Council budgets set for the coming year   

Aberdeenshire councillors met today (Thu, Feb 27) to agree budgets and set council tax for the financial year 2025-26.   

Papers presented to Full Council showed how a balanced budget could be achieved, reflecting the work and scrutiny applied to the setting process, outlining a range of financial savings across all services to bring spending in line with the available budgets. 

The Administration’s agreed budget demonstrates a billion-pound investment in local services from revenue, housing and capital programmes – all for the benefit of local communities.

Communities were again warned, however, that implementing the proposals will not be without change being felt on the ground and not all the decisions agreed today will be popular.  

The Administration said the Council needs to change and in order to balance the books, it needs residents to understand that things will change, with some services stopping and others being delivered in a different way.  

Revenue Budget  

Members heard that the 2025/26 revenue budget was being set against a backdrop of economic uncertainty and significant financial challenges for both the Council and its residents.  A balanced revenue budget of £802 million for the coming financial year was agreed.

As part of that budget-setting, councillors agreed to apply a 10% increase in Council Tax for the year ahead along with indicative increases of 8% in 2026/27 and again in 2027/28. Council Tax brings in just around 22% of the income that councils use to fund the delivery of their services.

The council’s Medium-Term Financial Strategy is shaped by external factors that present significant risks, including uncertainty over future funding levels, pay settlements for 2025/26, challenges in the construction sector and supply chain pressures, economic conditions and cost of living impacts on service demand and tax income, together with severe weather events leading to unexpected financial burdens.

Given these financial challenges, the Council will continue with strict financial controls implemented in 2025/26, along with investment in transforming the organisation, changing and in some cases reducing services, and driving full cost recovery through increased fees and charges. This approach reflects a stable and consistent response to financial pressures, rather than temporary fluctuations and changes in approach.

Council agreed to underwrite a £7.377 million budget shortfall to enable the Integration Joint Board (IJB) to establish a balanced budget by March.

It was also agreed that £2 million of the Transformation Reserve be released to fund the voluntary severance costs for staff who left Aberdeenshire Council in 2024/25.

The agreed savings of just under £14m in the next financial year will come from across the council’s directorates including:  

Business Services (£2,050,557 savings)  

Infrastructure Services (£2,968,200 savings)  

Education & Children’s Services (£7,255,733 savings)   

Communities Committee (£1,521,341 savings)    

 Capital Budget  

Borrowing in the capital budget for the coming financial year has been capped at no more than 8.5% of total income streams in any future year – resulting in an £86 million capital budget. Capital expenditure plays a key role in delivering the Council’s long-term priorities as it can be targeted in creative and innovative ways.  

Officers are in the process of developing a new capital strategy to address current challenges, with a new Peterhead Academy being a major focus of the Capital Plan. The strategy, which is closely related to the ongoing review of Corporate Asset Management, aims to make the best use of assets while aligning with Council goals, being cost-effective, and promoting sustainability.   

The agreed budget as well as opposition proposals and a recording fo the meeting can be found online here: https://aberdeenshire.moderngov.co.uk/ieListDocuments.aspx?CId=142&MId=7819&Ver=4     

Housing Revenue Account  

Councillors also approved the authority’s £76 million Housing Revenue Account budget for the coming financial year. This is the account which supports the maintenance and management of the council’s housing portfolio and is ringfenced from the standard revenue budget. As agreed at last week’s Full Council, housing tenants will see a rent increase of 5% from April 1 this year. The increase will see the average weekly rent rise by £4.63 to £97.19, and forms part of a three-year strategy agreed last year following input from tenants.   

Councillors also supported an increase in fees and charges of 3% and 5% across various categories, coupled with a significant reduction in heat and light charges for sheltered housing tenants of 24%. This will bring the weekly heat and light charge for a two-bedroom sheltered housing property down from £55.68 to £42.54.  

Carbon budget  

A carbon budget figure is set each year to keep the council on track to reduce emissions by 75% by 2030 and onto Net Zero by 2045.  

Aberdeenshire Council’s carbon budget has been set at 37,690 tonnes of carbon dioxide equivalent for 2025/26. Significant progress has been made to date through energy efficiency and decarbonisation projects across the council’s operational buildings, LED streetlighting, fleet, and changes to fuel type and materials in quarries.  

