflation within each
budget scenario. In addition, due to prevailing levels of economic uncertainty, it
is 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 4.6.3. 
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  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 a number of cost and demand pressures, already identified

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4.5.2 
for future years, which cannot be contained without a detrimental impact on
service provision.  These have continued to be reported within previous Budget
Outlook reports and as part of the Revenue Budget Overview report presented
at the Council budget meeting on 27 February 2025.   
Since the budget meeting on 27 February 2025, there have been no changes to
the cost and demand pressures within the mid-range scenario. 
4.5.3  When creating a longer term budget outlook beyond the current year, there is a
greater risk that currently unforeseen or unquantifiable cost and demand
pressures will emerge across future years.  It is therefore deemed prudent 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 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
Election costs 0 350 0 0 0
Education ICT Network
Infrastructure
0 53 53 53 53
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
Compliance with BMW Ban 2,479 3,051 3,051 3,051 3,051
Bus Transport Contracts 268 268 268 268 268
Migration from Skype for
Business to Teams
Telephony
63 300 300 300 300
Valuation Joint Board
Requisition
255 301 301 301 301
Allowance for pressures in
future years
500 1,000 1,500 2,000 2,500
Total Cost and Demand
Pressures
3,863 5,888 6,078 6,618 7,158 
4.5.5 The cost and demand pressures relating to Social Work within the Health and
Social Care Partnership are summarised within paragraph 4.6.3. 
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

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subject to Scottish Government grant funding and the council’s overall financial
position. The indicative allocation for 2026-27 represents an increase of
£3.053m, reflecting the non-recurring saving in relation to the Strathclyde
Pension Fund contribution. 
4.6.2 Political decisions will require to be made in respect of the allocation to the
Health and Social Care Partnership in future years.  For the purposes of the
Budget Outlook, flat cash allocations, adjusted for the Strathclyde Pension Fund
saving, have been 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 next year.   
4.6.3 Social Work services have already identified a number of cost and demand
pressures, included within Appendix 3, with the mid-range scenario summarised
below.  These are included for information purposes.  It is expected that the
HSCP will absorb their cost and demand pressures within their funding
allocation.  Note that these only extend to three years rather than the five years
of the council’s Budget Outlook.   
2026-27
£000
2027-28
£000
2028-29
£000
Pay Inflation 1,232 2,501 3,809
Pay Increments 198 396 594
Non-Pay Inflation 771 1,570 2,403
Adult Care - Older People 500 1,000 1,500
Adult Care – Mental Health 50 100 150
Looked After Children 0 250 500
General Contingency 200 400 600
Total Estimated Cost Increases -
Social Work
Cumulative
2,951 6,217 9,556 
4.6.4 
4.6.5 
In addition to the cost and demand pressures outlined above, there will be a
further £3m budget pressure from 2026-27, arising from the non-recurring use of
reserves, as a measure to balance the 2025-26 budget.  This financial outlook is
extremely challenging, particularly given that HSCP reserve balances are
expected to be depleted by 31 March 2026.   
The council’s Section 95 Officer has 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.  There is a 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 financial position of the
council, the financial position of the HSCP and related financial risk to the
council will be closely monitored throughout the year.  This will 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.

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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 have been 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 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
Base Budget
Adjustments
75 75 75 75 75
Employee Cost
Changes
12,722 18,099 23,620 29,288 35,109
Non-Pay Inflation 2,745 5,632 8,676 11,890 15,140
Cost and Demand
Pressures
3,863 5,888 6,078 6,618 7,158
Adjustment to HSCP
Payment re SPF Gain
3,053 3,053 3,053 3,053 3,053
Adjustment to
LiveArgyll Payment 
(193) (193) (193) (193) (193)
Total Estimated Net
Expenditure
350,554 360,843 369,598 379,020 388,631
Estimated Funding 336,112 331,314 331,018 330,725 330,436
Estimated Budget
Surplus / (Gap)
Cumulative
(14,442) (29,529) (38,580) (48,295) (58,195) 
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% has been assumed each year over the
five years 2026-27 to 2030-31.  As a result of 2025-26 budget decisions taken
by Council on 27 February 2025 to freeze fees on council-run ferries, the
forecast income from fees and charges in future years has been slightly

