RADICAL cuts at Scotland’s wealthiest local authority will require a “cultural change” in working habits, councillors in Shetland heard on Wednesday.
Shetland Islands Council must slash its £131 million budget by 13 per cent to meet savings targets of up to £17 million in the next financial year.
These reductions come on top of a £9.9 million savings programme already agreed to for the current financial year, of which only £1.4 million has so far been found.
The plans are likely to mean cuts to services and staffing levels, a freeze or reduction in council wages and an increase in charges across the board.
SIC finance chief Graham Johnston said that the council had done well saving money last year and managed to retain £275 million in its Reserve Fund, generated from oil revenues unique to the islands.
However he said that managers needed to do more if the council was going to achieve its savings targets and protect its financial position into the future.
Mr Johnston said: “Budget responsible officers are getting the message but are not getting it as much as I would like. To be honest we are in need of a cultural change within the organisation in the handling of this.”
Acting chief executive Hazel Sutherland described the challenge as “significant and daunting”, saying it would not be possible to avoid cuts to services and staffing levels.
She said that the financial pressures were being brought about by a £4 million likely cut in the government’s support grant, unavoidable £4 million growth in expenditure predominantly in community care, and a need to reduce the council’s draw on its own reserves by around £9 million.
Ms Sutherland said: “It is my opinion, therefore, that the council must tackle at a fundamental level the cost structures and quality of some services in order to live within its means and secure the reserves for future generations to enjoy.”
However as £56 million, or 43 per cent of the council’s budget was spent on “discretionary” services which many authorities can not afford, services committee chairman Gussie Angus said that the SIC could not “plead poverty”.
The council is to set up a £1 million “spend to save” fund to help managers introduce more efficient staffing structures, paying for early retirement and voluntary redundancy.
It is currently undergoing reviews of its education service and the council’s ports, with further reviews of inter island ferries, community care and internal management on the cards.
Education, ports and community care are being kept out of the £17 million savings plan, but every other part of the council is being targeted.
Department heads will be given the summer months to come up with a range of proposals and with the help of a dedicated project team they will be expected to table their suggestions within the next three to six months.
Ms Sutherland said: “It can feel overwhelming what we are facing and what changes we may need to make, so I don’t want to give you any impression today that I will get this turned around quickly or early. I think we need to spend time thinking about what we are going to do, in what order, and why.”
Councillor Caroline Miller said that it was like having a “bucket of cold water” poured over their heads.
Councillor Cecil Smith said that there would be “flak” from the community and councillors would have to stick to their decisions. “This time we must stand together,” he said.
On Monday and Tuesday the SIC faced a public hearing by the Accounts Commission where it faced criticism that councillors were unable to make difficult decisions and act in the interests of the local authority as a whole.
Next month the council will employ new interim chief executive Alistair Buchan whose main task will be to modernise the council so that it can provide services for less cost.
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