COUNCIL tax rates in Shetland will be frozen for the forthcoming financial year.
Elected members agreed to the move at a meeting of the full Shetland Islands Council (SIC) on Wednesday morning.
A report to councillors from finance manager Jamie Manson highlighted that the Scottish Government has offered a financial incentive to local authorities to freeze council tax rates.
This incentive is worth £323,000 to Shetland Islands Council, which is £13,500 more than the income which would come from a three per cent tax hike – the assumed rise included in previous financial forecasts.
Freezing council tax at 2020/21 levels means that the band D bill for the upcoming financial year, which starts in April, will remain at £1,206.33.
In previous years the SIC has used its power to increase council tax rates in a bid to chip away at funding gaps.
Council leader Steven Coutts said that while a freeze is of benefit to residents, there was concern over the potential financial impact to the SIC of freezes.
He said there was work to be done with local government body COSLA to recognise the knock-on cumulative impact of not increasing the tax in 2021/22 when it comes to rates in future years.
The report to councillors said the long-term cumulative impact of accepting the incentive, and deferring a three per cent increase, was a potential loss of £1.64 million over the next five years.
Shetland Central member Davie Sandison also suggested the freeze had been pushed on the council by central government – leaving the SIC with little “wriggle room”.
Members were told that if council tax was increased, then the offer of the incentive would be removed from the table.
Councillors also approved an increase of one per cent for housing rents and charges.
This is less than usual, with the council wanting to factor in the impact of Covid on tenants.
While the impact on tenants was recognised, some councillors expressed concern over the reduced income coming to the SIC and the level of maintenance needed on the local authority’s housing.
Development committee chairman Alastair Cooper said a “considerable challenge” was housing built in the 1970s and the early 1980s which is now needing repaired.
The pandemic has also delayed some works, he added.
“We can’t afford to not increase rents and try to deal with the 70s/80s housing which is needing improved,” Cooper said.
Cooper’s views were echoed by Amanda Hawick, who said a number of ageing council properties in her Lerwick South ward were needing maintenance. “The need is clearly evident,” she said.
Hawick also expressed concern over the level of fuel and working poverty in Shetland.
Lerwick member John Fraser added that there was a wider, underlying problem when it came to financial problems in the community.
“Poverty is real, and it’s here,” he said.
The councillor said the SIC should encourage governments to take a different approach to the benefits system to factor in higher living costs in areas like Shetland.
“This council most lobby appropriately to the Scottish Government and Westminster and have them recognise that a one size fits all benefits system is not fit for purpose,” Fraser said.
Shetland South member Allison Duncan, meanwhile, said that councillors should be encouraging any residents suffering from financial problems to approach the local Citizens Advice Bureau.
Councillors were also warned that a “substantial” funding gap of £7.7 million remains for the year ahead despite the money coming in for the council tax freeze.
In his report Manson added: “The council is considering a number of options in order to further reduce the remaining funding gap, namely by reducing expenditure through efficiencies and reconsideration of contingency funds, or increasing anticipated income through a further use of reserves, albeit in excess of the amount considered sustainable.”
The latest budget estimates assume that £14.1m will be withdrawn from the council’s long-term investments on a sustainable basis.
A further withdrawal to meet the current £7.7m funding gap will be “unsustainable” and will have “longer-term implications on the extent to which the reserves can be relied upon to contribute to future budgets, and ultimately support the delivery of services across Shetland”.
The council will set its budget in March, and Manson told councillors that some savings have already been identified by officials.
He could not offer any more information at this stage, but he did say they were both one-off and recurring savings.
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