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reduced.  
4.9.2 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 has been assumed each year in all
scenarios.  All councils increased their Council Tax by at least 6% for 2025-26,
with 13 increasing their Council Tax by more than 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. 
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  3,528 7,268 11,212 15,372 19,758
Management/Operational
Savings 
(48) (9) (9) (9) (9)
Policy Savings  1,012 1,748 2,217 2,331 2,465
Total Measures to
Balance the Budget
4,874 9,794 14,637 19,366 24,349 
4.10 Estimated Budget Gap AFTER Measures to Balance the Budget 
4.10.1 The table below summarises the 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
(14,442) (29,529) (38,580) (48,295) (58,195)
Measures to Balance
Budget
4,874 9,794 14,637 19,366 24,349
Estimated Budget
Surplus / (Gap)
Cumulative
(9,568) (19,735) (23,943) (28,929) (33,846)
Estimated Budget
Surplus / (Gap) 
In Year
(9,568) (10,167) (4,208) (4,986) (4,917) 
4.10.2 In the mid-range scenario, the budget gap is estimated at £9.568m in 2026-27
and £33.846m over the five year period 2026-27 to 2030-31.

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4.10.3 The budget gap in the best case scenario is estimated at £6.068m in 2026-27
and £13.415m over five years, increasing to £16.159m in 2026-27 and
£67.384m 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 Council on 27 February 2025, are summarised in the table below. 
2026-27
£000
2027-28
£000
2028-29
£000
2029-30
£000
Previously reported Budget
Surplus / (Gap) 
Cumulative
(9,588) (19,927) (24,316) (29,490)
Adjustment to Council Tax 27 90 158 230
Adjustment to Employee Costs (4) 108 223 342
Adjustment to Fees and Charges (3) (6) (8) (11)
Revised Budget Surplus / (Gap) 
Cumulative
(9,568) (19,735) (23,943) (28,929) 
5. CONCLUSION 
5.1 In the mid-range scenario, the budget gap is estimated at £9.568m in 2026-27
and £33.846m 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.  
5.2  This is a very challenging Budget Outlook position.  Variations to the
assumptions in respect of future Scottish Government grant levels and pay
awards 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 Fairer Scotland Duty - 
6.5.1 Equalities None directly from this report but any proposals to
address the estimated budget gap will require to
consider equality issues.
6.5.2 Socio Economic Duty None directly from this report but any proposals to

Page 14

address the estimated budget gap will require to
consider socio economic issues.
6.5.3 Islands Duty None directly from this report but any proposals to
address the estimated budget gap will require to
consider any island specific issues. 
6.6 Climate Change The Council is committed to addressing climate change
and reviews how Services are delivering this on an
ongoing basis, within the available budget resources.
6.7 Risk -  None directly from this report but any proposals to
address the estimated budget gap will require to
consider risk.
6.8 
6.9
Customer Service – 
The Rights of the
Child (UNCRC) -
None directly from this report but any proposals to
address the estimated budget gap will require to
consider customer service. 
None 
Kirsty Flanagan
Executive Director/Section 95 Officer
14 April 2025 
Councillor Ross Moreland, Policy Lead for Finance and Commercial Services 
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

