COUNCILLORS in Shetland are facing up to the challenge of saving up to £18 million in the next financial year.
Members sat through a three hour private seminar with council officials on Wednesday afternoon where they were told that there would have to be “painful” cuts to services and jobs to fill a gaping hole in the council’s accounts for 2012/13.
This year the authority is already being forced to find revenue savings of £9.4 million, along with £5.2 million being sliced off the capital programme for building projects.
Next year the figures will be even worse, with head of finance Hazel Sutherland advising members that a sum of between £15 million and £18 million would have to be found from revenue and capital budgets.
Next week councillors are looking at restructuring their senior management team with 15 posts to go and every top manager being forced to apply for a new job. This exercise is forecast to save the oil rich authority £1 million.
They have also been told that it is no longer an option to dip into council reserves, which have consistently bailed out the budget over the past few decades, providing an extra £3.6 million this year alone.
No decisions were taken at Wednesday’s seminar, the idea of which was to help councillors come to terms with the financial challenge they face in the run up to an election next May.
Chief executive Alistair Buchan said the financial problems were being caused by the council’s former approach to managing its resources and by the current squeeze on public sector funding.
“This is a very serious and quite massive challenge, but you just have to manage it in a careful and considered way and that’s what I am trying to bring about in the council,” he said.
“What will come out of this is a leaner, fitter organisation, but I would not be honest if I said it won’t have an impact on services.”
SIC vice convener Josie Simpson said it was going to be “very painful” and the council would have to look at several policy issues, including maintaining the floor on its oil reserves at £250 million.
“It’s too early to say where we will find the savings, but we have to take advice from our officers and we have to engage with the community, because at the end of the day it’s them that is going to suffer.
It will take several years to redesign the way the council operates so that it can function effectively without spending so much money, which may be complicated by next year’s election and a new set of councillors in the chamber.
Mr Buchan said the best result from the budgeting exercise would be “a strategy that made it clear where we were going over the next few years”.
He added that it was useful for councillors to discuss such matters privately to explore ideas and ask questions that helped them to make better decisions later on.
He also defended the speed at which changes are being introduced under his management.
“This is a very difficult period for the organisation, but when you look at an £18 million deficit you can see why we are having to move very quickly, and quite apart from that, I want to remove uncertainty for staff.”