News / SIC sets budget after ‘galling’ 5% funding cut
SIC COUNCILLORS have unanimously, if reluctantly, set a budget for 2016/17 which sees the islands receiving the worst settlement of any local authority in Scotland.
The “galling” loss of more than five per cent of its funding prompted strong criticism of the SNP government from council leader Gary Robinson and several of his fellow councillors.
Having set a draft budget in the autumn, the council’s number-crunchers were forced to revisit the figures after being taken surprise in November when John Swinney announced a much larger funding cut than had been forecast.
After planning for a reduction of 1.5 per cent (around £1.4 million), the SIC was forced to plug an additional £2.6 million shortfall in its revenue support grant from Holyrood.
When what council finance chief Jonathan Belford described as “enormous” cost pressures were factored in, a total of £9.3 million had to be found.
The local authority has broadly achieved that without any attention-grabbing cuts to public services.
A two per cent cross-departmental cut will yield an estimated £1.8 million in 2016/17, while a £1 million underspend in 2015/16 will also be used to close the funding gap and the size of the SIC’s contingency fund has also been reduced.
Other measures include a two per cent rent increase for council house tenants, equating to a £1 a week rise for occupants of one- and two-bedroom properties.
Robinson said it was “extremely disappointing” that the SNP government had slashed Shetland’s share of the local government pot by some five per cent.
Belford’s report to councillors states that funding to councils has reduced by 3.4 per cent, and Robinson said it was “further galling that the First Minister and other ministers have spoken about reductions of only one and two per cent”.
“I don’t think anybody in this room has any illusions about how difficult this is going to be,” he said.
“It’s hugely disappointing that a cash increase from Westminster has translated into a £350 million cut for local government in Scotland.”
Robinson said the “sense of injustice” was compounded by the “bungled merger” of Police Scotland and a failed NHS computer system, both costing tens of millions and suggesting “that these cuts could have been avoided, or at least mitigated, if the Scottish Government wished to do so”.
The offer tabled by Swinney left local authorities with little option other than to accept conditions such as continuing a freeze on council tax heading into its ninth year. Council are also compelled to maintain pupil-teacher ratios and allocate a sum to the NHS for adult social care services.
Belford estimated that failing to do any of those things would result in Shetland being penalised to the tune of around £1.5 million next year.
Robinson said: “It’s clear the penalties we face for not accepting this offer far outweigh any political gain there might be in having a spat with the Scottish Government over this.”
He was particularly scathing over the “deeply unfair” council tax freeze, which leaves the SIC charging the third lowest rate in the country.
Robinson said he was not sure whether, without a freeze being imposed, the council could have “justifiability kept council tax as low as it is”. No houses have been re-valued since 1991, and he recently saw a Band D property on the market for more than £300,000.
Councillor Drew Ratter backed Robinson’s comments, saying the budget was “probably the best start that we can make in circumstances where a lot of the props of local government in Scotland are being swept away”.
Development committee chairman Alastair Cooper expressed concern that £9.3 million was being taken out of a local economy which no longer has the “bubble” of construction work on Total’s new gas plant to rely on.
He said the future of Sullom Voe Oil Terminal was a worry, and called for “very serious discussions with the oil industry” in the next 12 months. Cooper added there were “a lot of inequities” in the council’s harbour charges that would need to be looked at.
Belford said he felt the SIC had taken a “balanced and prudent approach” to the budget.
Its revenue grant falls from £87 million in 2015/16 to just over £82 million in the year starting in April. Funding for capital spending has also been cut by around £500,000, though an “uplift” of £1.25 million will be available in the three years that follow.
Income from council tax will be around £8.5 million, while a total of £19 million will be drawn from the oil reserves and Shetland Gas Plant’s first contribution, bringing general spending on services to a total of £110 million.
Departmental directors are being tasked with finding money-saving proposals and bringing them to council committees throughout the year “so we can be confident setting the 2017/18 budget that we’re using work that has already started”, Belford added.
It is expected public spending austerity will continue in Scotland and the wider UK until at least 2020, meaning more drastic cost-cutting measures could follow.
But it is thought unlikely that those in Lystina House will choose to revisit the bone of contention that is school closures this side of the next set of council elections in May next year.
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