CAB - 7 Oct 2020 - 10 Oct 2020 - Advice

Transport / Extra million of ferry funding to go to Argyll and Bute

The council currently uses its own resources for nearly half the cost of running the inter-island ferry service.Photo: Shetland News

ARGYLL and Bute Council is set to receive nearly £1 million extra from the Scottish Government for its ferries – leading to further frustration locally that ministers are not providing full ‘fair’ funding to Shetland.

A total of £11.5 million was earmarked in the government’s recent draft budget for inter-island ferries, which was an increase of £1 million on the previous year.

Since the extra revenue funding was introduced a couple of years ago, the money has been shared between the Shetland and Orkney councils.

But it has now been confirmed that £954,000 of the projected £11.5 million is to go to Argyll and Bute Council.

It may feel like salt being rubbed into the wounds of the SIC, with councillors already feeling frustrated after their ask of £9.49 million was met with only around £5 million in the draft budget.

This has left a sizeable gap in the council’s budget for the year ahead, although the settlement may increase as the government’s bill goes through parliament.

The issue was raised in passing at a meeting of the full Shetland Islands Council on Wednesday during debate over a council tax rise of nearly five per cent.

George Smith and Allison Duncan expressed their concern that the extra million was going outside of Shetland, although Amanda Hawick said it came as no surprise to her as former finance sectary Derek Mackay told her in a meeting last year that Argyll and Bute would be eligible for a slice of the funding.

SIC leader Steven Coutts, meanwhile, said the extra money for Argyll and Bute means that there remains “no financial burden” for the west coast council.

As a result of this, he questioned why Shetland is still faced with a shortfall of over £4 million.

“We believe in equality and fairness,” Coutts said.

“No council should have a financial burden from running a ferry service. The government accepted that, the wider Parliament accepted that. The quantum of the financial burden has been scrutinised and accepted.

“Argyll and Bute Council revenue deficit for 20/21 is £454,000 according to their council budget papers. So we now understand the government proposing to allocate twice that sum to Argyll and Bute. No financial burden for Argyll and Bute Council.

“Why does a multi-million one remain for Shetland Islands Council? Is that a budget with fairness at its heart? These are very legitimate questions the government have been asked and need to answer.  We and the community in Shetland are awaiting the answers.”

A spokesperson for the Scottish Government said that ministers will be ready to listen if opposition parties like the Liberal Democrats – who represent Shetland and Orkney – want to negotiate the ferry settlement in return for support for the budget.

“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,” they said.

“Additional funding support of £11.5m for local authority ferry services, over and above that provided through the annual Grant Aided Expenditure (GAE) allocation, 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.

“Ministers have invited all parties to engage in budget discussions and if the Lib Dems would like to prioritise funding for local ferries in exchange for supporting the Scottish Government’s budget, then ministers have made clear that they will be listening‎.”

The Scottish Government, which had previously agreed to the principle of ‘fair funding’ of ferries for the local authorities in the Northern Isles, remains in talks with the Shetland and Orkney councils over the final settlement they will receive.

In 2019/20 £5.2 million was provided to the SIC, which was below its ask.

The year prior, when the funding was introduced, £5 million was allocated to Shetland – again, less than requested.