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Watchdog gives SIC books a clean bill of health

SIC convener Malcolm Bell says the watchdog's verdict shows real progress.

SHETLAND Islands Council’s leadership has hailed a report from Scotland’s finance watchdog giving its annual accounts a clean bill of health for the third successive year.

Senior auditor Carol Hislop, making her final professional visit to the islands on behalf of Audit Scotland, praised the local authority’s finance department to the rafters. She said the quality of its reporting had “improved immensely” in recent years.

Hislop has been Audit Scotland’s senior adviser in the isles for five years, a period encompassing 2010’s chastening two-day public hearing into its badly out-of-control finances and lack of proper governance.

Indeed Shetland had become a byword for lavish spending within Scottish public sector circles as its budget deficit spiralled alarmingly in the wake of the global financial crash.

Many of the spending cutbacks since then have been deeply unpopular, particularly among those in the most remote communities, and with more cuts in the offing – school closures loom large – there is a good chance the discontent will continue.

But what this council has achieved, under much-praised finance chief James Gray after he was drafted in from PricewaterhouseCoopers in 2012, is a steadying of the ship leading to altogether more gratifying yearly assessments from Audit Scotland.

At Tuesday’s full council meeting to discuss the audited 2013/14 books, SIC leader Gary Robinson said: “This is now the third successive year when we’ve had an unqualified set of accounts, as opposed to the previous seven consecutive years, so definite progress in the right direction.”

Council convener Malcolm Bell paid tribute to Hislop for her efforts in seeing the SIC through “some of the darkest and most troublesome periods in our history”.

“In recent years we have been on a journey to stability,” he said, “and Carol’s excellent leadership of the Audit Scotland team, coupled with strong financial governance put in place under James Gray and his team, has led us to this really sterling set of accounts.” 

Bell added that receiving “such a clean bill of health” from Audit Scotland was “no mean achievement”, thanking council staff for all their hard work.

He said: “The challenge now is to ensure, in the current public spending climate, we maintain our status as a well-led and managed council, providing excellent services to the people of Shetland.”

Hislop received a warm round of applause from around the town hall chamber, along with a bouquet of flowers from Gray which – Bell jokingly pointed out – had only been handed over after the completion of Audit Scotland’s report.

It all felt like a continuation of what one former hack described in 2012 as an “outbreak of mutual congratulation” between the watchdog and the SIC following years of reciprocal enmity.

Hislop said receiving flowers was “a first” as an auditor, adding she had enjoyed her time working in Shetland.

Accountant James Gray is credited with transforming the finance department.

“The first years were undoubtedly difficult, but I’ve really valued it, and I’ve learned a huge amount,” Hislop said. “I’m very pleased to see the situation you’re in now. This set of accounts is brilliant, and there are great people working within the finance department.”

One of the most seismic shifts since 2011, a period encompassing £36 million of cuts, is the plummeting wage bill. It is down from £86.4 million a year to £70.8 million, reflecting a 20% tumble in the number of full-time equivalent staff from a December 2010 peak of 2,854 to 2,248 this March.

That is reflected in a huge increase in spending on exit packages for staff in 2013/14. Some £3 million was spent on voluntary redundancies and retirements, compared to only £1 million in 2012/13.

While over 600 staff have left, the number of staff earning a salary of more than £50,000 has remained virtually the same, down from 111 to 110.

The local authority has always had more employees in high pay brackets than other councils, due largely to having far more marine staff.

The highest earner is chief executive Mark Boden, who was paid £101,069 last year. Senior directors Helen Budge (children’s services), Christine Ferguson (corporate services) and Neil Grant (development) were each paid £80,849.

Others on big salaries include the council’s senior lawyer Jan Riise, who was paid £72,648 in 2013/14, and finance chief Gray whose salary was £70,401.

Looking ahead the SIC doesn’t have its challenges to seek. There are an estimated £5.6 million of “cost pressures” and contingencies.

Those include: £1.5 million for another raft of exit packages; up to £800,000 for off-island placements for young people; up to £500,000 for re-tendering bus contracts; £280,000 for community care to deal with the ageing population; £250,000 on extra ferry fuel costs, and £100,000 to implement a £7.50-an-hour living wage for staff.

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