Budget Outlook 2023-24 to 2027-28

Argyll and Bute Council · 11 August 2022
Back to Policy and Resources Committee — 11 August 2022 and its agenda

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ARGYLL AND BUTE COUNCIL POLICY AND RESOURCES COMMITTEE
FINANCIAL SERVICES 11 AUGUST 2022
BUDGET OUTLOOK 2023-24 TO 2027-28  
1. EXECUTIVE SUMMARY 
1.1 This report provides an update to the budget outlook 2023-24 to 2027-28,
reported to the Policy and Resources Committee on 16 June 2022. 
1.2 The estimates within the report are based on the mid-range scenario with best
and worst case scenarios noted in Appendix 1. 
1.3  The assumptions in respect of future years Scottish Government funding
remain unchanged from those reported on 16 June 2022 and ranges between
0.5% reduction (best case) and 1.5% reduction (worst case) with a mid-range
reduction of 1.0%.  
1.4 There are no changes to my previous assumptions around the growth in
Council Tax. For 2023-24 the Council tax base has been assumed to grow by
1% in the worst case scenario, 1.5% in the mid-range scenario and 2% in the
best case. In future years this then drops down to 0.25% in the worst case
scenario, 0.5% in the mid-range scenario and 0.75% in the best case. 
1.5 There are no changes to the base budget since the report on 16 June 2022. 
1.6 Similarly there are no changes to the assumptions in respect of employee costs
for Council services which were previously noted as follows:
 Pay award for 2023-24 to 2027-28 of between 2% in the best and mid-
range scenarios and 5% within the worst case scenario. It is acknowledged
that as the pay award has not yet been agreed it could differ from this
estimate and at this stage we are recognising that possibility as a financial
risk.
 Increments between £0.345m and £0.690m with mid-range £0.690m. 
1.7 For non-pay inflation, only unavoidable/inescapable inflation has been built in
for the best case and mid-range scenarios with a contingency of £0.250m built
into the mid-range. A further general inflationary increase has been built into
the worst case scenario. The estimates for non-pay inflation have increased by
£0.434m with the main increases being insurance and bitumen prices. 
1.8 There are a number of cost and demand pressures for Council services built
into each scenario. Changes to these pressures since the report on 16 June
2022 are:
 New - Increased cost of salt for Winter Maintenance
 New - Cease use of red diesel
 New - Insurance payments

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1.9 In addition to the identified cost and demand pressures an allowance for
unidentified cost and demand pressures has been included in mid-range and
worst case scenarios of between £0.250m and £0.500m per year. 
1.10 There will be a political decision to be made as to the future allocation to the
Health and Social Care Partnership.  As part of the budget agreed in February
2022, indicative allocations for 2023-24 to 2024-25 were agreed on the basis of
a flat cash allocation. In the budget outlook I have assumed flat cash
allocations across all three scenarios. 
1.11 At this stage a 3% reduction to the Live Argyll Management fee has been
included within the estimates.  At the 2022-23 budget setting meeting in
February 2022 it was agreed to defer the proposed 3% reduction to the Live
Argyll management fee until 2023-24 subject to any future budget decisions. It
was agreed that management would engage in early discussions with Live
Argyll in relation to future approach to support effective longer term financial
planning. 
1.12 The budget gap in the mid-range scenario after allowing for the current base
commitments, employee adjustments, non-pay inflation and cost and demand
pressures and not factoring in any previous savings decisions or future
potential options is an estimated gap over the five year period of £47.784m with
a gap of £10.292m in 2023-24. 
1.13 The measures to balance the budget over the next five years are as follows:
 Proposed increase to fees and charges of between 2% and 4% (3% mid-
range).
 3% reduction to the Live Argyll Management Fee.
 Management/operational savings agreed by Council in February 2022. 
 Policy savings already agreed by Council in February 2022.
 Proposed increase to Council Tax (3% in all scenarios). 
1.14 In the mid-range scenario, the revised budget gap estimated over the five year
period 2023-24 to 2027-28 is £36.493m with a gap of £7.980m in 2023-24.   
1.15 The budget gap in the best case scenario over the five years is £25.060m with
a gap of £5.367m in 2023-24 and in the worst case scenario, the budget gap
over the five years is £79.798m with a gap of £16.231m in 2023-24.  A
summary of all three scenarios is included within Appendix 1. 
1.16 It is recommended that the Policy and Resources Committee consider the
current estimated budget outlook position for the period 2023-24 to 2027-28.

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ARGYLL AND BUTE COUNCIL POLICY AND RESOURCES COMMITTEE
FINANCIAL SERVICES 11 AUGUST 2022
BUDGET OUTLOOK 2023-24 TO 2027-28  
2. INTRODUCTION 
2.1 This report provides an update to the budget outlook 2023-24 to 2027-28,
reported to the Policy and Resources Committee on 16 June 2022. 
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
estimated budget outlook position for the period 2023-24 to 2027-28. 
4. DETAIL 
4.1 Funding 
Scottish Government Finance Settlement 
4.1.1 There are no changes to my previous assumptions around the level of future
Scottish Government funding.  In my report in June, I advised that the Resource
Spending review indicated that Local Government is expected to receive a flat
cash settlement up to 2026-27.  The flat cash position is at portfolio level and
does not include any transfers to Local Government from other portfolios in-year.  
These transfers are likely not be confirmed until December 2022 and that, along
with the fact that due to our declining population our settlement is usually worse
that the average, lead me to the funding assumptions built into the outlook.  The
funding assumptions range between a 0.5% reduction (best case) and 1.5%
(worst case) with a mid-range reduction of 1.0%.   
4.1.2 The table below summarises the mid-range scenario estimates expressed in
percentage terms and monetary value. 
2023-24
£000
2024-25
£000
2025-26
£000
2026-27
£000
2027-28
£000
% Change to Funding -1.0% -1.0% -1.0% -1.0% -1.0%
Estimated SG Funding
Reduction
(2,016) (2,143) (2,122) (2,101) (2,080)
Estimated SG Funding 214,330 212,187 210,065 207,964 205,884

