News / SIC heads towards sustainability
SHETLAND Islands Council has achieved what some observers had once believed unachievable – savings of almost £12.5 million with almost no argument.
A four hour meeting on Wednesday saw councillors vote through a £116 million budget that sees annual spending cut by more than 10 per cent.
This is the second year in a row Scotland’s highest spending authority has achieved such savings, putting the authority 70 per cent of the way towards its 2017 target of maintaining a reserve fund of £125 million.
That leaves roughly another £10 million to come off the annual budget before the SIC is self-sustaining, a holy grail that has until now appeared impossibly elusive.
The cuts come at a cost to jobs as well as services. In the past two years the SIC has shed 274 posts through voluntary redundancy, with a further 300 expected to disappear over the next 12 months.
Leader Gary Robinson, a driving force behind the savings, has given a personal commitment that everything will be done to avoid compulsory redundancies.
A giant step
Pleased with the outcome of Wednesday’s meeting, Robinson said the council had taken “a giant leap towards becoming a sustainable council”.
He said the SIC was now “better and more efficient than this time last year”, when councillors deliberated for eight hours and set up 52 service reviews.
“Some of those reviews are still going on and some have been set aside for the time being, but what we have done this year is put up a budget we expect officers to deliver on. We don’t expect anything to come back to members for decisions,” he said.
The previous council had kicked difficult decisions into the long grass as it came to the end of its term, which “suited some members”, he said, adding that privilege was no longer possible due to the size of the structural deficit.
Avoiding a nasty dunt
“I think there is a real recognition the council has to change its spending habits. When we said we were spending £100,000 a day from reserves that really struck a chord with folk and made people realise things were not sustainable.
“As long ago as 1993 (convener) Edward Thomason said there had to be a change in the way the council managed its finances if we were to avoid getting ‘a nasty dunt’ – if everything goes according to plan we will be able to avoid the nasty dunt, but it isn’t going to be easy.”
Robinson said the issues debated on Wednesday, which were fairly minor in terms of their financial impact, were the ones that had generated the most phone calls and emails from constituents.
The future of community councils, community skips and public toilets, along with Jonathan Wills failed campaign to retrieve the holiday club for children with special needs took up most of the debating time, along with concern about funding for Promote Shetland.
Meanwhile big savings had already been agreed after a successful ferries consultation, though major challenges lie ahead introducing charges for community care and trying to save £3 million by closing schools.
A huge amount of work
Agreeing the savings has been no easy task, involving the council in an unprecedented exercise known as zero-based budgeting.
Staff have worked overtime to go through every department with a fine toothcomb to identify every unnecessary item the council was spending money on.
Under the direction of new finance director James Gray, staff worked evenings and weekends to analyse budgets and weed out waste before presenting the information to councillors during a week of seminars in November.
There followed a series of special committee meetings where detailed debates took place about how the savings should be made, leaving very little for discussion on Wednesday.
The method used is called SOFIE – Sussing Out Further Internal Efficiencies – where administrative costs are cut prior to impacting on frontline services.
“It has been a huge amount of work. Staff have had to work weekends and work late and we owe them a debt of gratitude,” Gray said.
“No local authority goes into this level of detail very often and it reflects the scale of the challenge that we faced, which needed a different approach.
“The medium term financial plan showed we needed to save £38 million by 2017 and you can’t do that by salami slicing.”
Five year plan
Thus the need for a five year plan, which commits the council to saving £3 million in ferries but gives them a year to achieve that figure.
Everyone agrees that identifying the savings is easier than implementing them, as was discovered last year.
Gray explained that while on paper the council exceeded its target by £1.4 million to save £16.9 million last year, it only did so by bringing in a few one off cuts that had not been agreed on 9 February 2012.
“As you squeeze the budget there is less room for one off savings,” he warned.
“The focus has been on minimising the changes to the front line but people will start to see changes as time goes on, for example in the ferry service.
“Everybody involved should be satisfied with what we have achieved today, we have taken a big step but we can’t be complacent.”
More detail about the savings agreed on Wednesday can be found in the SIC’s Budget Book, which provides links to the individual committee reports where cuts were agreed.
The medium term financial plan can be accessed here.
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