AFTER years of cost-cutting, service redesign and reducing the workforce, Shetland Islands Council continues to be in a financially unsustainable position, elected members heard on Wednesday.
Councillors briefly met in the afternoon to approve the local authority’s unaudited accounts for 2019/20 in a socially distanced meeting held at the Lerwick Town Hall and remotely at various other locations across Shetland.
In a short introduction by finance chief Jamie Manson, councillors heard that following a slump in the international money market at the end of the 2019/20 financial year the value of the SIC’s reserves had dropped from £369 million to just under £329 million.
However, the amount of money the SIC draws from its reserves to help finance local services is based on the projected investment return rather than its market value.
Manson told the meeting that short to medium term the council’s expenditure was affordable but warned that long term that would not be the case.
“This year we already look to take out £10 million more than what the medium term plan was”, he said, adding that long-term “we will run out of money if we go on like that.”
In the key risks and uncertainties section of the 98-page document, Manson writes that the “council is not in a financially sustainable position over the medium term and faces an anticipated cumulative budget deficit of £40.7 million by 2023/24”.
The council has a range of “business transformation and service redesign projects underway” which at some stage will all result in some savings; these are however likely to be swallowed up again by reduced government grants and an increase in service demand, particularly for health and social care.
Other risks and uncertainties listed are the impact of the Covid-19 pandemic and the UK’s withdrawal from the European Union.
Following a question from deputy leader Emma Macdonald, Manson confirmed that the SIC had been given assurances from the Scottish Government that it will receive funding to “broadly offset” the additional Covid-19 related expenditure incurred between March and June.
However, as the SIC together with all other local authorities in Scotland will have to further adapt services over coming months to comply with Covid restrictions, there is no commitment in place yet as to who is going to pay for the additional expenditure.
“We do this at our own risk at the moment,” he said, “and we don’t have any assurance the Scottish Government will fund that.”
There was no debate and the meeting approved the accounts after Manson’s report was moved by council leader Steven Coutts.
The full unaudited accounts can be read here.
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