SIC moves ahead of its savings targets

SIC finance executive manager James Gray

SHETLAND Islands Council is cutting spending faster than expected, according to its finance manager James Gray.

Councillors heard on Thursday that departments expect to save £5.6 million more than they expected to this financial year.

However the council is still spending £63,000 every day from its oil reserves, a figure it expects to drop to a sustainable £22,000 a day in two years.


During a series of five committee meetings on Thursday, Gray told councillors that he was confident the council would be able to meet its ambitious 20 per cent savings targets by the end of 2015/16.

Two years ago the council was spending £100,000 a day from its reserves, threatening to bankrupt the authority within five years.

A major beneficiary this year has been the council’s harbour board, which earned £1.8 million more than expected largely thanks to extra work from the new Total gas plant and berthing a flotel for BP maintenance workers at Scalloway.


However social services lost around £1 million through delays in introducing its new care home charging regime, extra redundancy costs and increasing staffing at Viewforth care centre.

Gray praised managers across the council for achieving better than expected savings, suggesting the long term approach to cutting budgets made it easier for them to plan ahead.

“Budgets have been agreed for the next few years, so people are working towards their final budgets and if they get there quicker it is going to show up as an underspend,” he explained.

He said he was “comfortable” that the council was on track to meet its final target of an £8 million annual draw on its oil reserves within the next two years.


He added that many of the extra costs were going towards one off redundancy payments as staffing levels are reduced throughout the authority.

Two years ago the council was drawing £36 million a year from its reserves, £30 million of which was recurring.

By the end of the next financial year the overall figure should be £14.7 million, of which £8 million will be recurring.

By the end of the following year the total should be reduced to just £8 million, which Gray says is a sustainable draw on the interest generated on the council reserve fund.

“I am fairly pleased with the progress that’s been made,” he said. “We are starting to see the effects of decision the council has already taken coming through.”

The only big savings decision to be finalised surrounds the proposed closure of primary schools and reducing rural secondary schools to S1 and S2, both of which face substantial community opposition.