However, achieving Net Zero is a massive undertaking and one that will require equivalent funding, collaboration, and dedication from other public and private bodies to meet the incredible global challenge.  

Speaking on behalf of the Opposition, Cllr Gwyneth Petrie presented an alternative budget which made various changes to the revenue and capital budgets. These included the closure of the remaining service points in Inverurie, Fraserburgh and Peterhead and a move away from delivery of large corporate events, to smaller scale awards distribution at local level. There was also a focus on increasing income generation for the council through sponsorship opportunities and also through the amalgamation of various warden roles.   

Cllr Petrie, who also encouraged the Council to review the situation around Woodhill House – including its potential sale – commented: “I recognise that all sides of the chamber have made decisions in the run-up to today that none of us are comfortable with and that we’ve all found difficult. There are efficiencies even within our budget that we simply didn’t want to make and it’s tough and I don’t think we can deny that there will be an impact on those we present.  

“But this has to be the crunch year. We either change or we can change the spiral of more and more difficult decisions and that is the decision that sits before us today. We know that our budget probably won’t be universally accepted but I think the hope is that what we’ve proposed is a different way forward and hopefully the whole chamber can accept that the sum of that is required as we move forward for sustainability.”  

During cross-chamber debate, councillors made their cases for both budgets, recognising the challenges facing all services, while focusing on the need for difficult decision to be made in the face of extremely challenging economic times.   

Councillors said it was important that the public understand the complexity of setting local authority budgets and stressed that while the proposals taken are considered deliverable, residents are likely to see changes.  

Speaking in the chamber, Council Leader Cllr Gillian Owen described the administration’s proposal as a “good financial plan for next year and beyond” that would make the Council “more resilient and sustainable”.   

She said: “Local Government and the services we provide are at the heart our communities – services which support people from cradle to grave.  Setting a balanced budget which ensures we deliver on our priorities, provide those services which we know our communities value to a high standard and protecting the most vulnerable in our society continues to be very challenging.   

“For many years we have been commenting, in this chamber and in the wider media, about how difficult it is to set a budget for a Council of any size in the current climate. We continue to navigate the challenging financial context, with annual pressures typically around £40m to £50m.  Each year we are having to make savings and delivering changes of that financial magnitude and, of course, our communities have been exposed to many examples where we have had to cut our cloth accordingly.   

“The budget the Administration has set out is a balanced package of savings, cuts, and increases to fees and charges, including Council Tax, and a further commitment to move quicker on transformation. This is a good financial plan for next year and beyond that will make us more resilient and sustainable. Our residents won’t find the changes easy, but Aberdeenshire Council is not alone in facing these challenges. The whole of the public sector is facing similar – and in some cases much worse - financial positions. We are committed to explaining the position and working with our residents as we navigate the service changes and the impact they will have on individuals, groups and communities.”   

Deputy Leader, Councillor Anne Stirling added: “Today, I’m aware that the focus is naturally drawn to what we’re stopping or changing but I do think it’s important to reflect that we remain a major provider of services to our communities. We have heard we will be spending a billion pounds next year – a billion pounds educating our children, maintaining roads, supporting businesses to create employment, caring for our elderly population, supporting vibrant towns and villages, helping people to keep healthy and active, working with communities so they are resilient, disposing of our waste and keeping our children and adults safe from harm.   

“Our Medium-Term Financial Strategy is a critical strategic document, setting out the financial plan for delivering the Council’s priorities. It reflects the entirety of the financial resources available to us, from revenue, capital, and reserves, but also highlights the challenges we face in ensuring we remain financially sustainable.  

“As councillors it is incumbent upon us to consider the consequences of our decisions, and that is why there is such an extensive list of Integrated Impact Assessments in the papers before us. These documents look at the impact of tabled savings on groups with protected characteristics, and what we might do if these savings are taken to mitigate the effect on them. They also challenge us to always keep the impact of our decisions in our minds.   

“The Administration’s proposals are carefully considered. They draw on the views of residents, the advice of officers, and the feedback from communities. The financial position of the Council does continue to be challenging and I can’t see that getting any easier in future years, unless the way we are funded as local authorities fundamentally changes.”