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Council Tax 
4.1.3 The Council Tax budget for 2022-23 was set at £55.262m which reflected a 3%
inflation increase and 1.5% growth in the Council Tax base as agreed by the
Council on 24 February 2022. 
4.1.4 There are no changes to my previous assumptions around the growth in Council
Tax. It has been assumed that a 1.5% growth in the mid-range (1% in worst case
and 2% in best case) should be maintained for 2023-24 with the drop down to
0.5% in the mid-range in 2024-25. 
4.1.5 Within this report, I will present the budget gap, prior to any Member based
decisions and therefore at this stage in the report, the Council tax base is
assumed to remain at the same level as 2022-23.   
4.1.6 The table below summarises the estimated total funding in the mid-range
scenario. 
2023-24
£000
2024-25
£000
2025-26
£000
2026-27
£000
2027-28
£000
Estimated SG Funding 214,330 212,187 210,065 207,964 205,884
Council Tax Base 55,262 55,262 55,262 55,262 55,262
Council Tax Growth 829 1,109 1,391 1,674 1,959
Total Estimated
Funding
270,421 268,558 266,718 264,900 263,105 
4.2 Base Budget 
4.2.1 The 2022-23 budget approved by Council on 24 February 2022 was £262.812m.   
4.2.2 For future years, there are adjustments required to the base budget from
decisions by Council on 24 February 2022 and other adjustments as noted in the
table below: 
2023-24
£000
2024-25
£000
2025-26
£000
2026-27
£000
2027-28
£000
Base Budget 2022-23 262,812 262,812 262,812 262,812 262,812
Additional Funding in
Finance Order (see
paragraph 4.1.4)
6,315 6,315 6,315 6,315 6,315
Additional budget required
in relation to the Teachers
Pay Settlement 2021-22
(see paragraph 4.1.5)
121 121 121 121 121
Adjust for repayment of
Loans Fund Principal
Repayment Holiday
162 170 179 188 197
Remove one off 2022-23
Election costs
(350) (350) (350) (350) (350)
Remove one off 2022-23
Management/Operational
savings
2,174 2,182 2,182 2,182 2,182
Revised Base Budget 271,234 271,250 271,259 271,268 271,277

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4.3 Employee Cost Changes 
Pay Award 
4.3.1  The pay award for 2022-23 has still to be agreed and this may have an impact on
the base budget if the pay award is greater than the estimate built into the current
year’s budget, which was 2%.   
4.3.2 In March 2022, COSLA Leaders agreed to make an undifferentiated offer of a 2%
uplift to all bargaining groups on the basis of parity for all which has been both a
key concern and agreed position for the past number of years.  All Unions
rejected this initial offer.  On 17 June 2022, COSLA Leaders agreed to “mandate
the Resources spokesperson to make a revised pay offer of 5% contingent on
additional funding being provided by the Scottish Government, matching that
offered to Agenda for Change staff, and, recognising the significant affordability
impact this will have for Councils, to continue discussions to make clear to
Scottish Ministers that they must urgently identify and provide additional financial
resource for Local Government to protect local services and current staffing
levels.”  Negotiations are ongoing.   
4.3.3 The COSLA remuneration advisory group, made up of advisors from the Society
of Local Authority Chief Executives (SOLACE), The Directors of Finance and the
Society of Personnel and Development Scotland (SPDS) has noted the
constraints on Local Government funding, with two thirds of Councils having
budgeted for a pay increase of 2% or less.  The 2% increase is deemed to be
affordable, hence why that is the assumption that has been built into the mid-
range scenario.  On speaking with Director of Finance colleagues in early July,
there is still a shared view that no more than 2% is affordable for Local
Government.     
4.3.4 For future years, the pay assumption remains at 2% in both the mid-range and
the best case, reflecting that 2% is deemed to be affordable but it is not likely that
the pay award will be less than this.  For scenario purposes, 5% has been built
into the worst case.  There remains a significant risk that the pay award agreed
for 2022-23 and beyond could be higher.  Every 1% over and above what is
budgeted would add an additional pressure of circa £1.5m.   
Increments 
4.3.5 There are no changes to my previous assumption around the cost of employee
increments. It has been assumed that for future years, the best case is half of the
previous year cost, for mid-range and worst case, it will be equal to the cost in
2022-23 (£0.690m).   
4.3.6 The table below summarises the employee cost increases in the mid-range
scenario for Council services.  The employee cost increases relating to Social
Work within the Health and Social Care Partnership are summarised within
paragraph 4.6.3.

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2023-24
£000
2024-25
£000
2025-26
£000
2026-27
£000
2027-28
£000
Pay Award 3,000 6,061 9,182 12,366 15,613
Increments 690 1,380 2,070 2,760 3,450
Total Employee Cost
Changes
3,690 7,441 11,252 15,126 19,063 
4.4 Non-Pay Inflation 
4.4.1 Over the last few years, the Council have only included non-pay inflation within
the budget where it was deemed to be unavoidable or inescapable.  In terms of
the budget outlook, only unavoidable/inescapable non-pay inflation is built into
the best case and mid-range scenarios with a general inflation allowance over
and above this built into the worst case.   
4.4.2 Given the current instability around inflation rates officers continue to review
areas of non-pay inflation of significant value and volatility on an ongoing basis. 
The principle of only budgeting for unavoidable/inescapable remains, however, it
has to be noted that in this current financial climate, some budgets with no
inflation allowed for are now stretched beyond the point of containing the cost
within budget and therefore the budget will now buy less than what it used to be
able to buy (so in effect, we will see some cuts as a result). 
4.4.3 When creating a budget outlook for future years, there is a risk that inflation
assumptions could change during the year.  Due to the current inflation
uncertainty, it would be prudent to include a contingency for other inflation
increases not included in the calculations.  A contingency allowance of £0.500m
is included within the worst case scenario and a £0.250m allowance included
within the mid-range scenario each year.  No contingency is included within the
best case scenario.  This contingency will either be required, reduced or removed
to reflect changing circumstances before the 2023-24 budget process.   
4.4.4  The table below summarises the non-pay inflation increases in the mid-range
scenario for Council services since last reported on 16 June 2022 with more
detail available in Appendix 2.  The non-pay inflation increases relating to Social
Work within the Health and Social Care Partnership are summarised within
paragraph 4.6.3. 
Inflation Category 2023-24
Previous
estimates
£000
2023-24
Updated
estimates
£000
Increase
£000
Utilities - Electricity, Gas, Oil, Water 1,177 1,190 13
Street Lighting Electricity 116 116 0
Vehicle Fuel 62 60 (2)
Central Repairs - Outside Contractors 57 66 9
Waste PPP/Landfill Tax 502 502 0
NPDO/HUB Schools 1,024 1,034 10
Community Pool Subsidies 60 65 5
Residential Schools 91 91 0

