News / ‘Milestone’ budget slashes draw on oil funds
SHETLAND Islands Council has approved its first balanced budget since 1997 – marking a development characterised as the “end of the beginning” by council convener Malcolm Bell.
Back in 2011/12, the SIC drew down £36 million from its oil reserves – far more than it could afford – and was faced with the very real threat of becoming bankrupt.
Within three years, the current administration has been able to reduce its extra spending by 80 per cent to £6.9 million in 2015/16, a level that can be met by the interest earned from the council’s £200 million reserves.
The budget will see council tax frozen for another year at £1,053 for a band D property – the fourth lowest rate in Scotland – while most tenants will see no increase in council house rents. The average council house rent will be £72.04 per week.
Describing the budget as a “milestone”, political leader Gary Robinson said no one was under the illusion that the council was out of the woods yet.
He predicted further tough decisions would have to be taken in coming years, but these would mainly be due to reduced government funding rather than the deficit inherited from previous councils.
The only opposing view in chamber on Wednesday came from Lerwick South member Jonathan Wills, who warned that the budget might well be balanced but it was not sustainable.
He also criticised fellow councillors for the lack of public debate as most of next year’s budget had already been discussed and agreed in a council policy forum held behind closed doors.
And referring to the now derailed Blueprint for Education, Wills said the SIC had not done “anything serious” to reduce the cost of running the isles’ many schools, the largest item in the budget.
“Putting off decisions until 2017 is an attractive option for those who wish to be re-elected to this chamber, although I think it will turn out to be rather less popular long before the council elections in May that year,” he warned.
Responding, convener Malcolm Bell said the council could be described as a “coalition of 22 independent members” faced with a very difficult position.
He said it was his role to get everybody work to together and form a consensus.
“I applaud the membership for their resolve and also thank the public for sticking with us as we went through this very, very difficult period.
“We introduced internal policy forums, which basically bridges the gap that in other councils is filled by political parties.
“This is a forum that is open to all members where there can discuss and formulate policy ideas which are then worked up through the democratic process.
“My job is to encourage members to attend, and I think we are already seeing the benefits,” he said.
Robinson added: “We set today a sustainable budget, and yes there are challenges in the future, but we are now in the same position as any other local authority in that we just have to deal with whatever our budget settlement from the government is.”
As that settlement is as yet unknown, the council is prepared for further spending reductions in 2016/17, despite also receiving a return of around £10 million per annum from its reserves.
Chief executive Mark Boden said: “With the inevitable cost pressures of life we have to save around two per cent per year, and that will go on for a long time.
“We are also anticipating, guessing almost, what the UK and the Scottish government are going to do in 2016/17 and 2017/18. What we think might happen is a further reduction in government funding, which for us might amount to about £5 million.”
Finally, outgoing finance chief James Gray received a round of applause in the council chamber after convener Bell paid tribute to his contribution in getting the council back on the path of prudence.
After a three year spell in Shetland, Gray returns to his former employer PricewaterhouseCoopers, in Aberdeen, next week.
Playing down his role in turning around the SIC tanker, Gray said: “If councillors didn’t want to do this, it wouldn’t have happened.
“It is an effort where probably hundreds of people are involved, it certainly is not just a one person thing.
“I am just the front person for finance, and then it is the council that makes the ultimate decision. I am just a small cog in a big wheel,” he said.
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