Council / Caution urged over SIC’s year-end financial position
A WARNING has been made for Shetland Islands Council (SIC) not to “over-egg” its year-end financial position – with the months ahead set to be “extremely challenging”.
A report to councillors this week highlighted that that the SIC spent less on service delivery in 2022/23 than anticipated.
But this was largely due to additional funding from the Scottish Government and external bodies which has not yet been spent, which will need to be carried forward into 2023/24.
Nearly £9 million is due to be carried into 2023/24 in revenue and capital.
Total capital expenditure in 2022/23 amounted to £15 million against an approved budget of £25 million, representing an underspend of £10 million.
This is mainly as a result of slippage encountered during the year, and works will continue into 2023/24.
The report represented to the policy and resources committee on Monday warned that through carrying forward money into the current year the council’s “longstanding issue of financial sustainability therefore still exists”.
Finance manager Paul Fraser said “2023/24 will be challenging, and our pressures on reserves continue to be unsustainable”.
He added that when it came to reduced capital spend there was sometimes a struggle to get contractors in to do work, while there have been high prices which the council “can’t swallow”.
“Inevitably that leads to further delays,” Fraser said.
He added there was a worry about “overheating the market” given that capital work is being carried forward.
Meanwhile the council used £24.2 million from its reserves in 2022/23 instead of £27.7 million as originally planned.
It comes as the council reviews certain services this financial year to look at ways of reducing spend.
During debate Shetland Central councillor Catherine Hughson said the year-end position was better than it could have been.
Council leader Emma Macdonald, however, warned against capital projects continuing to be pushed back.
She advocated having a more “realistic approach” to what Shetland can manage in a year, in light of contractor availability.
Shetland Central member Davie Sandison said while the figures look encouraging in terms of not overspending against budgets, “they do actually need to be communicated in a certain way to the wider community”.
He said there are things that are masking the underlying trends, with the capital programme spend being a key one.
“We need to get the balance right of patting ourselves on the back for this report and making sure that people realise the challenge that we are currently facing in the current financial year,” Sandison said.
“I don’t think that’s going to get any easier – in fact it’s possibly going to get worse.”
He said he would be cautious about “over-egging” the report and said he felt the council is “going to face a very challenging 23/24.”
Macdonald said there was a need to get that message out, adding that the council needs to be honest about the challenges ahead.
Meanwhile Shetland West councillor Liz Peterson criticised the council for an apparent knack for overspending on projects against budget.
It came after councillors were asked for to approve extra money for four projects.
“I just don’t understand why nearly every job that we take on to do comes in over budget – I can’t mind ever hearing of something that’s actually been completed under budget,” Peterson said.
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