The Argyll and Bute Council is facing a financial crisis as they have already overspent their budget by £3.6 million in the first five months of the financial year. The overspend is attributed to a forecast overspend of £1.4 million for residential placements in social work and £1 million spent on roads and infrastructure services, including school transport and ferry repairs. It is expected that the overspend will reach £4 million by the end of the year.
To address this financial gap, the local authority is considering a five percent council tax increase as part of the 2025/26 budget, which could potentially rise to as much as seven percent. This increase is necessary to reduce the council’s £14.5 million budget deficit, which is still likely to be around £9 million even after the tax hike.
A report on the council’s financial outlook will be reviewed by the policy and resources committee on October 10. Executive director Kirsty Flanagan explained that the overspends are partially offset by additional income in waste management, reduced landfill tax costs, and vacancy savings across departments. The weather incident of October 2023 has also added pressure on the revenue perspective, resulting in a reported overspend of £3.567 million.
Regarding the council tax rise, Flanagan mentioned that a five percent increase is assumed in the mid and worst-case scenarios, while a seven percent increase is assumed in the best-case scenario for 2025/26. These assumptions are based on the fact that most councils increased their council tax by at least five percent in 2023/24 before the freeze in 2024/25. However, the actual figures could be significantly altered depending on the level of Scottish Government grant and pay awards.
The budget outlook will be closely monitored, and further updates will be provided as more information becomes available. The council is facing a very challenging financial situation, and tough decisions will need to be made to ensure the sustainability of public services in the region.