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Pre-Primary Partner Providers 86 181 95
ICT 123 123 0
Catering Purchases and Milk 309 309 0
Insurance 0 146 146
Bitumen – Roads 0 158 158
Contingency for unidentified/insufficient
inflation estimate
250 250 0
Total 3,857 4,291 434 
4.4.6 The inflation for years 2024-25 to 2027-28 is noted in the table below and is
based on future years estimates of inflation at this point it time.  It may be that the
inflation could rise to a peak over the next couple of years and then fall again and
this would alter the estimates in the table below, however, this is very difficult to
predict and the estimates will be kept under review.   
2024-25
£000
2025-26
£000
2026-27
£000
2027-28
£000
Unavoidable/Inescapable 7,271 10,476 13,926 17,641
Total Non-Pay Inflation 7,271 10,476 13,926 17,641 
4.5 Cost and Demand Pressures 
4.5.1  Over the last few years, services have worked on the basis of having to contain
any cost and demand pressures within current resources, however, there are a
number of cost and demand pressures already identified for Council services
which were reported as part of the budget in February 2022.  Since the Policy
and Resources Committee on 16 June 2022 the following changes have been
made to the cost and demand pressures: 
 New - Increased cost of salt for Winter Maintenance
 New - Cease use of red diesel
 New - Insurance payments. 
Officers are currently assessing the budget required in respect of the provision for
1140 hours.  The Scottish Government reduced the funding for this area of spend
in 2022-23 and it is likely that this may create a cost pressure for future years. 
The level of the cost pressure has not been quantified as yet and will be updated
within a future budget outlook.   
4.5.2  As with inflation, when creating a budget outlook beyond one year, there is a risk
that unknown cost and demand pressures will emerge that have not been
included within the outlook.  It is suggested that no allowance for this is included
within the best case scenario, a £0.500m general allowance is included within the
worst case and a £0.250m allowance included within the mid-range scenario
each year. 
4.5.3 The cost pressures are detailed in appendix 3 and are summarised in the table
below and will be subject to review during the financial year.

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4.5.4  2023-24
£000
2024-25
£000
2025-26
£000
2026-27
£000
2027-28
£000
Universal Credit – HB
Admin Grant
40 80 120 160 200
Oracle Fusion 35 35 35 35 35
ASN Support 0 75 206 206 206
SEEMiS Membership Fees 9 11 13 16 16
Sustainable rate for partner
providers
342 327 327 327 327
Election costs 0 0 0 0 300
HR System 100 (50) (50) (50) (50)
Waste 7 25 78 (91) (91)
Compliance with BMW Ban 0 400 1,600 1,150 0
Local Development Plan 0 50 0 50 0
House Loans 19 19 19 19 19
Parking 15 15 15 15 15
IT – Increased bandwidth in
schools
26 26 26 26 26
Salt for Winter Maintenance 163 163 163 163 163
Cessation of red diesel 78 78 78 78 78
Insurance 414 414 414 414 414
Allowance for pressures in
future years
250 500 750 1,000 1,250
Total Cost and Demand
Pressures 
1,498 2,168 3,794 3,518 2,908 
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  The Council, at the budget meeting on 24 February 2022, agreed a base
allocation to the HSCP of £69.005m for 2022-23 as well as indicative flat cash
allocations for 2023-24 to 2026-27.  On 2 March 2022 the Local Government
Finance Circular 1/2022 was published which distributed additional funding of
which £4.037m was required to be passed to the HSCP, therefore their allocation
increased from £69.005m to £73.042m.  
4.6.2 In the budget outlook, I have assumed flat cash allocations across all scenarios.
These are only assumptions and it will be a matter for Council to consider as part
of the budget process next year.   
4.6.3 Social Work services have already identified a number of cost and demand
pressures and these are summarised below and included within Appendix 4 for
information purposes.  It is expected that the HSCP absorb their cost and
demand pressures from their funding allocation.  Note that these only extend to
three years rather than the five years within this Council budget outlook.   
2023-24
£000
2024-25
£000
2025-26
£000
Pay Inflation 1,335 2,671 4,033

