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Osborne’s austerity will force SIC to cut deeper

The next round of SIC cuts will be a consequence of UK spending cuts now that the local deficit has been resolved.

SHETLAND Islands Council is facing up to the “harsh realities of austerity” as it looks to make more cuts over the next five years having mended its own overspending, according to a frontbench council member.

Environment and transport committee chairman Michael Stout was speaking as councillors agreed a medium term financial plan pencilling in an across-the-board 3.3 per cent spending reduction between now and 2020, when it is hoped UK public spending will begin to recover.

Back in 2010 the local authority’s budget deficit was out of control, with overspending peaking at an alarming £30 million a year. Large spending cuts since then have balanced the books and pared back the council’s reliance on its oil reserves to a sustainable level.

At a full council meeting on Wednesday, finance chief Jonathan Belford outlined the updated five-year plan taking the SIC up to the end of the 2020/21 financial year.

The cuts required will amount to around £32 million over five years and Stout was eager to hammer home the point that future cuts will be the result of a political choice by UK chancellor George Osborne rather than local mismanagement of resources.

“It’s important to understand the difference between what the council has already done in terms of turning around uncontrolled spending to get to a relatively stable position and… what we are now facing, which is the harsh realities of austerity,” he said.

Councillor Michael Stout wanted to press home the message that the SIC was facing the "harsh realities" of UK austerity.

“Austerity has specifically laid out a massive cut to public services in the UK as a whole, and we cannot protect Shetland more from that.

“This is a new phase that we are now in, facing another layer entirely having already gone through a very, very effective – in most respects – process of taking the savings that we could.”

The five-year plan was unanimously approved – though several councillors expressed misgivings about how well key services can be protected amid further spending cuts.

Council leader Gary Robinson said he felt changes brought in had left the SIC “in good shape to face the challenges that we know are ahead”.

He acknowledged concern over how an across-the-board reduction might impact on services such as education and social care which councillors wish to prioritise. Robinson added that detailed work on where the cuts will fall had already begun and should begin to be “visible to the wider community as soon as January”.

Privately many councillors accept it is inevitable that the unwelcome spectre of school closures will rear its head again over the next five years.

Councillor George Smith asked whether reducing the standard working week for staff from 37 hours to 35 hours – something that a dozen other Scottish councils have introduced – might be an option.

Robinson responded that he wanted to “keep an open mind” and allow officials to come up with proposals. He said that if the workforce needs to be further reduced, something he is not convinced of, there are other ways of doing it such as not replacing staff when they retire.

“I’m quite relaxed about what goes on within the plan provided it’s within the overall spending envelope,” Robinson said. “I’m open to any suggestions that mean we can deliver services effectively [and] efficiently in the future.

Councillor Gary Cleaver said he felt the standard working week was something that should be looked at “even if it is quite troublesome to both unions and the employer”.

He was interested to know why other councils had gone down that road and whether they felt it was “better to keep the workforce intact than have to lose them and not have the capacity to deliver services”.

Belford’s report outlined that the Scottish Government’s £86.5 million grant is expected to dwindle to just over £81 million in 2019/20, with a £4 million recovery projected for the following year.

In addition to council tax and other forms of income, he estimates £12 million a year can be drawn from the reserves – up from £7 million this year – based on a forecast that they will be worth £232 million at the start of 2016/17.

The figure is based on a long-term assumption that the investments will return 5.2 per cent plus 2.1 per cent inflation each year – in contrast to the much more pessimistic assumption Shetland Charitable Trust has made for its similar-sized investment portfolio.

Provided the requisite 3.3 per cent savings are made, that added draw on reserves and other factors including income of more than £1 million a year from Shetland Gas Plant should see the SIC’s overall budget maintained at around the £114 million mark between now and the decade’s end.

“It’s a huge challenge for the public sector in general, not just here in Shetland,” Belford said, adding it would be vital to “maximise productivity” and continue dialogue with the SNP government to ensure the community gets its fair share of funding.

Councillor Davie Sandison pointed out that the SIC was in the “unique” position of having a cushion worth around a tenth of its total budget – as well as SCT’s yearly funding of various services.

“Let’s make sure that the public at large realise that we have that cushion and we’re applying it to the prioritisation of services,” Sandison said.

Councillor Alastair Cooper queried, “on a lighter note”, whether SIC members could agree to forego their allowances “for the greater good of the community”.

“Are you offering?” asked Robinson. “I was trying to find out for Drew [Ratter]!” replied Cooper.

Robinson stressed that members’ pay represented a “very small amount” of council spending, with a backbench councillor’s allowance “now less than our lowest-paid member of staff would receive”.