Council / SIC suffers second largest funding cut in Scotland, report highlights

Lerwick Town Hall. Photo: Shetland News
Lerwick Town Hall. Photo: Shetland News

THE LEADER of Shetland Islands Council (SIC) says the local authority continues “to be asked to do more with less” after a new report highlighted that it has suffered a real terms decrease in core revenue funding from the Scottish Government of more than 14 per cent over the last five years.


A new Accounts Commission report published on Thursday showed that the cut for Shetland was the second largest of all of Scotland’s councils.

It added that reduced funding for the country’s 32 councils comes at a time of increasing demand from an ageing population.

The study, entitled Local Government in Scotland: Challenges and Performance 2019, showed that only the Western Isles had a larger cut in core funding than Shetland between 2013/14 to 2018/19.

All 32 local authorities saw their funding reduce, and while Shetland suffered a change of -14.1 per cent, the smallest cut was 4.4 per cent in Midlothian.

This year the SIC suffered a 1.3 per cent reduction in non-ring fenced funding for 2019/20, with officials raising council tax by three per cent in a bid to offset the drop.


There will also be a “unsustainable” draw from council reserves of around £3.5 million, with much of this stemming from the SIC coming £2.7 million short in its ask for ‘fair funding’ for inter-island ferries.

The Accounts Commission report also highlighted that the SIC spends £1,349 per week on its care home residents – more than three times the Scottish average.

The cost to the local authority of collecting council tax, meanwhile, is higher in rural areas, with the cost per premise in Shetland coming in at £12.80.


The new report recommends that councils “need to be open to transformational change and implement new ways of working” to deal with their uncertain financial future.

SIC leader Steven Coutts said the core funding reduction also comes despite a higher cost of living in the isles, and a larger council bill for providing services in an island community.

“The report rightly highlights the gap between demand and resources,” he said.

“Clearly central government have a key role to ensure that gap is closed through their financial support to local government. We can and will prioritise preventative and early intervention work but this alone will not be enough to close the gap if faced with continuing decline in funding at the level we have seen over the last five years.

“Clearly the settlement in 19/20 continues to see our council suffer real term cuts to our core funding. The failure of government to fully fund our ferry service is adding to our challenges.”

West Side councillor Coutts added that the local authority’s “prime focus remains achieving the best outcomes for our community”.

He also believes the council has continued to manage the grant reductions “as best we can”.


“We are continuing to be asked to do more with less,” Coutts continued.

“We need to ensure we continue to provide the essential services for our community. However, our ability to do that is severely constrained if we do not have the financial resources to enable us to do that. The council will continue to engage through COSLA for a fair settlement for local government.”

A Scottish Government spokesman, meanwhile, said in response to the report: “We recognise there are challenges but we have continued to treat local government very fairly.

“Local authorities will receive £11.2 billion in 2019-20 through the local government finance settlement, a real terms increase in both revenue and capital funding which, together with actual council tax rises, provides an extra 5.6 per cent in overall resources to support local services.”

Scottish Labour finance spokesman James Kelly, however, said it was “unacceptable that local communities are being penalised as a result of the SNP/Green budget”.