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Pay Increments 103 206 309
Non-Pay Inflation 3,490 6,981 10,680
Care Services for Younger Adults 412 832 1,261
Adult Services - Supported Living 344 686 1,029
Continuing Care for Looked After
Children
250 500 750
Kintyre Care Centre 750 750 750
Unknown Cost and Demand
Pressures
500 1,000 1,500
Total Cost Increase estimates
for Social Work
7,184 13,626 20,312 
4.7 Estimated Budget Gap PRIOR to Measures to Balance the Budget 
4.7.1 The budget gap in the mid-range scenario after allowing for the current base
commitments, employee adjustment, non-pay inflation and cost and demand
pressures is summarised in the table below.  This is the budget gap prior to
factoring in any previous savings decisions or potential options towards balancing
the budget. 
2023-24
£000
2024-25
£000
2025-26
£000
2026-27
£000
2027-28
£000
Base Budget 271,234 271,250 271,259 271,268 271,277
Employee Cost Changes 3,690 7,441 11,252 15,126 19,063
Non-Pay Inflation 4,291 7,271 10,476 13,926 17,641
Cost and Demand
Pressures 
1,498 2,168 3,794 3,518 2,908
Total Estimated
Expenditure
280,713 288,130 296,781 303,838 310,889
Estimated Funding 270,421 268,558 266,718 264,900 263,105
Estimated Budget
Surplus / (Gap)
Cumulative
(10,292) (19,572) (30,063) (38,938) (47,784) 
4.8 Measures to Balance the Budget 
4.8.1 In previous years, a general inflationary increase of 3% has been applied to fees
and charges.  For the budget outlook a range of between 2% (worst case) and
4% (best case) with a mid-range of 3%.  The Council may consider, that in light of
the increasing inflation we are experiencing on many cost areas, that it would be
appropriate to increase the fees and charges inflation to a higher level.   
4.8.2 A number of policy options were agreed at the Council meeting on 24 February
2022 that impacted on 2023-24 and beyond.   These are now factored into the
budget outlook, reducing the budget gap. 
4.8.3 In terms of Council Tax, a 3% increase has been assumed across all scenarios,
this being the increase applied in 2022-23.  It will be a matter for Council to
decide the level of Council Tax increase.

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4.8.4 In respect of Live Argyll, at the budget meeting on 24 February 2022, Council
agreed to defer the proposed 3% reduction in the management fee for 2022/23
and noted that this will be applied in 2023-24 and will be subject to any future
budget decisions. 3% of the 2022-23 management fee equates to £0.122m and
this reduction has been built into the budget outlook from 2023-24 onwards.  No
further reduction has been built in, this would be a matter for Council to consider. 
4.8.5  The table below summarises the proposed measures to balance the budget in
the mid-range scenario. 
2023-24
£000
2024-25
£000
2025-26
£000
2026-27
£000
2027-28
£000
Fees and Charges
Increase
356 722 1,099 1,488 1,888
Management/Operational
Savings February 2021
20 20 20 20 20
Policy Savings February
2021
128 128 128 128 128
Policy Savings agreed
February 2022
3 6 6 6 6
Council Tax Increase  1,683 3,450 5,278 7,170 9,127
Reduction to Live Argyll
Management Fee
122 122 122 122 122
Total Measures to
Balance the Budget
2,312 4,448 6,653 8,934 11,291 
4.9 Estimated Budget Gap AFTER Measures to Balance the Budget 
4.9.1 The table below summarises the estimated budget gap in the mid-range
scenario. 
2023-24
£000
2024-25
£000
2025-26
£000
2026-27
£000
2027-28
£000
Estimated Budget Gap
Prior to Measures to
Balance Budget
(10,292) (19,572) (30,063) (38,938) (47,784)
Savings Measures 2,312 4,448 6,653 8,934 11,291
Estimated Budget
Surplus / (Gap)
Cumulative
(7,980) (15,124) (23,410) (30,004) (36,493)
Estimated Budget
Surplus / (Gap) In Year
(7,980) (7,144) (8,286) (6,594) (6,489) 
4.9.2 In the mid-range scenario, the budget gap estimated over the five year period
2023-24 to 2027-28 is £36.493m with a gap of £7.980m in 2023-24.   
4.9.3 The budget gap in the best case scenario over the five years is £25.060m with a
gap of £5.367m in 2023-24 and in the worst case scenario, the budget gap over
the five years is £79.798m with a gap of £15.443m in 2023-24.  A summary of all
three scenarios is included within Appendix 1.

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4.9.4 The changes from the previous anticipated outlook reported to the Policy and
Resources Committee on 16 June 2022 are summarised in the table below: 
2023-24
£000
2024-25
£000
2025-26
£000
2026-27
£000
2027-28
£000
Previously reported
budget surplus / (gap)
Cumulative
(6,891) (13,385) (20,940) (26,710) (32,275)
Increase to cost
pressures
(655) (655) (655) (655) (655)
Increase to Non Pay
Inflation
(434) (1,084) (1,815) (2,639) (3,563)
Revised Budget
Surplus / (Gap)
Cumulative
(7,980) (15,124) (23,410) (30,004) (36,493) 
4.10 Budget Working Group 
4.10.1 As part of the 2021-22 and 2022-23 budgets, a cross party Budget Working
Group (BWG) was established comprising of six Members from the
administration, three Members from the opposition and two Trade Union
representatives. The BWG did not have any decision making authority but could
report to and make recommendations to either the Council or the Policy and
Resources Committee.  Its primary purpose was to engage with officers and
provide scrutiny on the identification of savings options as they are developed. 
4.10.2 Given the significant budget gap over the next five years it was agreed at Policy
and Resources Committee on 16 June 2022 that a similar group will be
established to support the 2023-24 budget approach and for the group to begin
discussions in August 2022 to allow sufficient time to address the financial
challenges ahead.  Officers are making arrangements for the first meeting to take
place in August. 
5. CONCLUSION 
5.1 In the mid-range scenario, the budget gap estimated over the five year period
2023-24 to 2027-28 is £36.493m with a gap of £7.980m in 2023-24.   Council
officers are continuing to further develop savings options during 2022-23 and
these will be presented to members at a future date to help balance the budget in
future years. 
5.2 
5.3 
This is a very challenging budget outlook position and the level of Scottish
Government grant and the pay award are the two assumptions that could alter
the figures significantly.  Both will be kept under close review and the budget
outlook updated as and when further information becomes available.   
It should be noted that service concession flexibility has now been agreed by the
Cabinet Secretary for Finance and the Economy and a draft consultation draft of
the statutory guidance was issued on 18 July with responses due back by 12

