Agenda item

The Committee had before it a report by the Executive Director for Corporate Services which outlined the known factors affecting the financial position and financial sustainability of an organisation’s General Fund over the medium term. Furthermore, the purpose was to draw out the scenarios that the Council faces and described the approach to addressing the conclusions.

The report recommended:-

that the Committee –

(a)      approve the Medium Term Financial Strategy for the General Fund, 2025;

(b)      note that the Scottish Budget for 2026/27 has been announced as being presented to the Scottish Parliament on 13 January 2026;

(c)      note that the Scottish Government published its latest Programme for Government in May 2025, followed by an updated Medium Term Financial Strategy in June 2025. This, in addition to the outcome of the Local Government Settlement for 2025/26 and information included in the previous MTFS from Scottish Government means the Central Scenario has been updated to expect a cash increase of 1% per annum in grant funding from the Scottish Government for future financial years. The Council’s MTFS model will be updated for the Council’s Budget meeting in March 2026 with details of the actual financial settlement for 2026/27;

(d)      note that inflation remains above Bank of England target levels;

(e)      note that the Capital Programme, as included in the Council Financial Performance Quarter 1, 2025/26 report (CORS/25/181), is the basis for capital financing costs and debt levels referred to in the MTFS;

(f)       approve the Loans Fund Repayment Policy for 2026/27 and beyond as described in Table 5 of the MTFS;

(g)      note the 2026/27 Budget will be discussed and set by the Council in March 2026 following a public engagement exercise as required by the Scheme of Governance and Budget Protocol, and that details of this consultation exercise are contained in 5.10 of the MTFS. The results of the engagement will also be reported to Council as part of the Budget setting reports;

(h)      note that the Financial Resilience Framework shows that the General Fund has underlying resilience of £12m (uncommitted reserves) which is a falling percentage of the net General Fund budget. The aim is to move to a target range (2–3%) of Net Expenditure and review this annually based on risks and inflation. Therefore the Council should determine during the 2026/27 budget - setting process how this aim is addressed;

(i)       note that the Financial Resilience Framework also identifies that the total value, and cost of servicing debt is rising. Careful consideration will have to be given to each and every capital project to ensure it fits with the Council’s Strategic priorities, and delivers Best Value, as well as being affordable, sustainable, and prudent in compliance with the Prudential Code. The Council approved a cap on the cost of capital financing of 12% of Net Revenue Expenditure; and

(j)       note that the Chief Officer – Finance will continue to develop the Financial Resilience Framework with a view to embedding it across the councils financial planning, financial monitoring, and financial year end reporting arrangements.

The Convener, seconded by the Vice Convener moved:-

that the Committee approve the recommendations contained within the report.

Councillor Malik, seconded by Councillor Tissera, moved as an amendment:-

that the Committee –

(1)    approve recommendation (a);

(2)    note the lack of direction within the Medium-Term Financial Strategy to the IJB, noting the “Golden Rules” are silent on recommending holding additional general reserves for the IJB, as is Section E of the Executive Summary, Reserve policy (risk based);

(3)    note 1.16 of the proposed Strategy, noting that we believe the UK Government passed over the full NI contributions to the Scottish Government, as part of the record £50b settlement, who then failed to pass these contributions over to local government. This choice by the SNP has caused unexpected and unnecessary costs for the Council;

(4)    agree the financial outlook fails to note the record settlement received by the Scottish government from the UK Government, noting the question that must be asked is “where has the money gone John”; and

(5)    agree (i) of the recommendations contradicts the decision taken at Council on 28 October 2025.

On a division, there voted:- for the motion (5) – the Convener, the Vice Convener and Councillors Allard, Greig and Radley; for the amendment (3) – Councillors Malik, Nicoll and Tissera.

The Committee resolved:-

to adopt the motion.