News / Tough times ahead for SIC

SCOTLAND’S wealthiest council is being forced to face years of belt tightening to maintain its reserves and absorb cuts in government funding.

Council tax however is likely to stay frozen at 2007 levels as part of the concordat with the SNP government at Holyrood.

Shetland Islands Council tomorrow (Wednesday) is being asked to slash next year’s revenue budget by £16.3 million, through losing staff, reducing grant funding, lowering operating costs and raising more income.

Last month senior councillors and officials identified savings of £11.6 million, but head of finance Graham Johnston has told councillors that a further £6.7 million must be found if the SIC’s funds are to remain healthy.

He has proposed a range of measures including raising the price of school meals, charging pupils for music lessons, hiking ferry fares and cutting staffing levels and overtime.

However he warns that more savings will be needed over the next few years after grim forecasts from Scottish finance secretary John Swinney that support for local government will shrink by three per cent a year for the next six years, a cut of £18 million by 2016 for Shetland.


Government capital funding is looking even worse, with a 40 per cent reduction on the cards for next year.

Mr Johnston said that these government cuts, along with spending pressures, the world-wide financial crisis and “distractions within the council” make this year’s budget setting exercise “more challenging than ever before”.

Adding to the pressure, the eyes of local government watchdog Audit Scotland are trained on the SIC following the difficulties surrounding chief executive Dave Clark, whose departure is currently being negotiated after just eight months in the post. This will put councillors under “exceptional external scrutiny”, according to the finance chief.

The major problems facing the council’s overstretched budget include the cost of introducing single status, which has risen from a projected £4 million to £5.3 million.

Become a supporter of Shetland News


Community care is £4.1 million over budget; the school service is over by £1.2 million; children’s services by £1.1 million and transport by £500,000.

Proposed savings include a 15 pence increase in school meals (yielding £20,000); charging £160 a year for music lessons (£130,000); charging £2.70 for meals on wheels (£6,000); and increasing fares by five per cent (£74,000).

Savings of £1.5 million could be made by scrapping 10 per cent of the council’s vacant posts, £240,000 by cutting overtime by 10 per cent and £370,000 by reducing the travel and subsistence budget by 10 per cent.

Other proposals include a three per cent cut in discretionary grants and in maintenance budgets, replacing the essential car users allowance with a standard mileage rate, and introducing efficiency measures.


In his report to today’s full council meeting, Mr Johnston said: “As much as possible has been done to minimise the effects of these proposals, but there can be no doubt that there will be some adverse effect on services, service users, employees and the wider Shetland economy.

“The scale of the problem makes it impossible to maintain the council’s sustainable financial policy framework without having these adverse effects to some degree.”

He added that implementing these measures would be “very challenging” and would require “resolve and close collaboration between councillors and corporate managers”.

He added: “Members should be in no doubt that the implementation of many of the measures referred to above will have a significant impact on staffing levels (there is no possibility of achieving the savings required without such impacts).

“For the moment it is envisaged that the results will be achieved by not recruiting into vacant posts, but that is something which will have to be carefully monitored and controlled during 2010/11, requiring the vigilant engagement of corporate management and councillors, either through the proposed finance committee and/or full council.”


By freezing council tax the SIC will benefit from an extra £256,000 as it has for the past three years, which is the equivalent of an increase of 3.2 per cent.

Next year Mr Johnston says the council is likely to be looking for savings of £7.815 million, going up to £8.906 million in 2012/13. By that time the council should have reduced its draw on the reserve fund from £2 million to zero.

“If the current service growth trends are not addressed then the ability to fund future capital programmes from our reserves will be jeopardised,” he said.

Forward planning will be a priority to meet the “known and agreed future expenditure growth”, especially in community care.

“Given the council’s aspirations to meet those demands as fully as possible, there will have to be real progress on substantially cutting expenditure elsewhere, which strongly implies the need to secure savings from the Education Blueprint exercise (to mention only one highly salient and significant area),” Mr Johnston said.

Become a supporter of Shetland News

Shetland News is asking its many readers to consider start paying for their dose of the latest local news delivered straight to their PC, tablet or mobile phone.

Journalism comes at a price and because that price is not being paid in today’s rapidly changing media world, most publishers - national and local - struggle financially despite very healthy audience figures.

Most online publishers have started charging for access to their websites, others have chosen a different route. Shetland News currently has  over 600 supporters  who are all making small voluntary financial contributions. All funds go towards covering our cost and improving the service further.

Your contribution will ensure Shetland News can: -

  • Bring you the headlines as they happen;
  • Stay editorially independent;
  • Give a voice to the community;
  • Grow site traffic further;
  • Research and publish more in-depth news, including more Shetland Lives features.

If you appreciate what we do and feel strongly about impartial local journalism, then please become a supporter of Shetland News by either making a single payment or monthly subscription.

Support us from as little as £3 per month – it only takes a minute to sign up. Thank you.



Subscribe to a selection of different newsletters from Shetland News, varying from breaking news delivered on the minute, to a weekly round-up of the opinion posts. All delivered straight to your inbox.

Daily Briefing Newsletter Weekly Highlights Newsletter Opinion Newsletter Life in Shetland Newsletter

JavaScript Required

We're sorry, but Shetland News isn't fully functional without JavaScript enabled.
Head over to the help page for instructions on how to enable JavaScript on your browser.

Your Privacy

We use cookies on our site to improve your experience.
By using our service, you agree to our Privacy Policy and Cookie Policy.

Browser is out-of-date

Shetland News isn't fully functional with this version of .
Head over to the help page for instructions on updating your browser for more security, improved speed and the best overall experience on this site.

Interested in Notifications?

Get notifications from Shetland News for important and breaking news.
You can unsubscribe at any time.

Become a supporter of Shetland News

We're committed to ensuring everyone has equitable access to impartial, open and quality local journalism that benefits all residents.

By supporting Shetland News, you play a vital role in ensuring we remain a pivotal resource in supporting the community.

Support us from as little as £3 per month – it only takes a minute to sign up. Thank you.