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August.  The flexibility, should the Council approve to use, will provide a one-off
gain in addition to a recurring saving.  Officers will work through the draft
guidance and after approval of the guidance be able to report what this may
mean for Argyll and Bute Council.   
5.4 A cross party budget working group will be established to provide scrutiny on the
identification of savings options with early engagement with services users and
stakeholders to help inform and develop savings options within the financial
envelope. 
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 medium to longer term
financial strategy is being updated and the Council are
actively continuing to pursue opportunities to mitigate
against future budget gaps. 
6.3 Legal -  None directly from this report but Council will need to
balance the budget. 
6.4 HR -  None directly from this report but there is a strong link
between HR and budgets.
6.5 Fairer Scotland Duty - See below
6.5.1 Equalities None directly from this report but any proposals to
address the estimated budget gap will need to consider
equality issues.
6.5.2 Socio Economic Duty None directly from this report but any proposals to
address the estimated budget gap will need 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 need 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 need to consider
risk.
6.8 Customer Service - None directly from this report but any proposals to
address the estimated budget gap will need to consider
customer service. 
Kirsty Flanagan
Executive Director/Section 95 Officer
20 July 2022 
Policy Lead for Finance and Commercial Services:  Councillor Gary Mulvaney

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APPENDICES: 
Appendix 1 – Budget Outlook, Best, Worst and Mid-Range Scenarios
Appendix 2 – Non Pay Inflation
Appendix 3 – Cost and Demand Pressures (Council Services)
Appendix 4 – Cost and Demand Pressures (Social Work) 
For further information contact Anne Blue, Head of Financial Services
anne.blue@argyll-bute.gov.uk

Page 14

BUDGET OUTLOOK 2023-24 to 2027-28 APPENDIX 1
POLICY AND RESOURCES COMMITTEE - 11 AUGUST 2022
2023-24
£000
2024-25
£000
2025-26
£000
2026-27
£000
2027-28
£000
2023-24
£000
2024-25
£000
2025-26
£000
2026-27
£000
2027-28
£000
2023-24
£000
2024-25
£000
2025-26
£000
2026-27
£000
2027-28
£000
Base Budget 269,127 269,127 269,127 269,127 269,127 269,127 269,127 269,127 269,127 269,127 269,127 269,127 269,127 269,127 269,127
Base Budget Adjustments 2,107 2,123 2,132 2,141 2,150 2,107 2,123 2,132 2,141 2,150 2,107 2,123 2,132 2,141 2,150
Revised Base Budget 271,234 271,250 271,259 271,268 271,277 271,234 271,250 271,259 271,268 271,277 271,234 271,250 271,259 271,268 271,277
Pay Award 2,978 6,016 9,114 12,274 15,497 2,978 6,016 9,114 12,274 15,497 7,445 15,262 23,470 32,089 41,138
Pay Increments 345 690 1,035 1,380 1,725 690 1,380 2,070 2,760 3,450 690 1,380 2,070 2,760 3,450
Additional Teacher Costs (23) 23 23 24 24 22 45 68 92 116 (23) 23 23 24 24
Total Employee Cost Changes (Council Services) 3,300 6,729 10,172 13,678 17,246 3,690 7,441 11,252 15,126 19,063 8,112 16,665 25,563 34,873 44,612
Non-Pay Inflation - Council Services 3,867 6,639 9,610 12,794 16,207 4,291 7,271 10,476 13,926 17,641 6,316 11,103 16,147 21,470 27,097
Housing Benefits Admin Grant 40 80 120 160 200 40 80 120 160 200 40 80 120 160 200
Oracle Fusion running costs 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35
ASN Support 0 0 198 198 198 0 75 206 206 206 0 145 444 444 444
SEEMIS Membership Fees 9 11 13 16 16 9 11 13 16 16 9 11 13 16 16
Sustainable Rate for Partner Providers 342 327 327 327 327 342 327 327 327 327 342 327 327 327 327
Election Costs 0 0 0 0 250 0 0 0 0 300 0 0 0 0 350
Software support for a  new HR system & Backfill for project
team. 50 (50) (50) (50) (50) 100 (50) (50) (50) (50) 150 (50) (50) (50) (50)
Waste 7 25 78 (91) (91) 7 25 78 (91) (91) 7 25 78 (91) (91)
Compliance with BMW Ban 0 200 800 800 0 0 400 1,600 1,150 0 0 875 3,500 1,500 0
Planning (Local Development Plan) 0 50 0 50 0 0 50 0 50 0 0 50 0 50 0
House Loans 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19
Parking 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15
IT - increased bandwidth in schools 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26
Increase in cost of Salt for Winter Maintenance 147 147 147 147 147 163 163 163 163 163 179 179 179 179 179
Cessation of Red Diesel usage 78 78 78 78 78 78 78 78 78 78 78 78 78 78 78
Rightsize Council insurance budgets 414 414 414 414 414 414 414 414 414 414 414 414 414 414 414
Allowance for Cost and Demand Pressures Future Years
0 0 0 0 0 250 500 750 1,000 1,250 500 1,000 1,500 2,000 2,500
Total Cost and Demand Pressures 1,182 1,377 2,220 2,144 1,584 1,498 2,168 3,794 3,518 2,908 1,814 3,229 6,698 5,122 4,462
Total Estimated Expenditure PRIOR to measures to
balance the budget 279,583 285,995 293,261 299,884 306,314 280,713 288,130 296,781 303,838 310,889 287,476 302,247 319,667 332,733 347,448
Scottish Government Grant 214,895 213,821 212,752 211,688 210,629 213,817 211,679 209,562 207,466 205,391 212,736 209,545 206,402 203,305 200,256
Specific Funding for Additional Teachers 515 512 509 506 503 513 508 503 498 493 510 502 494 487 480
Council Tax 56,367 56,790 57,216 57,645 58,077 56,091 56,371 56,653 56,936 57,221 55,815 55,955 56,095 56,235 56,376
Total Funding 271,777 271,123 270,477 269,839 269,209 270,421 268,558 266,718 264,900 263,105 269,061 266,002 262,991 260,027 257,112
Budget Surplus / (Gap) PRIOR to measures to balance the
budget (7,806) (14,872) (22,784) (30,045) (37,105) (10,292) (19,572) (30,063) (38,938) (47,784) (18,415) (36,245) (56,676) (72,706) (90,336)
Measures to Balance the Budget:
Fees and Charges 475 963 1,465 1,984 2,517 356 722 1,099 1,488 1,888 237 481 733 992 1,259
Live Argyll - 3% decrease to management fee 122 122 122 122 122 122 122 122 122 122 122 122 122 122 122
Management/Operational Savings agreed February 2021
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Policy savings agreed February 2021 128 128 128 128 128 128 128 128 128 128 128 128 128 128 128
Policy savings reported Agreed February 2022 3 6 6 6 6 3 6 6 6 6 3 6 6 6 6
Council Tax Increase 1,691 3,445 5,265 7,152 9,109 1,683 3,425 5,227 7,092 9,021 1,674 3,403 5,188 7,031 8,933
Council Tax Increase (Growth element) 0 34 69 105 143 0 25 51 78 106 0 17 34 52 70
Total Measures to Balance the Budget 2,439 4,718 7,075 9,517 12,045 2,312 4,448 6,653 8,934 11,291 2,184 4,177 6,231 8,351 10,538
Budget Surplus / (Gap) Cumulative AFTER measures to
balance the budget (5,367) (10,154) (15,709) (20,528) (25,060) (7,980) (15,124) (23,410) (30,004) (36,493) (16,231) (32,068) (50,445) (64,355) (79,798)
Budget Surplus / (Gap) In Year AFTER measures to balance
the budget (5,367) (4,787) (5,554) (4,819) (4,532) (7,980) (7,144) (8,286) (6,594) (6,489) (16,231) (15,837) (18,378) (13,910) (15,443)
Best Case Scenario Worst Case ScenarioMid-Range Scenario

