Key Facts and Figures

Orkney Islands Council

2025-2026

IMAGE: The cover displays the words “Orkney Islands Council”, “Key Facts and Figures” and “2025-2026” on a burgundy background.

Contents

• The Funding of Council Services
• Revenue Expenditure
• Aggregate External Finance (AEF)
• Calculation of Council Tax
• Council Tax Comparison
• Council Tax Levels in Scotland
• General Fund: Where the money goes
• Housing Revenue Account
• Harbour Accounts
• Committee Framework
• General Fund Services: Capital Resources
• Non-General Fund Services: Capital Resources
• Corporate Asset Management Plan
• Operational Council Properties
• Non-Operational Council Properties
• Schools and Leisure Facilities
• Statistical Information
• Social Work
• Roads and Planning
• Environmental Services
• Employee Statistics
• Community Councils
• Additional Information
• Further Enquiries
• Glossary of Terms

The Funding of Council Services

Council Services

The council provides many essential services such as education and learning, housing, recycling and refuse disposal, roads, parking and pavements, marine services, social care, social work, and transport.

Revenue Expenditure

Revenue Expenditure is the day-to-day expenses of providing services.

Aggregate External Finance (AEF)

AEF is the total grant provided by central government to local authorities. It comprises three elements: General Revenue Grant (GRG), Business Rates Income and Ring-fenced Grants. GRG is the principal grant received by local authorities and is determined by the total level of grant available and an individual authority’s need to spend. Business Rates Income is collected by all authorities and paid into a central pool which is then redistributed by the Scottish Government. Ring-fenced grants are provided for a specific service area or initiative.

The difference between AEF, fees and charges, the use of balances, and the total budgeted expenditure is met by Council Tax.

Council Tax

Councils raise taxes from residents by way of a property tax – the council tax – which is based on property values. Each dwelling house in a local authority area is placed into one of eight valuation bands, A to H. All Councils determine their Council Tax level based on the number of Band D equivalent properties, subject to certain reductions and exemptions.

Reserves

Reserves are the accumulation of surpluses, deficits, and appropriations over past years. The Council will assess each year whether it can apply an element of the working balances to support current spending plans.

Council Spend

It is expected that the level of funding available to the Council will continue to fall in real terms for the foreseeable future. As a result, over the medium term, the Council will continue to plan for a reducing level of resources being available to support its activities. Additionally, it is also anticipated that significant cost pressures will persist beyond 2025-2026 resulting from local demographics, the service requirements of the local population and the impact of Welfare Reform. The combination of these anticipated cost pressures coupled with reduced government grant income presents significant challenges and financial risks for the Council over the medium term.

However, the Council has been proactive in its preparation for the anticipated reductions in grant funding and demand pressures.

• A medium-term resource strategy was prepared to establish a framework for budget setting over the period 2023-2028.
• All Council Services are required to find additional efficiency savings within their approved budgets and to keep budget service pressures to a minimum.
• A long-term financial plan has also been prepared which gives an indication of the funding gap the Council could face over the next ten years.

Calculation of Council Tax

Council Tax Calculation 2025/2026

IMAGE: The council tax calculation table shows an approved budget of £118.205 million, deductions for reserves, the finance settlement and the empty property surcharge, and a resulting Band D Council Tax of £1,574.60.

Council Tax plus Scottish Water Charges 2025-2026

The water and sewerage charges are the responsibility of Scottish Water. The level of charges set by the water authority is subject to scrutiny by the Water Industry Commission for Scotland. The Council bills and collects these monies on behalf of Scottish Water.

Non-Domestic Rates

The Council calculates business rates by multiplying the ratable value (RV) of the property by the rate per £1 which is announced by the Scottish Government each year.

For 2025-2026, the rate per £1 is 48.1p. Properties with a RV over £51,000 will have an extra 5.4p added to the rate per £1, and properties with a RV over £100,000 will have an additional 1.3p added again to the rate.

A number of reliefs are available, for example, the Small Business Bonus Scheme (SBBS). Details of all the reliefs can be obtained by www.scotland.gov.uk.

Business Rates income is allocated to councils as part of the local government settlement. The council retains all income it collects, however where this varies from the amount included within the Local Government settlement a commensurate increase or decrease is made to the general revenue grant to ensure no overall change in the total revenue support provided by the Scottish Government.

Non-Domestic Rate Poundages 2025/2026

Council Tax Comparison

Local Authorities are grouped into ‘families’ which take account of factors out with the Council’s control to allow fairer comparison in levels of Council Tax. The chart below compares the Council Tax levels of members of our family group. Band D Council Tax levels are as follows:

Council Tax Comparison with family group members

IMAGE: A bar chart compares Band D Council Tax for the family group members: Comhairle Nan Eilean Siar £1,388, Orkney £1,575, Dumfries & Galloway £1,455 and Shetland £1,387.

