SHETLAND Charitable Trust has set a standstill budget of £11 million per year for the next three years.
After eight years of reducing its annual spending from £15 million, the trust has finally attained a sustainable budget, which was described as “an historical landmark” by independent trustee John Scott.
Financial adviser Jeff Goddard told trustees on Thursday that SCT had almost broken through the quarter of a billion pound threshold on money spent supporting the local community since it was created from oil funds in 1976.
The situation is a vast improvement on the low point of 2003 when investments had plummeted from a peak of more than £300 million to a trough of just £134 million in the space of just four years, while annual spending was up to £15 million.
Since then returns on investments have veered from one extreme of 19 per cent lost in 2002/3 and 2008/9 to gains of 31 per cent in 2009/10.
Trustee Jonathan Wills felt the trust was still not doing enough to protect its capital, currently at £221 million.
He was told that any return to the policy of growing the fund by the rate of inflation plus 2.5 per cent would halve the amount it could spend on a wide range of welfare, recreation, cultural activities as well as supporting the voluntary sector.
Mr Scott warned that its £3 million investment in the Viking Energy wind farm was costing around £150,000 in lost income every year.
With stock market gains, the Viking investment had cost the trust £4 million, he said. “I wouldn’t like this to go on much further,” he said.
Chairman Bill Manson praised staff for their achievement in balancing the budget one year ahead of schedule.
“When the markets crashed in 2003 we were spending £15 million a year while our investments were only worth £134 million, down from £300 million in 1999.
“At that point we started the hard work of reducing our annual expenditure and this year we have achieved our target of an £11 million annual budget.
“It has not been easy, but we have kept our heads and our staff and our clients have all risen to the challenge and should be proud of themselves for their achievement.”
Since 1976 the charitable trust has spent £248 million on the Shetland community, building a range of social facilities that include international class sporting facilities at Lerwick’s Clickimin Leisure Complex, seven rural leisure centres, six rural care homes, as well as the award winning Shetland Museum and Archives.
The charitable trust also supports Shetland Amenity Trust, Shetland Recreational Trust and Shetland Arts Development Agency, and spends £1 million a year supporting the islands’ voluntary sector and more than £3 million on grants and community schemes.
General manager Ann Black said that there were still challenges to be faced, but is confident they can be met through a standstill budget of £11 million a year.
“Like elsewhere in Britain, Shetland has an ageing population that will put pressure on trust funds. We can expect general costs to rise above the rate of inflation and we need to build up a reserve to replace our assets.
“However we have ridden out the storms on the financial markets over the past decade by sticking to our investment policies and have now achieved a sustainable budget for the first time in eight years.
“I believe we are in a strong position to maintain all that we have for future generations if we carry on as we are doing.”
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