News / SIC making “good progress” on cuts
CASH-strapped Shetland Islands Council is less than a quarter of the way to reaching its target of cutting costs by £15.4 million this financial year.
However SIC head of finance James Gray told councillors on Monday they were making “good progress” on reducing expenditure.
In the three months since 1 April the council cut its wages bill by £2 million and cut other payments by £1.5 million compared to the first three months of last year.
However it will take weeks for the troubled authority to gain a clear picture of its current financial position, which will be reported to members on 20 September.
Gray told the SIC’s audit and standards committee if the council achieved this year’s savings target it would reduce its overspending from £100,000 to £68,000 a day.
He added that the council could still draw on its dwindling reserve fund built up on income from the oil industry to balance its budget and keep the government from sending in commissioners to take control, as some members fear.
When pressed by committee vice chair Jonathan Wills whether it would be realistic to set a floor of £150 million for the reserve fund, Gray said he believed £125 million was more achievable.
The previous council set a £250 million floor, which has already been breached by around £60 million. So far this year £4 million has been drawn from the reserves, compared to £12 million at the same time last year.
The finance chief stressed, however, that whatever target the council set for its reserve fund would dictate the speed at which cuts would be made.
Calling for some reassurance, Wills complained: “Every councillor has a nightmare about what happens if we can’t set a balanced budget.”
Gray replied that he thought they were making good progress. “I think we are still behind where we should be, but there’s still seven months to try and do something about that.”
He agreed that if the council cut back on the £5.6 million it spends every year on capital projects, that money could be used to maintain jobs and services.
“So we can carry on employing people to provide services or we can build nice new shiny things, that’s the choice before us to put it crudely,” Wills said.
Meanwhile corporate services director Christine Ferguson has promised to put together a report to help councillors understand how Scotland’s wealthiest authority ended up in its current financial crisis.
Councillors said they did not want to divert staff time away from the more important task of resolving the crisis by finding savings, but they did want to learn from the past.
Meetings with council trade unions are being penciled in to discuss the proposed measures to cut costs.
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