A BUDGET which plans for a total unsustainable draw from reserves of over £12 million in the next financial year has been approved by councillors.
The budget shows revenue and capital spending will outstrip income from Scottish Government core funding, council tax, fees and charges and sustainable use of reserves by £12.26 million.
A report from Manson described this as affordable in the short-term given the value of Shetland Islands Council’s investments, which at the end of January stood at £429 million.
But it is the third budget in a row which has required an unsustainable draw from reserves.
Manson said at a meeting of the full council on Wednesday that the budget was “prudent and affordable…but not yet sustainable in the long-term”.
He said, though, it was a step in the right direction as the unsustainable draw to cover spend on day to day services is less than previously anticipated.
Lerwick member Amanda Hawick asked whether the budget for housing was enough due to the ageing condition of the local stock, but Manson said he believed the provision allocated in the budget was “sufficient”.
Ian Scott, who represents Shetland Central and is a long believer that the council should dip into its pockets more, asked how large the reserves would need to be in order for an extra £3 or £4 million draw down to be deemed sustainable.
Manson said the underlying investment base – which generates the gains in value – would probably need to increase by “hundreds of millions” to cater in the long-term for an additional £3 or £4 million draw each year.
A total of £3.2 million of savings, meanwhile, have been identified for the next financial year, which tempers the £4 million of growth associated with increased demand on services.
The budget also includes plans to increase the council’s headcount by 38.5 full-time equivalent posts.
Shetland West member Catherine Hughson warned, though, that she had concerns over the “number of vacancies we have been unable to fill at this time”.
John Fraser, who represents Lerwick North, asked how many of the roles were effectively a requirement of the Scottish Government.
Manson said some of the posts were planned as a result of legislation, such as pupil/teacher ratios, but “most of it stems from increased demand”.
Council leader Steven Coutts, who moved the approval of the budget, paid tribute to staff when it comes to financial management and added: “When we set a budget, we deliver it”.
He also encouraged councillors to look to the “bigger picture” and embrace opportunities in front of Shetland, pointing to the Our Ambition document the council approved earlier this year.
Shetland Central member Davie Sandison noted the importance of sticking to the council’s medium term financial plan, while depute leader Emma Macdonald said “for me this budget really highlights the importance of all the council working together”.
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