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SIC passes budget: relief over improved deal, but worries about impact of council tax rise

Lerwick Town Hall.

MEMBERS of Shetland Islands Council have unanimously passed a £107 million budget for 2018/19 that includes a three per cent increase in council tax.

The local authority’s financial standing for the year ahead is considerably rosier than it looked two months ago when the Scottish Government’s draft budget – allocating £78.8 million to the SIC – was unveiled.

Since then accounting adjustments and alterations to the SNP administration’s settlement with local government throughout Scotland have bolstered that sum to £80.45 million.

Even more importantly, a one-off payment of £5 million (the council had been seeking £7.5 million) to plug the funding gap for inter-island ferries was eventually forthcoming.

A three per cent council tax rise, the maximum permitted by the Scottish Government, will yield an additional £270,000 next year.

However, councillors including Lerwick South member Amanda Westlake used Wednesday’s Full Council meeting to warn that rise would have a “detrimental impact on families” that are already struggling to get by.

Westlake pointed to a “massive increase” in foodbank demand, saying folk “can’t afford to eat”, and said a comparably low council tax bill was overridden by the much higher cost of living islanders face.

SIC leader Cecil Smith.

Gone are the days of astronomical draws on the oil reserves, with finance chief Jonathan Belford comfortable that taking nearly £18 million out of its own resources was sustainable.

Thanking council staff for their hard work in putting the budget together, SIC leader Cecil Smith said: “This is a better position than I expected us to be at, but it’s only a once-off.

“There’s lots of challenges ahead. The community of Shetland has recognised the position we’re in and wants to work with us – that’s a long way to come in the last six years.”

Belford said costs were projected to grow by £5.6 million, or around five per cent of the budget, with much of that related to a pay increase for public sector workers following a sustained wage freeze in recent years.

Even after the rise, Shetland residents will continue to enjoy among the lowest council tax rates in the country – currently only three other local authorities are cheaper – and Belford said foregoing the rise would be “a lost opportunity”.

Council tax had been frozen at 2008 levels for almost a decade until last year, and he said deciding not to raise revenue risked sending a message to the Scottish Government “about your ability to afford services into the future”.

“It was unexpected that we would receive £80.5 million – we had forecast somewhere close to £79 million – but it doesn’t resolve everything,” Belford said.

“And we’ve also got the ongoing discussions to have in relation to ferries to maintain and increase the £5 million that has been allocated for the next financial year.”

Several members echoed Westlake’s sentiment on the issue of poverty including deputy leader Steven Coutts, who noted that evidence on the higher cost of living faced by islanders was crystal clear.

Council tax is the only direct revenue-raising instrument available in local authorities’ arsenal, and Coutts felt they had “very little option” but to increase it. But he is keen to see the system of local taxation receive an overhaul.

“Council tax is a very crude and blunt tool,” he said. “The government, having made initial moves to look at other options for local taxation, [has not come forward with reform] and that’s something that as a council we certainly need to push at, because it’s clearly not fair.”

South Mainland councillor George Smith said that for some families a three per cent rise would be “difficult to find”, but “the risks to those families of us not doing that might be greater in the long term”.

“We have to continue to press the Scottish Government for fair funding,” he said.  “If we are seen to be not taking an opportunity to raise some revenue ourselves, our arguments become a lot weaker.”

Lerwick South member Amanda Westlake is worried about the impact a three per cent council tax rise will have on the working poor.

North Mainland member Alastair Cooper said it would be essential that when universal credit is fully implemented in the islands “we make sure the folk is looked after in the interim period between application and actually receiving it, and we process the application as quickly as possible”.

Lerwick North member Stephen Leask said it had turned out to be a “very encouraging budget” demonstrating the importance of avoiding the “knee-jerk reaction of some of the councillors during the process of developing the budget”.

That may have been a reference to Central Ward member Ian Scott’s regular calls for greater use of council reserves. He was unable to attend Wednesday’s meeting.

“We don’t just say we’re going to use extra expenditure from our funds,” Leask said. “We say no, we’re not going to use it, you [the government] come up with the cash.”

Environment and transport committee chairman Ryan Thomson said the new council had done an “incredible amount of work in lobbying and negotiating with our MSPs and the Scottish Government” in the past nine months.

“I think our relationship with Holyrood is improving, they’re listening to us more and more, and one of our most important roles is to continue lobbying and negotiating nationally,” he said.

There were concerns during Monday’s policy and resources committee meeting about plans to make £200,000-worth of efficiencies in mental health when those seeking help continue to face considerable waiting times.

Lerwick North member John Fraser asked if members were being asked to accept that reduction “without the knowledge of the effects it will have on some of the most vulnerable in society”.

But community care director Simon Bokor-Ingram assured members no decision would be taken without detailed reports going before the Integration Joint Board (IJB) and council committees.

“We’ve got a project to look at how we might make the mental health service more efficient,” he said. “Whilst it’s challenging, I believe we have a history of being innovative, outcome-focused and efficient.”