AN ELECTED member believes Shetland Islands Council (SIC) is “lurching into a crisis” when it comes to its finances.
Allison Duncan – who has repeatedly voiced concern on the matter over recent years – said he felt it was “not appropriate” to leave deficits to the next council, which will be elected in 2022.
Unaudited accounts presented to a meeting of the full council on Wednesday reiterated that the council was not in a “financially sustainable position over the medium term”.
If no action is taken then the anticipated cumulative budget deficit amounts to more than £100 million by 2025/26.
“The council will need to adapt its service provision if it is to continue delivering positive outcomes for service-users in the future without exacerbating the existing cumulative budget deficit,” the accounts said.
The council continues to budget draws from its reserves but part of this is usually deemed unsustainable.
The accounts do show a £5.45 million underspend on general services, though, in the last year as a knock-on effect of the coronavirus pandemic through services being changed or work postponed.
The council’s net worth also increased by £37.3 million through 2020/21 to just over £600 million, which is in part due to gains on long-term investments.
But there is a warning that “if the council does not take action to reverse a recent trend of using its reserves to fund budgetary deficits, and to limit the draw on reserves to a sustainable level, it will likely result in the erosion of the asset base in around 10 years”.
Echoing Councillor Duncan, Lerwick member Amanda Hawick said the SIC faces some “serious challenges” going ahead.
But council leader Steven Coutts took the opportunity during Wednesday’s meeting to highlight some of the positives over 2020/21.
He pointed to the signing of the islands growth deal which will benefit Shetland, Orkney and Western Isles, full funding for running ferries, the now finalised college merger and investment in early learning in addition to new fish markets and a revamped Toft Pier.
“I’m content that we are doing an awful lot for the community,” Coutts said.
He added that early intervention work in the council is doing amounts to “preventative spend” which should have a benefit later down the line.
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