SIC to look at a long-term approach to council tax
A LONGER term approach could be taken to setting council tax in Shetland as the local authority seeks views from local residents.
Shetland Islands Council (SIC) leader Emma Macdonald said the long-term strategy would “guide the overall direction council tax should take and the role it should play in supporting the council’s budget”.
But she reiterated that the council would still be setting council tax prior to every financial year.
A two-week public survey aims to gather people’s views on the overall direction of council tax in Shetland, rather than any specific figures.
This is different to previous years; in December 2024, for example, the SIC sought people’s views on a range of possible scenarios for 2025/26 – no increase, or rises of three, five or ten per cent.
Ultimately council tax for 2025/26 was an increase of ten per cent after a push from depute leader Gary Robinson, who said it could be a start towards the SIC getting back to a more sustainable position.
That came after a council tax freeze in 2024/25, which was incentivised by the Scottish Government.
Budget discussions last year heard how although freezes to council tax keeps people’s bills the same, for the SIC it takes things out of sync with inflation.
The SIC said this week that around £12.6 million is raised a year from council tax, but more than £40 million is being drawn from reserves to support spending.
It is this level of draw from reserves that continues to give the SIC the tag “unsustainable”.
Council tax rates in Shetland are also among the lowest in Scotland, with band D sitting at £1,387 compared to a national average of £1,543.
Macdonald said a long-term outlook “would just allow us to have a clearer strategy, but we would always make a decision based on what we know” – such as the budget offer for local government.
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“So it will always be a decision that is taken by members each year, but the strategy should help us have a clearer aim in mind,” Macdonald added.
“We also have to consider what’s happening in the wider community around the costs people are facing and balance all of these decisions alongside the need to keep our services running, which are costing more to deliver.”
Finance manager Paul Fraser said: “In most councils, council tax is a key tool to balance the budget, so the decision is largely about setting a rate to fill the gap between planned spending and income.
“In Shetland, it’s a bit trickier — we rely much more heavily on reserves, so councillors have to consider not just the immediate budget, but how council tax contributes to our finances over the longer term.
“That’s why a long-term strategy is so important.”
The first question of the survey asks people about long-term approaches to council tax – including no increases and keeping it among the lowest in Scotland, “even if that means reducing some services”.
Other options for feedback include gradually increasing council tax over several years to move it closer to the Scottish average, increasing it only to protect essential services from cuts and increasing it if the additional income is ring-fenced for specific purposes.
The survey also asks people what they would like to see prioritised in a long-term strategy, including preventing reductions in services and raising additional income to support investment in specific areas such as capital projects, climate resilience and ferries.
It also asks questions to gather a sense of people’s understanding of council tax.
The survey is available online here, although paper copies are available from the council headquarters at 8 North Ness.
Responses will be shared with councillors alongside other information and feedback at a meeting on 29 January.
Meanwhile council house rents could increase too in 2025/26, with a 7.5 per cent rise said to have been mooted to tenants.
The SIC’s housing revenue account is ring-fenced, meaning income from rent goes directly towards housing related spend.
A report to councillors in December highlighted though that over the last five years there have been a combination of rent-freezes and below inflation rent increases which have had a cumulative loss of investment of £800,000.
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