Letters / Shetland needs autonomy to prosper
On 9 September 2020 Shetland Council voted to support a motion to “explore ways to achieve “financial and political self-determination” for the islands, and that remains SIC policy.
It was the manifestation of the cumulative effect of Shetland’s dissatisfaction of its status over many years.
The bulk of Shetland’s finance is dispensed from Holyrood to which is added a small contribution from council tax, but to balance its budget the SIC is obliged to use its reserves. These reserves and investments (plus contributions from the harbour account) were never intended to be used for that purpose.
The local authorities’ yearly disputes with Holyrood as to funding are evident, with the latter claiming that its reduction in dispensations to councils and subsequent budget cutbacks are necessary and the result of their own block grant being cut by the UK government.
Westminster is truncating the entire UK budget, which has and will result in nationwide austerity i.e. cuts to everything. Due to underfunding many councils are de facto bankrupt.
However, it is ironic that when millions are needed for wars the funds are conjured up immediately and are always financed to the exclusion of all else. A case in point is the £1million a pop for a laser to shoot down many missiles from Yemen, but there is littleroom or money to provide adequate protection for Shetland’s fishing vessels out to territorial limits. Therein lies a story.
In addition, the very latest wheeze is to suggest a national wealth fund be established (40 years too late for that) – smoke and mirrors – window dressing to the gallery – a distraction from which Shetland would not benefit.
The UK Government says the deficit (perhaps they actually mean the national debt) needs to be brought down because the ratio of gnp/nd is 100% and consequently interest rates are kept high to counteract inflation. That is not correct.
The Chancellor of the Exchequer will recall (he worked in Japan for several years) thatJapan has a gnp/nd ratio of 265% with interest rates and inflation next to zero. It illustrates the level of competence (or is it incompetence) of who has been in charge of running the UK’s finances.
The numerous Scottish finance officers have shown a similar lack of knowledge and expertise. What hope then for Shetland, having its finances tied to those having questionable knowledge and ability.
For Shetland this primarily means severe restrictions and cutbacks, paradoxically in its land of copious amounts of oil gas, wind farms, energy hubs, fishing, the revenue and tax of which has and will contribute vast amounts of money to the UK exchequer andby association and implication Holyrood.
Shetland needs its fair share of those accruals.
It is well recognised that the internal ferries need to be replaced by fixed links/tunnels to provide a modern transport infrastructure as has been done in Faroe and Norway as part of their own programmes for economic development, infrastructure andpopulation retention.
This is seen to be fully justified by the fortuitous deployment and the ease of helicopter medivacs from the North Isles to the Gilbert Bain Hospital when the ferries do notrun because of either bad weather, ferry breakdowns, drydockings or lack of qualified crew members – indeed the fishing industries and spaceport urgently require tunnels to support them, their workforces and make further progress and population retention.
The Ferguson £millions are on the public balance sheet, so why can the provision of Shetland ferry/tunnels not be similarly held as they are Shetland’s equivalent of buses and trains in Scotland/UK.
In the meantime, as an illustration of Shetland’s can-do attitude the Yell-Unst and Whalsay tunnel groups are developing their business plans, which should be financed directly from the UK – since it is an infrastructure project akin to roads, but remember the broken promises to dual the A9 and A96.
In the interim the UK/Scottish administrations may put forward some hybrid schemes to finance tunnels, which might involve outside finance such as bonds etc but they will probably be expensive to finance (interest plus capital repayments) at a rate ofsay three per cent or more above the bank rate and at a term of over 30 years or so, for which the Scottish Government will demand that Shetland pays sweetly for.
It could all be done much more cheaply by obtaining credit directly from the UK Office of the Department of Debt Management which is part of the UK Treasury, who work hand in hand with its compatriot the Bank of England.
Lately £27m was “received/promised” from the UK (not Holyrood) Levelling Up Fund to finance the Fair Isle ferry (half a percentage above BoE rate over 30 years, a reasonable deal at first glance) however, Shetland is obliged to find/put up the capital, from its own resources or borrow at dear rates, to enable it to get reimbursed bycentral government over the period.
That innovative approach is of course a sleight of hand accountancy trick to keep it on Shetland’s balance sheet as a debit, but positive on Westminster’s. That means Shetland would be in hock for 30 years or more. Is that what Shetland’s councillors would agree to?
Similar smoke and mirrors are evident in regard to a new £47.5m Brae School. Shetland will have to find the entire sum up front to make it eligible to receive half of that back from Holyrood over 25 years.
This is a mechanism to keep £24m off Holyrood’s books and place the total balance on those of Shetland, who will have to finance it all, out of rapidly depleting reserves.
