Fresh round of cuts roadshows looms after SIC beats savings target

Shetland Islands Council is preparing for a fresh series of cuts roadshows this summer, having managed to exceed its ambitious savings target by more than £2 million in the last financial year.

Starting on 13th June, 15 drop-in sessions will be staged throughout the islands to explain and discuss possible cuts in the infrastructure department, which encompasses inter-island ferries, winter road maintenance and street lighting. Many in the North Isles are steeling themselves for a battle to protect their ferry timetables from the hatchet.

Figures issued by the local authority today show that – excluding its one-off £5 million compensation settlement with Lerwick Port Authority – the SIC stripped out an “unprecedented” £11.5 million of spending last year.

That came chiefly from “efficiency savings”, as opposed to cuts to frontline services, and comfortably beat the £9.4 million target for 2011/12. New finance chief James Gray estimated just over £6 million will be “recurring” savings.

SIC chief executive Alistair Buchan congratulated councillors and staff for the achievement, singling out recently retired political leader Josie Simpson for having “stuck rigidly to his guns” amid some fierce criticism in recent months.

He said the savings were thanks to “belt-tightening right across the whole organisation”, including a £1 million cut in senior management costs, not filling vacancies and reducing councillors’ hospitality budget.

Mr Buchan said the council had managed to trim its 3,000-strong workforce by nearly 200 over the past 18 months, without having to resort to forcing anyone out of work.

But a much stiffer challenge lies ahead, the outgoing council having agreed a £120 million budget for 2012/13 which requires a further £15.4 million of savings this year. Roughly the same again will follow in 2013/14, though those spending plans will be revisited by new councillors this autumn.

With a mammoth 52 service reviews underway, efforts to save £30 million in just two years are likely to spell ferry timetable cuts, more school closures and major cutbacks in social care.

During the election campaign a number of newly-elected members signalled a desire to slow down the pace of the cuts. Privately, some councillors have expressed surprise at the strength of new leader Gary Robinson’s opening salvo last week. He told reporters the only thing remaining up for discussion was “exactly where the cuts fall”.

In-keeping with Mr Robinson’s remarks, the clear message coming out of the impressive new North Ness office complex, illustrated by some stark figures, is that this would be the wrong time to step on the brakes.

Newly-published sums show that the SIC’s reserves, now worth around £193 million, have declined from a pre-financial crash peak (at today’s prices) of £465 million in the year 2000 – a drop of 57 per cent.

Councillors and officials have spent the past year warning that at the current trajectory, the reserves could be busted altogether by 2017. That has angered trade unions, with Unison branch representative Brian Smith this week calling for a “turnaround” on the “cuts-and-more-cuts rhetoric”.

Mr Buchan insisted he would never engage in “scaremongering” to ensure the steep cutbacks go ahead. “I’ve never believed in spin of that type as a means to get results,” he told The Shetland Times. “The public are no daft, they would see through something like that.

“These are massive savings targets that we face, with implications for every person living in Shetland. The council wants to have an honest dialogue with communities over how we do this.”

He did accept councillors would have “a limited amount of room for manoeuvre” provided good progress was made in balancing the budget.

“With some of the proposals, I’ve no doubt, there will be some delay, slippage, or ultimately members may decide not to [make] some of the savings,” he said. “I can’t afford to take my foot off the gas at the moment if the council is to have any chance whatsoever in terms of getting their budget on a sustainable footing.”

Mr Buchan said the savings made to date had paved the way for another round of community consultations. It would not have been fair to ask the public to accept cuts to key services without first making substantial savings within the organisation, he said.

“It’s critical that we hear as much as we can about how any changes would affect people’s day-to-day lives,” he continued. “I’m acutely aware of the ‘consultation fatigue’ that’s out there in the community, but this is so important – we’ve got to do it.”

The prospect of more such meetings is unappetising for all concerned, and Mr Buchan conceded it could well be both a “tedious” and “lengthy” process. But last winter’s public consultations threw up a “massive” number of savings ideas, many of which are now being looked into.

Last year the council drew £36 million from its reserves, but the return generated through stock market investments was only £4.7 million. With uncertainty over the financial future of Greece, Spain and the whole Eurozone, Mr Buchan warned it was possible that factors outwith the SIC’s control could exacerbate things further.

“When you also consider that the international financial situation is extremely volatile, there is every possibility that this could get worse before it gets better,” he said.

A few years down the line, there should be some added income when Total’s new gas plant is up and running, while renewable energy could also create opportunities. At the same time, Mr Buchan was at pains to stress that an ageing population and rising fuel prices will increase the pressure on council budgets.

“I think these things tend to balance each other out,” he said. “With financial planning it’s always better to err on the side of being prudent.

“I don’t think any objective person looking at these figures can really say they are in any sense unnecessary if we’re going to achieve a sustainable budget, which we must do. It’s going to test the council to the absolute limits, but we’ve shown in the last financial year that we can do it.”