Council facing ‘huge’ £8.3m budget black hole

Council officials in Argyll and Bute have warned they may have to look at plans for next year’s budget earlier than usual – with a funding gap of £8.3m on the cards.

The council’s executive director has also said that the prediction already factors in a 5% council tax increase in the 2025/26 financial year.

But a pledge has also been made to look at additional sources of revenue after a councillor warned that there was “only so much” the authority could do to increase council tax or reduce services without affecting local residents.

The budget for 2025/26 will be set next February.

Executive director Kirsty Flanagan told the council’s policy and resources committee: “£8.3m is a huge figure, and we have not had something like that for some time.

“It also assumes a 5% increase in council tax, so members will need to give that figure some consideration.

“One of the two biggest assumptions that affect the budget outlook is the Scottish Government grant. We have built in a 0.5% reduction, which it is prudent to do. Had we not got the additional £62.7m, we would have had to assume more than 0.5%.

“The other is the 2% pay award. A lot of finance colleagues are putting in 2% for next year, and we will see how the conversations go this year.

“We are hoping that with inflation reducing, that will take some pressure off, because much more is not affordable. It is one we will have to keep under review.

“We are already in May, and months seem to go by so quickly, but we may have to look at this earlier than usual if we want to bridge the gap.”

Cllr Gordon Blair asked: “Are you going to set up a specialist team to look at other sources of revenue? Obviously there is only so much council tax can go up, and only so much we can cut back.”

Ms Flanagan responded: “We are looking at all avenues of opportunity to help bridge the gap in the executive leadership team, and have discussions with other chief officers on the budget approach for next year.

“We will come forward and discuss it with elected members. Quite often we have brought a report to the committee in May, but because of the change in administration we did not get a chance.

“Additional revenue is something we will look at, but it is harder than you think.

“It is an aspiration we all have.”

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