Band D Council Tax actual levels 2012 – 2026

The graph compares Scotland average and Orkney Band D Council Tax levels from 2012-13 to 2025-26. The vertical axis ranges from £750 to £1,650.

IMAGE: A line graph compares Scotland average and Orkney Band D Council Tax levels from 2012-13 to 2025-26. Both lines rise over the period, with Orkney increasing to approximately £1,575 in 2025-26 and Scotland average to approximately £1,543.

Council Tax Levels in Scotland

General Fund: Where the money goes

The Council’s 2025/2026 budget will be monitored and reported on a Committee basis and the analysis below shows the distribution of the budget.

By Committee

How our budget is allocated to services (net expenditure) for 2025/2026

IMAGE: A pie chart shows the 2025/2026 net expenditure allocation: Infrastructure and Organisational Development £18.90M (16.8%), Education, Communities and Housing £57.69M (48.8%), Orkney Health and Care Partnership £31.41M (26.6%), and Policy & Resources £12.55M (10.6%).

Type of costs our budget covers (gross expenditure) 2025/2026

IMAGE: A pie chart shows gross expenditure by type of cost: Staff Costs £81.60M (47.4%), Property Costs/Supplies and Services/Transport Costs £25.82M (15.0%), Administration Costs £19.93M (11.6%), Payments to other bodies £41.60M (24.1%), and Capital Financing £3.30M (1.9%).

General Fund: Where the money comes from

Service expenditure analysis (net) 2025/2026

IMAGE: A pie chart shows net service expenditure funding: Non Domestic Rates £11.76M (9.9%), Council Tax £13.67M (11.6%), General Revenue Funding £74.30M (62.9%), and Movement in Reserves £18.48M (15.6%).

Government grant allocation taken from settlement letter from the Scottish Government

The Government provides a grant allocation to assist councils in planning their budgets and Council Tax levels. The figures shown below highlight the grant allocated for the current and previous financial years.

The 2025/2026 settlement is an increase in government grant of £10.748M.

Housing Revenue Account

Background

There is a statutory requirement for local authorities to maintain a housing revenue account (HRA or ‘rent account’) ring-fenced out with the General Fund. All expenditure incurred and income received in respect of specified houses, buildings, and land, must be included in the HRA and be in balance at the end of each financial year.

Summary of budgeted HRA expenditure and income for 2025/2026

Housing Stock

Weekly Rent Levels in 2025/2026

Prior to the commencement of the house build programme the Council had some of the lowest Council house rents in Scotland. The policy for funding the build programme of increasing rent by Consumer Prices Index (CPI) has seen the rents rise. The rent increase of 4.1% for 2025/2026 is above the Consumer Prices Index (CPI) of 3.8% at August 2025. This increase equates to an average rent figure of £106.70 per week in Orkney, over the 48-week period that rents are charged during the year.

Harbour Accounts

Background

Scapa Flow Oil Port

The Council maintains a separate trading account for Scapa Flow Oil Port in terms of Section 67 of the Orkney County Council Act 1974 which requires the Council to keep separate accounts in respect of the harbours undertaking to distinguish capital from revenue and income from expenditure.

In line with Open Port Duties and the need to support oil port activities at Flotta, Ship to Ship operations, tanker anchoring and movements throughout the port area, the Harbour Authority requires a 24-hour, 7 day per week harbours operation. This means that there is a requirement to incur a substantial level of expenditure to maintain this level of service. For the Oil Port, the expenditure projections assume the service level continues as in 2024/2025 adjusted for the Council’s budget strategy and a decrease in tanker traffic.

The income levels for the Scapa Flow Oil Port account are mainly dependent on the number of oil tankers that will load at the Flotta Terminal during the year, but account is taken of diversification into ship-to-ship operations and rig and vessel mooring.

The income projections are based on 12 tankers with an average gross tonnage of 59,000 gross tonnes (GT). This compares to the 2023/2024 budget which assumed 22 tankers with an average tonnage of 64,000 GT.

Overall, a budget surplus of £488,900 is anticipated for Scapa Flow Oil Port for the financial year 2025/2026. Under Section 69 (1) of the Orkney County Council Act 1974 the surplus achieved will be credited to the Strategic Reserve Fund which the Council can thereafter invest or utilise in terms of Section 69 (2) and (3) of the Act.

Miscellaneous Piers and Harbours

The Council maintains a separate trading account for Miscellaneous Pies and Harbours to distinguish it from General Fund Services and to demonstrate to harbours users that the dues paid for the use of the Council’s piers and harbours are ring-fenced for the provision of harbours services or applied to the maintenance of the piers and harbours. The main income sources for 2025/2026 are Northlink roll-on-roll-off services, freight services, internal ferry services, plus cruise ship revenues. 188 cruise ship visits in 2025 compared to 229 in 2024.