Page 15

NON-PAY INFLATION (COUNCIL) Appendix 2
Service Category Basis of Inflation
Inflation
Percentage
Mid Range
2023/24
Council Wide Electricity
Due to current market condition for electricity 20% increase mid range, with a 0.5%
tolerance for best and worst case.
20.00% 481,154
Council Wide Gas
Due to current market condition for gas 75% increase mid range, with a 0.5% tolerance
for best and worst case.
75.00% 371,037
Council Wide Heating Oils
Due to current market condition for heating oils 100% increase mid range, with a 0.5%
tolerance for best and worst case.
100.00% 266,842
Council Wide Solid Fuel
Based on estimates provided by facility services with a 0.5% tolerance for best and
worst case.
8.00% 18,430
Council Wide Water Charges Current rate of inflation with a 0.5% tolerance for best and worst case. 9.10% 53,241
Council Wide Vehicle Fuel Historic rate carried forward from last year - will be reviewed during 2022-23
4.97% 60,377
Council Wide Central Repairs - Outside Contractors
Based on labour and materials costs survey data from the Royal Institute of Chartered
Surveyors (RICS) and information from the property team on the typical allocation of
their costs between labour and materials.
3.40% 66,006
Council Wide Contingency for unidentified/insufficient inflation estimate £250k built in to mid-range and £500k built in to worst case scenario 250,000
Council Wide Insurances Current rate of inflation with a 0.5% tolerance for best and worst case. 9.10% 146,114
1,713,201
Education Pre-Primary Partner Provider Uplift
Brought into line with the estimate within Social Work for the impact of the Real Living
Wage on service costs.
5.00% 180,699
Education External School Placements Based on prior year uplifts 8.00% 90,590
Commercial Services Catering Purchases
Figure used by facility services based on national estimates for year 1 with a 0.5%
tolerance for best and worst case.
15.00% 308,543
Legal & Regulatory Support Leisure SLA-MAKI/Islay Pools
Based on RPI at February 2022 with a 0.5% tolerance in the best and worst case
scenarios.
8.18% 13,757
Legal & Regulatory Support Leisure SLA-Atlantis Based on RPI at May 2022 with a 0.5% tolerance in the best and worst case scenarios.
9.24% 51,161
Legal & Regulatory Support NPDO-Variable Element Based on year on year RPI uplift with a 0.5% tolerance for best and worst case.
8.18% 599,843
Legal & Regulatory Support NPDO-Utilities Rebate RPI at February 2022 with a 0.5% tolerance for best and worst case. 8.20% -23,945
Legal & Regulatory Support NPDO-Electricity
Due to current market condition for electricity 20% increase mid range, with a 0.5%
tolerance for best and worst case.
20.00% 89,930
Legal & Regulatory Support NPDO-Gas
Due to current market condition for gas 75% increase mid range, with a 0.5% tolerance
for best and worst case.
75.00% 119,481
Legal & Regulatory Support NPDO-Heating Oil
Due to current market condition for heating oils 100% increase mid range, with a 0.5%
tolerance for best and worst case.
100.00% 68,801
Legal & Regulatory Support NPDO-LPG
Due to current market condition for gas 75% increase mid range, with a 0.5% tolerance
for best and worst case.
75.00% 53,900
Legal & Regulatory Support NPDO-Water Current rate of inflation with a 0.5% tolerance for best and worst case. 9.10% 31,906
Legal & Regulatory Support HUB-Variable Element Based on year on year RPI uplift with a 0.5% tolerance for best and worst case.
8.18% 93,883
1,678,549
Customer and Support Services ICT Historic rate carried forward from last year - will be reviewed during 2022-23
15.00% 123,000
Roads and Infrastructure Waste PPP-Private Contractor Inflation Based on RPIX at February 2022 with a 0.5% tolerance for best and worst case.
7.09% 465,049
Roads and Infrastructure Waste PPP-Central Government Inflation
Based on Landfill Tax increase between 21/22 and 22/23 with a 0.5% tolerance for best
and worst case.
1.96% 36,765
Roads and Infrastructure Roads - Bitumen for Road Surfacing Based on price increases in 2022/23 with a 0.5% tolerance for best and worst case.
40.00% 158,512
Roads and Infrastructure Electricity - Street Lighting
Due to current market condition for electricity 20% increase mid range, with a 0.5%
tolerance for best and worst case.
20.00% 116,305
899,631
4,291,381
Council Wide Total
Executive Director Douglas Hendry - Total
Executive Director Kirsty Flanagan - Total
Total Non-Pay Inflation in the Mid Range

