News / Trust stability allows long term planning
FINANCIAL stability at the £210 million Shetland Charitable Trust means that for the first time in its history it can offer a three year budget for the community organisations it funds.
Years of unsustainable expenditure at up to £18 million a year have been brought under control. As a result on Thursday trustees were able to set a standstill budget of £11 million a year until 2015.
The move will be welcomed by the many organisations funded by the trust, some of whom have been calling for a three budget for the past decade. They will however face the challenge of not increasing their expenditure.
Shetland Islands Council convener and trustee Sandy Cluness said: “Most funded bodies have found it very difficult operating on a one year budget. This level of funding is perfectly reasonable, it’s a good idea and we should get on with it as quickly as possible.”
However trustees also heard that the past three weeks have seen SCT’s stock market investments plummet by £12 million “on paper”, reflecting the recent volatility of the global financial exchanges.
Independent trustee Sir John Scott called for further savings by removing the special islands allowance from the 250 or so people employed in all the bodies funded by the charitable trust.
The islands allowance was introduced in the 1970s to stop local people moving into the lucrative oil industry, and is worth around £2,000 a year to public sector employees.
Sir John estimated the saving could be as high as £1 million a year that could be spent on “charitable purposes”, though trust staff later suggested that the actual figure was around half that amount.
Shetland Islands Council trustee Rick Nickerson urged caution, saying: “We are entering what could be a new boom in Shetland which is not unsimilar to what happened in the 1970s and it could be a case where an islands allowance will be required to attract new staff because of oil developments and maybe other developments.”
But Sir John said the allowance was “archaic” and should be phased out, adding that the trust should be following the example of the local authority and reducing its overall staffing costs, which currently stand at around £6 million.
The trust’s financial controller Jeff Goddard said it was very important for community organisations to have stable funding during times of public sector restraint.
Just over £9 million will be spent on recurring costs, including staff, with £1.6 million on planned maintenance and £300,000 for unplanned “one-offs”, such as the £220,000 needed to repair Scalloway swimming pool’s roof next year.
Trust chairman Bill Manson said he believed the trust could afford £11 million a year on the basis that it earns an average five per cent on its investments. “Unless the financial world turns upside down we can afford the current policy,” he said.
If any cash is left over at the end of the year it will go into an asset replacement fund, though a working group is being set up to make sure the trust is as flexible as possible in allowing funded bodies to retain unspent cash into the following year.
The trust has around £170 million invested on the global markets and £40 million in the local economy. On 31 March this year the trust was worth £219.8 million, but that figure is now below £210 million.
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