A report by the Chief Financial Officer was considered by the Enabling and Customer Services Committee, setting out the impact of the settlement on the council’s revenue and capital planning.
The Scottish Government announced the Local Government Finance Settlement on 13 January 2026. It includes additional core revenue funding of £253.5 million nationally, with Dumfries and Galloway Council’s share estimated at £5.17 million.
This represents a 1.6 per cent cash increase, which equates to a real-terms reduction of around 0.6 per cent, once inflation is taken into account.
The report highlights that the settlement covers one year only, with no confirmed funding levels beyond 2026/27, which continues to present challenges for longer-term financial planning.
Members were also advised that the council faces a projected funding gap of £34.8 million over the three financial years from 2026/27 to 2028/29, forming the basis for political group budget proposals.
As part of the same update, members also considered how the Local Government Finance Settlement affects the council’s longer-term Capital Investment Strategy, to ensure existing commitments remain affordable and deliverable as part of the wider budget-setting process.
The update provides clarity for councillors as they consider the difficult choices required to deliver a balanced and sustainable budget, ahead of budget-setting meeting of Full Council later this month.
Councillor John Campbell Chair of Dumfries and Galloway Council’s Enabling and Customer Services Committee, said:
“The update today provides councillors with a clear and factual understanding of the funding position and the constraints we are working within.
“It forms an important part of the information members require – and to consider – when we move towards setting a balanced budget that recognises the significant financial pressures facing local government.
“Alongside this, members have received an update on how the settlement is being reflected in our capital investment planning. This is about taking a careful, disciplined approach to long-term investment decisions, while ensuring that existing commitments remain affordable and sustainable as part of the overall budget.”
Councillor Ben Dashper, Vice-Chair, said:
“Budget-setting requires transparency and discipline. This update ensures councillors are working with the latest financial information as they balance service pressures with longer-term sustainability.
“The settlement is one part of a wider picture that will inform the decisions taken at Full Council later this month.”
The committee also agreed that Council Leader, Councillor Stephen Thompson, would write to the Scottish Government seeking fairer and more transparent funding that reflects the council's role in delivering vital services to residents across the region.
Full Council will meet on 26 February to set Dumfries and Galloway Council’s 2026/27 budget, informed by the Local Government Finance Settlement and ongoing financial planning work.