Page 16

COUNCIL COST AND DEMAND PRESSURES 2023-24 to 2027-28
Department Service Cost/Demand Pressure 2023-24
£,000
2024-25
£,000
2025-26
£,000
2026-27
£,000
2027-28
£,000
2023-24
£,000
2024-25
£,000
2025-26
£,000
2026-27
£,000
2027-28
£,000
2023-24
£,000
2024-25
£,000
2025-26
£,000
2026-27
£,000
2027-28
£,000
Chief Executive's Unit Financial Services Universal Credit “Full” Service went live in Sept 2018, but managed migration has
been deferred to 2021 and will not be completed until 2024. 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
marginally since implementation of Universal Credit but it is hard to predict just how
quickly the rest of the working age caseload will migrate from Housing Benefit to
Universal Credit between now and 2024.  These figures represent our best estimates
at this time.
40 80 120 160 200 40 80 120 160 200 40 80 120 160 200
Chief Executive's Unit Financial Services Implementation of new financial ledger system - Oracle Fusion Project 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35
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.  It is anticipated that growth continues over the next 5 years however
the extent of this growth is difficult to determine.  Scottish 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 continued improvements in recording and the introduction of the additional need
types 'Child plans' and ‘Other’ in 2011.   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.
0 0 198 198 198 0 75 206 206 206 0 145 444 444 444
Executive Director -
Douglas Hendry
Education The SEEMiS group, provider of the Council's Education Management Information
System, recently reviewed their long term financial plan and refreshed it to cover
the period 2021/22 to 2025/26.  As a result of this exercise there were implications
on Membership fees with a cost pressure on the Education service arising from
financial year 2023/24.  Indicative membership fees were provided for financial
years 2021/22 to 2022/23 and these have been factored in accordingly.
9 11 13 16 16 9 11 13 16 16 9 11 13 16 16
Executive Director -
Douglas Hendry
Education The Council has had a requirement to deliver 1140 hours of Early Learning and
Childcare from August 2021. The Council has been notified that the ring fenced
funding will be reduced by £1.124m from 2022-23. Also, as part of the 1140
expansion programme, the Scottish Government 'Funding Follows the Child'
guidance, requires local authorities to set a rate locally that is paid to funded
providers in the private and third sectors, including childminders, to deliver the
funded entitlement that allows them to deliver a high quality ELC experience for all
children. This rate should be sustainable and reflect national policy priorities,
including funding to enable payment of the real Living Wage to all childcare workers
delivering the funded entitlement and have a margin for re-investment built in. The
service has worked hard to mitigate the effects of this and has reduced expenditure
as far as possible.  However there remains a funding gap, the service are able to
cover the over spend for 2022-23 from carry forwards so the cost pressure is
requested from 2023-24 onwards. The service will continually review their plans
looking for efficiencies where possible.
342 327 327 327 327 342 327 327 327 327 342 327 327 327 327
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 0 0 0 250 0 0 0 0 300 0 0 0 0 350
Executive Director -
Kirsty Flanagan
HR Costs for a project team for a  new HR system & Backfill . This is a total new system
build. 50 -50 -50 -50 -50 100 -50 -50 -50 -50 150 -50 -50 -50 -50
Best Case Mid Range Scenario Worst Case
APPENDIX 3

Page 17

COUNCIL COST AND DEMAND PRESSURES 2023-24 to 2027-28
Department Service Cost/Demand Pressure 2023-24
£,000
2024-25
£,000
2025-26
£,000
2026-27
£,000
2027-28
£,000
2023-24
£,000
2024-25
£,000
2025-26
£,000
2026-27
£,000
2027-28
£,000
2023-24
£,000
2024-25
£,000
2025-26
£,000
2026-27
£,000
2027-28
£,000
Best Case Mid Range Scenario Worst Case
APPENDIX 3
Executive Director -
Kirsty Flanagan
Waste Additional costs derived from the current waste model. Note that the treatment of
waste going forward has not been fully costed due to uncertainty as to how the
council will deal with the Bio Municipal Waste ban and the Deposit Return Scheme.
Pressure has increased due to an updated waste model.
7 25 78 (91) (91) 7 25 78 (91) (91) 7 25 78 (91) (91)
Executive Director -
Kirsty Flanagan
Waste Achieving compliance with ban on biodegradable municipal waste in 2025.  This is
the estimated revenue costs from potential scenarios, remaining in or coming out of
the current waste PPP contract.  Coming out of the Waste PPP contract would
create an additional one-off cost.  There are also capital cost implications that are
not included within these estimates.  Due to the complexity of the model, estimates
are subject to change. 
0 200 800 800 0 0 400 1,600 1,150 0 0 875 3,500 1,500 0
Executive Director -
Kirsty Flanagan
Planning 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.
0 50 0 50 0 0 50 0 50 0 0 50 0 50 0
Executive Director -
Kirsty Flanagan
Housing Rightsize budget for House Loans which is a historic budget which has simply been
rolled forward year on year
19 19 19 19 19 19 19 19 19 19 19 19 19 19 19
Executive Director -
Kirsty Flanagan
Parking Loss in income at Glen Loin Car park, Arrochar due to end of lease and responsibility
for car park returning to owners, Luss Estates
15 15 15 15 15 15 15 15 15 15 15 15 15 15 15
Executive Director -
Kirsty Flanagan
IT Increased bandwidth for schools to allow digital transformation to support the move
to online learning
26 26 26 26 26 26 26 26 26 26 26 26 26 26 26
Executive Director -
Kirsty Flanagan
Roads Increased cost of Salt for Winter Maintenance, average useage of 15,000 tonnes of
salt over the winter period would equate to £163k of additional costs.
147 147 147 147 147 163 163 163 163 163 179 179 179 179 179
Executive Director -
Kirsty Flanagan
Roads Change at 1 April 2022 to stop the use of Red Diesel in certain vehicles has resulted
in an unavoidable increas in fuel costs in Roads and Infrastructure.
78 78 78 78 78 78 78 78 78 78 78 78 78 78 78
Council Wide Council Wide Rightsize budget for Council insurances which is a historic budget that requires to be
increased in line with the current insurance costs.
414 414 414 414 414 414 414 414 414 414 414 414 414 414 414
Council Wide Council Wide General provision for unidentified Cost and Demand Pressures 0 0 0 0 0 250 500 750 1,000 1,250 500 1,000 1,500 2,000 2,500
TOTAL 1,182 1,377 2,220 2,144 1,584 1,498 2,168 3,794 3,518 2,908 1,814 3,229 6,698 5,122 4,462