Page 15

BUDGET OUTLOOK 2026-27 to 2030-31 APPENDIX 1
Policy and Resources Committee - 8 May 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 4,752 9,530 12,811 16,158 19,572 4,752 9,530 14,452 19,521 24,743 7,919 16,041 24,570 33,525 42,928
Full year effect of 2025-26 pay award for teachers in 2026-27 496 496 496 496 496 496 496 496 496 496 496 496 496 496 496
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) 12,423 17,500 21,081 24,727 28,441 12,722 18,099 23,620 29,288 35,109 15,889 24,610 33,738 43,292 53,294
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
Election Costs 0 327 0 0 0 0 350 0 0 0 0 370 0 0 0
Education ICT Network Infrastructure 0 53 53 53 53 0 53 53 53 53 0 53 53 53 53
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
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 268 268 268 268 268 268 268 268 268 268 268 268 268 268 268
Migration from Skype for Business to Teams Telephony 19 282 282 282 282 63 300 300 300 300 108 318 318 318 318
Valuation Joint Board 255 301 301 301 301 255 301 301 301 301 255 301 301 301 301
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 3,321 5,016 4,979 5,269 5,559 3,863 5,888 6,078 6,618 7,158 4,656 7,305 7,975 9,015 10,055
Adjustment to Health and Social Care Partnership Payment 3,053 3,053 3,053 3,053 3,053 3,053 3,053 3,053 3,053 3,053 3,053 3,053 3,053 3,053 3,053
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 348,739 357,751 363,665 370,113 377,095 350,554 360,843 369,598 379,020 388,631 355,461 370,398 383,949 398,499 413,541
Scottish Government Grant 262,366 263,021 263,678 264,337 264,997 261,058 260,406 259,755 259,106 258,459 259,749 257,801 255868 253,949 252,044
Packing Extended Producer Responsibility Funding - DEFRA 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Transfer from Reserves - EPR funding carried forward from 2025-26 2,499 0 0 0 0 2,499 0 0 0 0 2,499 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 70,731 71,261 71,795 72,333 72,875 70,555 70,908 71,263 71,619 71,977 70,380 70,556 70,732 70,909 71,086
Total Funding 337,596 334,282 335,473 336,670 337,872 336,112 331,314 331,018 330,725 330,436 334,628 328,357 326,600 324,858 323,130
Budget Surplus / (Gap) PRIOR to measures to balance the budget (11,143) (23,469) (28,192) (33,443) (39,223) (14,442) (29,529) (38,580) (48,295) (58,195) (20,833) (42,041) (57,349) (73,641) (90,411)
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 3,537 7,277 11,231 15,409 19,823 3,528 7,250 11,176 15,316 19,681 3,519 7,223 11,121 15,223 19,538
Council Tax Increase (Growth element) 0 27 55 84 116 0 18 36 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
NEW Management/Operational Options 2025 (48) (9) (9) (9) (9) (48) (9) (9) (9) (9) (48) (9) (9) (9) (9)
NEW Policy Options 2025 536 636 636 636 636 536 636 636 636 636 536 636 636 636 636
Total Measures to Balance the Budget 5,075 10,242 15,374 20,438 25,808 4,874 9,794 14,637 19,366 24,349 4,674 9,359 13,938 18,373 23,027
Budget Surplus / (Gap) Cumulative AFTER measures to balance the budget (6,068) (13,227) (12,818) (13,005) (13,415) (9,568) (19,735) (23,943) (28,929) (33,846) (16,159) (32,682) (43,411) (55,268) (67,384)
Budget Surplus / (Gap) In Year AFTER measures to balance the budget 0 (7,160) 410 (188) (410) (9,568) (10,167) (4,208) (4,986) (4,917) (16,159) (16,523) (10,729) (11,857) (12,116)
Mid-Range ScenarioBest Case Scenario Worst Case Scenario

Page 16

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
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 -
Douglas Hendry and
Kirsty Flanagan
Education and ICT The Education ICT Network requires  a transformative technology upgrade in 2025-26 with improved
security and reconfiguration to support in-school and at home learning.  A cost pressure was agreed as
part of the budget for 2025-26.  There was an ongoing revenue requirement built into the cost pressure
and this is expected to increase from 2027-28.  
0 53 53 53 53 0 53 53 53 53 0 53 53 53 53
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
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
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.   The cost pressure is the best estimate of future renewals and expected increases.  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.
268 268 268 268 268 268 268 268 268 268 268 268 268 268 268
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.
19 282 282 282 282 63 300 300 300 300 108 318 318 318 318
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
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 3,321 5,016 4,979 5,269 5,559 3,863 5,888 6,078 6,618 7,158 4,656 7,305 7,975 9,015 10,055
Best Case Mid-Range Worst Case
APPENDIX 2

Page 17

SOCIAL WORK COST AND DEMAND PRESSURES - 2026-27 to 2028-29 APPENDIX 3
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.
1,232 2,501 3,373 1,232 2,501 3,809 2,054 4,210 6,474
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.
541 1,102 1,680 681 1,388 2,126 817 1,675 2,577
All Social Work Non-pay inflation impact of payroll inflation on NHS posts which are
recharged to Social Work.
75 151 230 90 182 277 104 213 325
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 0 500 1,000 1,500 1,000 2,000 3,000
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 50 100 150 75 150 225
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.
0 0 0 0 250 500 250 500 750
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 0 200 400 600 200 400 600
TOTAL UNFUNDED COST AND DEMAND PRESSURES 1,947 3,952 5,580 2,951 6,217 9,556 4,698 9,544 14,545
Worst CaseMid RangeBest Case