The proposed Maintenance Programme has a budgeted cost of £2,765,000 for financial year 2025/2026.

In recognition of the ongoing maintenance requirement, it is considered prudent to set aside underspends on the Maintenance Programme in a Piers Property Maintenance Fund.

Due to the anticipated increase in cruise income for 2025/26, a budget surplus of £2,349,800 is anticipated, after maintenance expenditure of £2,738,600, for the Miscellaneous Piers and Harbours Account for financial year 2025/26.

Summary of budgeted Harbour Accounts expenditure and income for 2025/2026

Committee Framework

Councillors and Committees - Political representation

Politically, the Council is made up of independent councillors, two who are members of the Scottish Green Party.

Council Structure

The Councillors sit on eight main committees. Each committee makes recommendations connected to a particular area of the Council’s work, such as education or transport. The exceptions are the Planning Committee, the Local Review Body, and the Licensing Committee, which deal with planning applications, notices of review and civic and miscellaneous licensing matters respectively – these committees operate with full delegation.

A cycle of meetings involving each of the committees takes place five times a year. Once a cycle has been completed, a meeting of the Full Council is held. All 21 Councillors take part – and make final decisions on the recommendations made by the committees.

The committees and the Full Council meet in public. Meetings can be watched from the public gallery at the rear of the Council chamber. A sound system ensures debates are heard loud and clear, with special equipment on offer for people with impaired hearing.

The Council also has the following sub-committees:

Investments Sub-committee

The Investments Sub-committee considers matters relating to management of the investment of reserve funds. The Sub-committee also considers the application of reserve fund monies, including making loans.

Asset Management Sub-committee

The Asset Management Sub-committee considers matters relating to the Council's assets, including land, property, information, and communication technology requirements.

Pension Fund Sub-committee

The Pension Fund Sub-committee considers matters relating to the management of the Orkney Islands Council Pension Fund, including the appointment and monitoring of fund managers.

Community Development Fund Sub-committee

The Community Development Fund (CDF) Sub-committee considers applications for financial assistance from the fund from groups and clubs hoping to develop projects and facilities to enhance their community.

Human Resources Sub-committee

The Human Resources Sub-committee considers strategies, policies and procedures relating to human resources, matters relating to the staffing and workforce planning of the Council and conditions of service for employees. The Sub-committee also sits as the Staffing Appeals Sub-committee.

College Management Council

The College Management Council was established as a Sub-committee of the Education Committee in March 2009. Its remit includes responsibility for the governance of Orkney College, the quality of education provided by the College, the estates strategy, and its annual budget.

Police and Fire Sub-committee

The Scottish Parliament approved the establishment of a single Police Service and a single Fire and Rescue Service for Scotland which came into operation on 1 April 2013. A local policing officer and a local senior fire officer are designated for each local authority area, to work with the local authority and other partners in determining priorities and objectives for their respective services. A local plan for each local authority area is agreed between the relevant local officer and the local authority, setting out priorities, objectives, and arrangements for local service delivery.

In April 2012, Orkney Islands Council agreed that a Police and Fire Sub-committee be established to consider the matters relating to the police and fire and rescue services.

This includes approving the local policing plan and scrutinising the performance of its implementation.

St Magnus Cathedral Sub-committee

Members of the St Magnus Cathedral Sub-committee consider matters relating to the fabric and use of the Cathedral and its curtilage.

Harbour Authority Sub-committee

In July 2016, Orkney Islands Council agreed that a Harbour Authority Sub-Committee be established to consider Marine related operations.

Orkney Islands Area Licensing Board

This is constituted as an independent regulatory body by the Licensing (Scotland) Act 2005 and is separate from the Council. The main function of the Board is to regulate premises that sell alcohol to the public. Membership of the Board is drawn from the membership of the Council.

General Fund Services: Capital Resources

Capital expenditure is the spending on assets of the Council which have a benefit of longer than one year, such as upgrading council housing, construction of new leisure centres or day care centres, or acquisition of land or other assets. Capital Investment programmes have been developed with reference to the Prudential Code. The key objective of this code is to assist councils to determine their own capital investment plans that are affordable, prudent and sustainable.

Budgeted capital resources 2025-2028: General Fund

Analysis of 2025-2028 capital programme by service: General Fund

Major Capital Projects: General Fund

The following table gives some examples of larger projects that are on the current approved General Fund capital programmes to be delivered over the next few years.

Asset Lifecycle Maintenance Programme

Non-General Fund Services: Capital Resources

Non-General Fund services include the Scapa Flow Oil Port, Miscellaneous Piers and Harbours, Strategic Reserve Fund, Housing Revenue Account, and the Orkney College.

Budgeted capital resources 2025-2028: Non-General Fund

The following table gives some examples of larger projects that are on the current approved Non-General Fund capital programme to be delivered over the next few years.