Page 18

SOCIAL WORK COST AND DEMAND PRESSURES - 2023-24 to 2025-26 APPENDIX 4
Service Cost/Demand Pressure 2023-24
£000
2024-25
£000
2025-26
£000
2023-24
£000
2024-25
£000
2025-26
£000
2023-24
£000
2024-25
£000
2025-26
£000
All Social Work Estimated Pay inflation reflecting a best case of 1%, mid range of 2% and worst
case of 3%.
668 1,336 2,011 1,335 2,671 4,033 1,342 2,685 4,068
All Social Work Estimated Pay increments, best case is that 50% of the incremental changes based
on 2022/23 are absorbed and in the mid-range and worst case, the increase is in
line with the increase in 2022/23.
52 103 155 103 206 309 103 206 309
All Social Work Non-pay inflation, best and worst case based on unavoidable/inescapable inflation
and worst case.
3,014 5,982 9,110 3,385 6,764 10,346 3,756 7,524 11,541
All Social Work Non-pay inflation impact of payroll inflation on NHS posts which are recharged to
Social Work.
96 196 302 105 217 334 105 217 334
Adult Care Younger Adults Demand Growth (Excluding Physical Disability): There has been
continuing increase in demand for care and support services for profoundly
disabled younger adults (ie under 65) whose parents have historically provided
care but are no longer able to.  The best case assumes a 1% increase in spending
reflecting the limited service capacity in the area, the mid-range reflects 2% growth
and the worst case reflects 3% growth.
170 342 516 341 689 1,044 511 1,038 1,582
Adult Care Younger Adults Demand Growth - Physical Disability: There has been continuing
increase in demand for care and support services for profoundly disabled younger
adults (ie under 65) whose parents have historically provided care but are no
longer able to.  The best case assumes a 1% increase in spending reflecting the
limited service capacity in the area, the mid-range reflects 2% growth and the
worst case reflects 3% growth.
35 71 107 71 143 217 106 215 328
Adult Services Learning Disability Budget Adjustment - The Learning Disability Supported Living
budget is carrying a recurring unbudgeted commitment of circa £743k which is
contributing to the recurring overspend on the Social Work budget. To address this
situation, it is proposed to realign the budget over the three year period from
2023/24 to 2025/26 whilst also reviewing cases and redesigning services. The
adjustment will be reviewed annually to reflect spending reductions delivered as
well as any changes to funding and practice resulting from the implementation of
the Independent Review of Adult Social Care.
248 495 743 248 495 743 248 495 743
Adult Services Physical Disability Budget Adjustment - The Physical Disability budget is carrying a
recurring unbudgeted commitment of circa £89k which is contributing to the
recurring overspend on the Social Work budget. To address this situation, it is
proposed to realign the budget over the three year period from 2023/24 to
2025/26 whilst also reviewing cases and redesigning services. The adjustment will
be reviewed annually to reflect spending reductions delivered as well as any
changes to funding and practice resulting from the implementation of the
Independent Review of Adult Social Care.
30 60 89 30 60 89 30 60 89
Best Case Mid Range Worst Case

Page 19

Service Cost/Demand Pressure 2023-24
£000
2024-25
£000
2025-26
£000
2023-24
£000
2024-25
£000
2025-26
£000
2023-24
£000
2024-25
£000
2025-26
£000
Best Case Mid Range Worst Case
Adult Services Mental Health Budget Adjustment - The Mental Health budget is carrying a
recurring unbudgeted commitment of circa £197k which is contributing to the
recurring overspend on the Social Work budget. To address this situation, it is
proposed to realign the budget over the three year period from 2023/24 to
2025/26 whilst also reviewing cases and redesigning services. The adjustment will
be reviewed annually to reflect spending reductions delivered as well as any
changes to funding and practice resulting from the implementation of the
Independent Review of Adult Social Care and any additional funding provided to
address mental health issues as a consequence of the COVID pandemic.
66 131 197 66 131 197 66 131 197
Children and
Families
Continuing Care demand for Looked After young people 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 form high cost external residential care to
local foster and kinship care), the mid case reflects £250k per annum and the worst
case reflects £500k per annum.
0 0 0 250 500 750 500 1,000 1,500
All Social Work Allowance for unknown cost and demand pressures which could arise. The best
case assumes unknown pressures totalling £250k per annum, the mid range £500k
per annum and the worst case £750k per annum.
250 500 750 500 1,000 1,500 750 1,500 2,250
Adult Services Kintyre Care Centre - Potential cost pressure as a result of potential transfer of KCC
facility to HSCP Management.
750 750 750 750 750 750 900 900 900
TOTAL COST AND DEMAND PRESSURES 5,378 9,966 14,730 7,184 13,626 20,312 8,417 15,971 23,841