THE GLOBAL financial crisis and runaway spending have hit Shetland Islands Council’s investments hard, putting more pressure on the authority as it attempts to rein in its finances.
The council’s reserves built up during the oil era dwindled to £185 million, down a huge 17 per cent during the first six months of the current financial year.
More than half of the money lost between April and the end of September was withdrawn by the council to cover revenue and capital costs.
On 31 March last year the fund stood at £223 million. Six months later it was down £38 million to £185 million.
The council overspent £20 million from its reserves, while £18 million was lost on the markets. Chief finance officer Hazel Sutherland blamed “uncertainty surrounding the European Union and the general economic situation in the UK and America”.
Senior councillors on the SIC’s executive committee will discuss the worrying financial position and receive an update four months on when they meet on Monday morning.
They will also hear how badly the council’s pension fund has done over the same period, when it dropped in value from £251 million to £231 million despite employees paying in £4 million more than was paid out in pensions.
The council will be discussing a package of savings to cut its annual spending by £29 million over the next two years early in February, amidst union claims that they are going too far, too fast for the local community.
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