Corporate Asset Management Plan

The Corporate Asset Management Plan summarises the Council’s aims and objectives for our assets to ensure that they are used in an effective and efficient manner. It also provides detail on our future investment strategy and the effect this will have on our assets.

The function of asset management within Orkney Islands Council applies to all types of physical asset held by the Council. Assets are classified in the following six generic categories:

• Property.
• Open Spaces and Heritage.
• Roads and Infrastructure.
• Housing.
• Fleet and Plant.
• Information and Communications Technology (ICT).

Operational Council Properties

Assets from which Council Services are delivered (Operational Property)

Non-Operational Council Properties

Assets from which no Council Services are delivered (Non-Operational Property)

The School Estate is the most significant of the Council’s property assets and a further breakdown is provided below.

Schools and Leisure Facilities

Education

Pupil Numbers

Leisure

Statistical Information

Area: 990km²

Electorate: 17,645 (25 June 2025)

Population – as at 30 June 2022

Over the next 10 years, the population of Orkney Islands is projected to decrease by 3.5% due to natural change (more deaths than births).

Equality Census Data

Registrars of Births, Marriages, Civil Partnerships and Deaths

Statistics for calendar year 2024

Social Work

Roads and Planning

Environmental Services

Employee Statistics

IMAGE: A line graph titled “Full Time Equivalents” charts male, female and total full-time equivalents from March 2009 to July 2025. The vertical axis ranges from zero to 2,200; the total is approximately 1,939 at the end of the period.

Community Councils

Community Councils play an important role in local democracy by representing local views which can influence decisions in planning and the provision of local services. The Community Councils provide an effective, strong voice within each community area offering sound, local advice on a range of community issues.

Orkney Islands Council consults and depends on information and views from Community Councils, and these are used in shaping local authority policies. Community Councils are regularly consulted by other public agencies on a wide range of community related issues. Democratic Services is situated within the Chief Executive’s Service to provide a communication link between Orkney Community Councils and Orkney Islands Council.

Each Community Council meets approximately every 6-8 weeks and holds an average of 7 meetings per year. Public or Special meetings are arranged, when necessary, to facilitate the discussion of controversial issues. Members of the public are entitled to attend and observe proceedings at any Community Council meeting.

The Community Councils funding allocations across the various areas is as follows:

The budget allocation covers annual grants, community council grants scheme and equipment. Each Community Council receives a core grant and an additional amount depending on the electoral numbers.

Additional Information

Useful Websites

Further Enquiries

If you have a query relating to any of the details in this booklet, or would like further clarification or background information, please contact the Finance Section on 01856 873 535.

Alternatively, you can write to:

The Finance Section, Orkney Islands Council, Council Offices, School Place, Kirkwall, KW15 1NY.

Or e-mail: accountancy@orkney.gov.uk

If you are interested in any of the following Council publications, these can be obtained by visiting the Council website, www.orkney.gov.uk:

• Orkney Islands Council’s Council Plan 2023-2028.
• Public Performance Reports.
• Annual Reports.
• Orkney Islands Council Community Plan and Council Plan.

Glossary of Terms

Council Taxes

Council tax is the established basis of local taxation. Eight separate charging bands from A to H. All Councils determine their Council Tax level based on the number of Band D Properties, subject to certain reductions and exemptions.

National Non-Domestic Rates

From 1st April 2011, the distribution methodology provides that Councils retain what it is estimated they can collect in business rates (rather than the previous policy where it was redistributed on the basis of population shares). As the combined total of Non-Domestic Rates (NDR) income and General Revenue Funding (GRF) provided to councils is guaranteed by the Scottish Government, any reduction in the amount of NDR collected is compensated for by a corresponding increase in GRF and vice versa.

Any surpluses or deficits are paid out or recovered from Councils in the calculation of future years distributable business rates totals.

General Fund

The fund to which a local authority’s day-to-day running costs are charged with the exception of housing.

Revenue Support Grant

The Revenue Support Grant is the main form of central government support to local authorities. It is not related to specific services but is a general grant payable as a contribution towards the cost of total general fund expenditure. Distribution between authorities is based on the Government’s assessment of their spending needs.

Aggregate External Finance (AEF)

The total of government determined support for local authorities, in other words, revenue support grant plus specific grants plus non-domestic rate income.

Scottish Water

The Council is required by law to include charges from Scottish Water in the Council Tax bill but has no responsibility or control over the setting of charges.

CFCR (Capital from current revenue)

The amount that is contributed to the capital program from the Council’s revenue budget.

IMAGE: The closing page displays the Orkney Islands Council crest and logo, followed by the Finance Services address, telephone and fax numbers, and the website address.

Finance Services, School Place, Kirkwall, Orkney, KW15 1NY.

Telephone: 01856873535. Fax: 01856876158.

www.orkney.gov.uk