News / A man who loves a challenge
SHETLAND Islands Council’s new finance boss is confident he can defeat a culture of overspending and deliver balanced books by the end of the 2014/15 financial year.
James Gray worked as a local government specialist with accountancy giant
PricewaterhouseCoopers (PwC) in Edinburgh before taking on what must be one of the most challenging local government jobs in the whole of Scotland in April.
The 30 year old has no illusions about the size of the challenge, but is determined to turn the SIC into a local authority that cuts its coat according to its cloth.
The task is “massive”, he admits, but says there is no alternative.
“I didn’t come here to fail,” he adds, conceding such cultural change takes time.
If councillors do not find £30 million of recurring savings over the next two years, the remaining £193 million in the reserves will be gone by 2016/17, Gray insists.
Once the money runs out, Shetland Islands Council will not be able to go to the bank to borrow money to pay wages because a local authority can only borrow for clearly defined capital projects. The SIC is not the government of Shetland, it just is a one of 32 Scottish local authorities.
In the ‘90s, the council had close to £500 million in the bank, encouraging councillors to design gold-plated services the local authority could not realistically afford.
Masked by high returns on its investments, the SIC’s vulnerability only became clear when the money markets started to crash five years ago and pushed the UK and most of the western world into the current age of austerity.
It transpired that the council in Shetland had been living beyond its means to the tune of between £20 and £30 million each year.
Gray says that as a result there is no alternative to making the savings agreed by the previous council; all that the new crop of councillors can influence is the pace at which they are implemented.
“The challenge is enormous, there is no getting away from that. But first of all there needs to be a recognition that the reserves will disappear if nothing is done.
“The level of cuts is not what is up for question, all that can be debated is the timing and the speed, and that is down to the floor of reserves members are willing to accept.”
Gray believes that if the brakes are applied quickly enough the council could hold on to a reserve fund worth £125 million.
“The higher the level of reserves members want to have, the quicker the cuts will have to be. The benefit of having higher reserves mean you generate more income from those reserves, which means you could sustain a higher level of services than with a lower level of reserves.
“That is the trade off – you take the early pain and get the early gain, or you defer it; but will still have to come to the ultimate position of a balance budget one way or the other.”
Gray first came to Shetland in spring 2011 as a consultant with PwC when the council failed to prepare its accounts under new international accounting standards.
He quickly realised the challenge the SIC was facing and knew that this was the right job for him. It is not the money that attracted him, as he could earn far more with his previous employers.
“If you are going into an organisation that is working well and you are just there to make sure it continues working well, that’s not as much of a challenge as coming to an organisation that has recognised it has difficulties.
“The aim is to be by the end of 2014/15 at a position to deliver a budget that does not require a draw on reserves, so that as we move into 2015/15 the council operates like every other local authority.
“I absolutely want to see this sorted. This is why I came. Once that’s done, and it is there and is happening, I obviously need to see what I want to do next – I always need a challenge,” he says.
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