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News / SIC faces another ‘significant’ funding cut

SIC leader Cecil Smith.

SHETLAND Islands Council leader Cecil Smith says the local authority will have to find “several million pounds in savings” to balance its books next year after receiving another “significant cut” in funding from the Scottish Government.

Thursday’s draft budget announcement from finance secretary Derek Mackay – which is still subject to amendments before going through parliament – would give the SIC a shade over £79 million in revenue funds. A further £6.6 million will be forthcoming for capital spending.

The revenue sum is a relatively small drop on last year’s settlement in cash terms, but accounting for inflation and pressure on services it still leaves another sizeable challenge for councillors in the wake of cuts stretching back over nearly a decade.

Local authorities do now have the power to raise council tax by up to three per cent, but income from local rates makes up a relatively small proportion of SIC revenue. If it went for the maximum increase the council would only raise an extra £280,000.

A lift on the public sector pay cap will be good news for workers – with those on less than £30,000 a year poised to get a three per cent increase and those earning more to get two per cent. But it will also have an impact on local government budgets.

Smith said: “This settlement means another year of severe financial pressure for Scottish councils, none more so than Shetland.

“It is a significant cut in funding that fails to take account of inflationary cost pressures and the government’s requirement for new services, such as an increase to 1,140 hours of early learning and childcare. There is no new money for this, and so it will have to be found by diverting money from other services.

“We appreciate the financial challenges that the cabinet secretary faces, but nonetheless this settlement will mean that the council will have to find several million pounds in savings in order to set a balanced and sustainable budget.

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“The detailed impact on Shetland Islands Council will only emerge fully over the next few days and weeks, but at this time we can say the settlement is not good news for Shetland. Hard choices lie ahead and difficult decisions will have to be taken on our services.”

Smith said he was “very disappointed” the government has not delivered on its commitment to fair ferry funding in the Northern Isles [see separate story].

But left-leaning Central Mainland councillor Ian Scott suggested on BBC Radio Shetland’s public platform on Thursday evening that until political “humanity” is restored at Westminster, the SIC might have to dip into its £340 million oil reserves to subsidise services.

“When push comes to shove, we have to look after our people, look after our communities, our ferry services, all our social services,” he said, adding that while he had “no particular enthusiasm” for the settlement from Edinburgh, the problem was that Holyrood is “completely strapped for money” due to the austerity policy of the Tory UK Government.

Scott acknowledged it wouldn’t please the council leadership or finance chief Jonathan Belford, but “we have got an enormous reserve fund” and “surely we can spend an extra £3-4m here, an extra £2-3m there, or people in Yell, Whalsay, Unst are not going to have a ferry service”.

His view is unlikely to command majority support in the town hall chamber, however, and Smith responded: “I would never use our funds to top up what the Scottish Government is liable for.”

He did emphasise that, while there will be “difficult choices” to make, “I don’t want to put the fear into the community that we’re going to slash everything, because that’s not what we’ll do”.

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