Local Government 2024-25 Provisional Outturn and 2025-26 Budget Estimates

Executive Summary

Revenue Expenditure

• Net revenue expenditure on local authority services was provisionally reported as £15,760 million in 2024-25 and budgeted as £16,239 million for 2025-26.
• This is an increase of 6.8% (£1,002 million) in 2024-25, compared to the net revenue expenditure figure of £14,758 million seen in 2023-24. However, much of this increase can be attributed to the baselining of £950.9 million into the General Revenue Grant, which switched this funding away from the category of specific grants. As Net Revenue Expenditure measures general funding and the use of Council’s own reserves, funding more money via the General Revenue Grant leads to a corresponding rise in Net Revenue Expenditure.
• Net revenue expenditure is estimated to increase by a further 3.0% (£479 million) in 2025-26.
• Education and Social Work continue to be the services with highest net revenue expenditure in both 2024-25 and 2025-26. These services account for around 50% and 31% respectively of net revenue expenditure in both years.

General Funding

• Local authorities reported provisional general funding of £16,394 million in 2024-25, and budgeted for £17,358 million of general funding in 2025-26.

General Fund and Harbour Account Reserves

• General Fund (including Harbour Account) reserves at 31 March 2025 were provisionally reported as £2,771 million, and budgeted to be £2,625 million at 31 March 2026.  For context, General Fund (including harbour account) reserve balances were at around £1,600 million on 31 March 2020. Therefore, whilst reserve balances remain above pre-pandemic levels for Scotland, these are being brought down.
• Harbour Account reserves remain fairly constant at around £288 million as at 31 March 2024, 31 March 2025 and 31 March 2026.

Capital Expenditure

• Capital expenditure across local authorities was £3,678 million in 2023-24, and is provisionally reported as £4,479 million in 2024-25, an increase of 22% (£801 million). It is budgeted as £5,035 million in 2025-26.
• Housing Revenue Account (HRA) has the highest capital expenditure in both 2024-25 and 2025-26, accounting for 29% and 30% of all capital expenditure in both years. Education is expected to have the second highest in both years, accounting for 23% in 2024-25 and 21% in 2025-26.
• The increase of 51% in capital expenditure for Education from 2023-24 to 2024-25, reflects the roll out of the Learning Estate Investment Programme.
• The main sources of capital financing are borrowing and grants & contributions. In-year borrowing is expected to increase from £1,705 million in 2023-24, to £2,395 million in 2024-25, and then to £3,021 million in 2025-26. Borrowing is currently the primary source of capital financing.
• Total external debt was provisionally reported as £22,916 million in 2024-25, and budgeted as £25,696 million in 2025-26, with local authorities continuing to remain under-borrowed.