No doubt Holyrood and or Westminster will attempt to place similar stratagems in regard to internal ferries/tunnels plus the external passenger/freight ships (freight-plus). It is well known that Transport Scotland (an agency of the Scottish Government) charged with building and or procuring ferries has no money earmarked for the latter vessels.
With governments like that who need enemies. Shetland may care to note that Jersey/Guernsey, who of course are autonomous – Crown Dependencies, are considering short distance tunnels to France.
Shetland would be much wiser to secure finance directly from the UK Treasury/BoE with oil/gas/wind/energy as collateral. In that respect reference could be made to a suggestion that financing could be made via Perpetual Bonds issued by Shetland and backed by the Department of Debt Management (a stand-alone section of the UK Treasury) in association with the BoE as mentioned in the local media.
Shetland as an autonomy/Crown dependency:
Amendment to the UK ZCC Act 1974. Area extended from 12 miles to UK Territorial limits, with all functions presently controlled by either UK or Scotland to be repatriated (except defence and foreign affairs) to Shetland.
Financed by Revenue from all on and offshore activity and all taxes presently levied by Westminster and Holyrood, to cover all Shetland’s financial needs, who in return provide oil/gas/energy to the UK from its infrastructure on land and surrounding areas.
Shetland has proven that it is capable of instigating, administering and managing its Sullom Voe and marine interests and that capability can be equally applied to running an autonomous Crown Dependency.
The Lerwick heat and power scheme is an example of what has and can be achieved. A local bank could be established to invest in the local economy, and energy developments.
Control and use over the Shetland Charitable Trust and SIC reserves could give a better financial and social return and benefit rather than relying on the vagaries of the stock market and the “expertise” of asset managers with their associated fees.
It may be of interest to remember that the Falkland Islands with a population of perhaps 2,000 (a British Overseas Territory) with nascent oil production revenue rules itself very successfully.
Shetland with a population well over 10 times that could do likewise. Both scenarios could be adapted to and supported by CBDC (Central Bank Digital Currency) issued by/direct from the BoE to the SIC account, which would allow Shetland’s finances to be outwith the remit or grasp of Holyrood/Westminster.
The UK government instituted a “windfall tax” amounting to 75% (no doubt mitigated by investment allowances), but it amounts to an unfriendly act as it will inhibit developments throughout the islands including Sullom Voe and hence affect the money and throughput that would accrue to the SIC and lessen job prospects.
This increased tax/revenue to the UK exchequer results in Barnett consequentials to Scotland of £290 million (a large proportion obtained from Shetland’s waters), but it is unlikely that even a very small portion of that sum will be available to Shetland (for tunnels?) as it will disappear into Holyrood administration’s pet projectselsewhere, for little benefit if any to Shetland.
Recently the UK Government granted an investment to SaxaVord Spaceport – £10m – for which thanks must be given. It might be apposite to inquire if that sum will be deducted from the yearly sum granted to Shetland via Holyrood?
That being so it would be appropriate for the UK to fund all the internal tunnels directly (and not by an expensive off balance sheet privatised account via the “City”) and infrastructure that Shetland so desperately needs, and from which the UK itself will benefit.
The UKs proposed budget last week was a very guarded, (perhaps sordid) affair, primarily designed as a sop to mollify the Tory faithful with an election in sight, using the debatable and perhaps questionable “financial headroom”, supposedly in accordance with its self-imposed but elastic “fiscal rules”, to reduce the National Insurance Social levee (it is in effect an add on to income tax) by two per cent.
The following day, the prestigious Institute of Fiscal Studies gave its verdict: The UK will have to raise taxes, and or more likely cut services for at least five years. That will apply equally to Scotland and by extension to Shetland.
The result will be that there will be no money or credit for Shetland’s new hospital, ferries, tunnels etc from Westminster or Holyrood. Expect similar from aprospective Labour administration.
Shetland should not have to put up with that – Faroe wouldn’t.
All the above uncertainty will mean that Shetland will have to look after itself as no help can be expected from elsewhere.
Currently all major political parties opine that the optimum method to jumpstart the moribund UK economy is to invest in infrastructure. Shetland therefore is the obvious place to start.
The SIC and their officials have a difficult and onerous task to oversee and control events and promote businesses in Shetland and should be encouraged by organisations such as SAAT 9 Shetland Autonomy Action Team) to vigorously pursue their established policy of “exploring ways to achieve financial and political self-determination” all within the umbrella of UK Crown oversight, together with councillors adequately remunerated for doing what should be a full time job.
A coherent strategy is now required by the SIC, to which SAAT and all Shetlanders can contribute.
Cecil Robertson
Inverness
