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Council / Shortfall resulting from draft ferry funding figure ‘beyond disastrous’

There are hopes, however, that the £5m figure could rise before the Scottish Government budget is passed

The Whalsay ferry Linga, seen here docking at Vidlin at midday on Friday, will make her last run at 2pm - Photo: Hans J Marter/Shetland NewsWhalsay ferry Linga berthing at Vidlin. Photo: Shetland News

THE SCOTTISH Government’s draft budget contains a £200,000 drop in funding for Shetland Islands Council (SIC) to run its ferries compared to what the local authority received last year.

The provisional figure of £5 million falls some way short of the £9.49 million ask the local authority had submitted for ‘fair’ ferry funding.

Environment and transport committee chairman Ryan Thomson said this shortfall in funding would be “beyond disastrous for Shetland”.

However, the settlement could increase over the coming weeks as the budget often gets tweaked in order for it to pass through parliament.

Shetland’s sole SNP councillor Robbie McGregor said he was “disappointed at the level of funding” indicated for ferries in the draft budget.

“We need to continue dialogue and discussion,” he said.

The overall provisional settlement for Shetland Islands Council, meanwhile, is around £600,000 less in total than last year.

SIC finance manager Jamie Manson said that while the unrestricted general revenue element has increased slightly by 1.7 per cent to £81 million, the capital grant has reduced by 33 per cent to £6.1 million compared to last year.

There was disappointment locally when the draft budget, announced on Thursday, contained a total of just £11.5 million for supporting Scotland’s inter-island ferries.

That pot of cash – which was a £1 million increase on 2019/20 – has been split over the last two years between Shetland and Orkney, but there is suggestion that for 2020/21 the Western Isles could get a slice too.

The government introduced the funding a couple of years ago in a bid to support the Shetland and Orkney councils, which did not receive any specific grants to run its ferries, unlike the Western Isles.

However, the settlements received so far – £5 million in 2018/19 and £5.2 million in 2019/20 – have both fallen short of the SIC’s ask, with £7.9 million for example requested for the current financial year.

This has left a shortfall in the council’s books, with councillors saying that the gap leads to difficult decisions in the local budget-setting process.

In the Scottish Parliament last year islands minister Paul Wheelhouse said the Scottish Government “understands the significant financial challenges that can fall on individual local authorities and remains committed to the principle of fair funding for the provision of ferry services and ferry infrastructure”.

Back in 2017 there was cross-party support in the Scottish Parliament for a motion from the two Northern Isles MSPs to honour its commitment to the fair funding of ferries.

SIC finance chief Manson explained that around £8.2 million of the draft settlement for the council is ring-fenced for specific purposes – with £5 million of this allocated for ferries.

He said that at this stage last year the provisional ferry funding for 2019/20 was £5 million before it increased to £5.2 million as the budget went through parliament.

SIC political leader Steven Coutts, however, said that the government had accepted that the council had a shortfall of £9.49 million in revenue funding.

“Costs are rising and without a fair settlement from government we will continue to face challenges,” he said.

The SNP minority government generally needs at least two votes from other MSPs to get the budget over the line.

In the past, this has been done with the help of the Greens who in return have secured extra funding for local government.

SNP Highlands and Islands MSP Maree Todd was approached for comment, but her team referred the matter to the Scottish Government.

A spokesperson for the government said: “Local authorities are wholly responsible for their own internal ferry services, but we understand the significant financial challenges that can fall on individual councils from doing so.

“Additional funding support of £11.5m for local authority ferry services has been allocated within the Scottish budget for financial year 2020-21. This is an increase of £1m on the last financial year, in a challenging financial context, and this brings the total additional support provided for local authority ferry services over the past three years to £32.5m.

“Decisions on the precise allocation of this additional funding will be taken in due course.”