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.

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 said it 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.

Council agreed to underwrite a £7.377m budget shortfall to enable the Integration Joint Board (IJB) to establish a balanced budget by March. It was also agreed that £2m 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)

• £193,000 - Reduce the number of highest cost software licences to only apply to those staff deemed to be in critical roles
• £472,000 – Demolition of Gordon House and closure of St Leonards, Banff

Infrastructure Services (£2,968,200 savings)

• £750,000 - Public street lighting will be turned off overnight from around 1am-5am in residential areas
• £170,000 - Decommission ice plant and end nightwatch provision at Macduff Harbour
• £50,000 - Stop provision of sandbags to members of the public. The implementation will be phased over three years to allow for members of the public to make alternative arrangements

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

• £588,000 – Removing the fourth October intake for Early Learning and Childcare admissions, bringing it in line with statutory entitlement
• £487,600 – Ongoing review of Early Learning and Childcare settings across Aberdeenshire
• £77,000 - proposal to add 15% to the cost of a meal for Primary 6 and 7, taking the daily cost up to £3.05

Communities Committee (£1,521,341 savings)

• £131,911 - Move all Live Life Aberdeenshire sport and physical activity venues to a standard operation model which will dictate opening times, timetabling and staffing structure
• £690,130 – a 10% revenue saving through income generation
• £128,444 - Change the operating model of all “non-core” venues and offer only to inducted community groups, mothballing venues unless there is a lead user/group who would take on the operating responsibilities

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 £86m capital budget. 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.

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 month’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.

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.”