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.
Become a supporter of Shetland News
Shetland News is asking its many readers to consider start paying for their dose of the latest local news delivered straight to their PC, tablet or mobile phone.
Journalism comes at a price and because that price is not being paid in today’s rapidly changing media world, most publishers - national and local - struggle financially despite very healthy audience figures.
Most online publishers have started charging for access to their websites, others have chosen a different route. Shetland News currently has over 440 supporters who are all making small voluntary financial contributions. All funds go towards covering our cost and improving the service further.
Your contribution will ensure Shetland News can: -
- Bring you the headlines as they happen;
- Stay editorially independent;
- Give a voice to the community;
- Grow site traffic further;
- Research and publish more in-depth news, including more Shetland Lives features.
If you appreciate what we do and feel strongly about impartial local journalism, then please become a supporter of Shetland News by either making a single payment or monthly subscription.
Support us from as little as £3 per month – it only takes a minute to sign up. Thank you.Support Shetland News