Group to look at budget shortfall in capital spend
By NEIL RIDDELL
Councillors have agreed to establish a working group charged with the ominous task of squeezing a projected capital spend of £36.5 million into an allocated budget of just £15 million for next year, amid fears that they are stocking up problems with overly-ambitious future spending plans.
Members and officials will work together to establish just how many of the SIC’s estimated £230 million-plus wish list of projects can actually be afforded in the coming years as they seek to draw up a five-year plan for spending which will include the first two years after the next election.
After a priority-setting process decried by one critic as a “shambles”, the council did eventually settle upon a £19.9 million capital programme for the next 12 months at a special Full Council meeting in Lerwick Town Hall on Tuesday.
It is part of an overall £34 million programme in 2009/10 once spending of £11 million on new tugs at Sellaness and £2.6 million on the housing revenue account have been factored in – making it roughly equivalent to the annual capital programme of Highland Council, covering the largest land mass in Scotland.
The major projects going ahead this year are the Mid Yell junior high school and cinema and music venue Mareel, while the new AHS – estimated to cost between £4-5 million a year if a leaseback arrangement with Shetland Charitable Trust is agreed – is not part of the programme. Councillors have agreed that their reserves will be drawn down below the policy “floor” of £250 million during construction of the Lerwick school.
Members agreed to head of finance Graham Johnston’s suggestion that spending on feasibility studies and design work for future projects be approved provisionally, with the caveat that expenditure will only happen if it has been established that spending on the projects in question in future years will be affordable. His report warned of “hard decisions” to come, stating: “The biggest concern is that the council is storing up aspirations and commitments for 2010/11 and beyond which exceed future spending limits.”
Mr Johnston suggested to members that they may want to consider removing £820,000 of spending in 2009/10 on additional care home beds, Whalsay terminals and the Walls pier on the grounds that they will amount to £10 million spending if taken further forward next year, and a further £25 million in the subsequent three years, at a time when the council is trying to wean itself off the habit of dipping into the oil reserves.
As part of the council’s agreed financial strategy, capital spending will fall from £20 million to £15 million next year and, with an eye-watering £36.5 million projected spend including £6 million on new ferry terminals to serve Whalsay, £3 million to dredge Scalloway Harbour and £2.5 million on additional care home beds, a working group including chairmen, vice-chairmen/women and spokesmen/women of the main committees are to be tasked with deciding which projects to shed.
Members voted 17-1 in favour of Lerwick North councillor Allan Wishart, who had previously raised his concern that the meeting could descend into a “bun fight” with councillors putting forward their own pet projects for funding, after he suggested moving ahead with the capital programme as it stood.
He said the suggestion of slashing spending on vehicle replacements by 50 per cent would be “knee jerk” and could see the SIC finding itself without enough gritters next winter. That particular matter will soon be the subject of a report from executive director of infrastructure Gordon Greenhill.
Mr Wishart said halting spending on feasibility studies and design work for new projects would succeed only in “reducing our options for the future” and “we could end up with nothing on the shelf”. Shetland South councillor Rick Nickerson backed Mr Wishart, saying it was important the programme did not grind to a halt.
Shetland West member Frank Robertson estimated that on average it took five years to get a project from start to site and that it was “very important” to have projects ready to slot into the capital programme in future years, stressing how vital it was to have local authority projects to keep the local economy ticking over. He said: “We have built up a huge list, I think £230 million, but we’re looking at a total programme of £19 million [in] projects that can go ahead. [It’s] important to have design – [look at] how much money it generates in the local economy – we have to have certainty of a programme ahead of us.”
Lerwick South councillor Jonathan Wills said the whole process was “quite frankly a shambles” and hit out at chief executive Morgan Goodlad and other senior figures for their failure to detect that “unaffordable aspirations” had been building up over a number of years, to the point where they have now spiralled out of control.
Dr Wills has repeatedly called on the council to start living within its means in the past 12 months, saying this week that if the SIC keeps going along its current trajectory it is “going to hit a concrete wall”.
Dr Wills said he agreed with council convener Sandy Cluness that the SIC faced the problem of setting its priorities every year, but disagreed with the suggestion that there was no solution. “The answer is a mechanism for sorting out our priorities. Somebody’s got to sit down and sort this out,” he said.
He added that having a list of aspirations more than double the council’s capacity to spend was something he regarded as a “financial crisis” which will cause a “logjam” and get “really horrific” in future years, or leave the council having to “destroy” its oil reserves.
Although he was seconded by councillor Allison Duncan, when it came to a vote Dr Wills found no support for his proposal that spending on new projects, with the exception of an NHS resource centre and Leog replacement, be halted.
As is traditional at gatherings of this nature, a number of councillors put forward the virtues of various projects within their own constituency, with Florence Grains advocating spending to upgrade the dangerous Bixter bus exchange, Addie Doull mentioning marina work at Hillswick and Robert Henderson reminding members that Fetlar has “had a very raw deal in the past” and stressing the importance of the breakwater project.
Only two concrete proposals subsequent to Dr Wills’ were put forward and rejected. Firstly, Mr Nickerson tried to get funding for work on the Sandsayre Pier in Sandwick, which serves tourists travelling to Mousa, increased and was defeated by 14 votes to three, before Shetland North councillor Bill Manson also saw his attempt to restore spending on toilets and water-based facilities to the capital programme fall by the wayside by a margin of 13 to five.
Mr Manson had suggested that failing to provide sufficient toilet access would lead to a “public nuisance”, while he was saddened by the prospect that the work of a number of small groups on marinas and other water-based facilities would see their work go to waste. “It’s a shame if we cut them off in their prime,” he said.
Mr Cluness concluded the meeting by saying he felt the council had used its oil reserves to provide “excellent infrastructure” for the community over the past 30 years and “managed our resources very well”.