Council exceeds savings target but finances still perilous, executive committee told
Shetland Islands Council is moving steadily towards financial sustainability, having dramatically cut its draw on reserves.
But the authority is still in a “perilous position” as its efforts to balance the books continue.
A report by head of finance James Gray showed the council had exceeded its £15.3 million savings target for 2012/13 by almost £4.9 million.
Figures tabled before today’s executive committee showed the draft draw on reserves for the year is £21.445 million, against a target of £26.331 million.
The figure represents an impressive reduction from £35.6 million which was taken from the reserves fund during the previous financial year.
But members were told not to be complacent. Director of corporate services, Christine Ferguson warned: “That doesn’t mean to say job’s done. There is still a long way to go.”
Chairman Gary Robinson said the council had gone from spending £100,000 a day to £59,000 a day from reserves but he warned there was still work to be done. And Alastair Cooper was worried what impact cuts to capital investment would have on the building trade locally.
Mr Gray’s report shows the value of the externally-invested reserves stood close to £206 million by the end of March, compared with £193 million 12 months ago.
But the strong return has been driven by an impressive 14.6 per cent return on the council’s investments in the money markets.
It is unlikely that a similar figure will be recorded in successive years.
“We do not anticipate that level of growth is sustainable in the longer term,” the report stated.
Another fly in the ointment has been that community care costs have “leaped” by £1 million. The overspend has been blamed on delays in decisions over the future of the Freefield Centre and day care services.
Jonathan Wills pointed towards the programme of possible school closures and said the increase in community care spending underlined the necessity of “combining” schools as soon as possible.
Mr Cooper was anxious to know where the shortfall would be made up. Mrs Ferguson said the department was working on a “contingency”.
Dr Wills was also concerned by an overspend on fund managers’ fees by 18.7 per cent. “I think we’re paying too much,” he insisted.
Another concern for Mr Cooper was the impact the moves to cut spending could have on the future of the building trade. He said the “substantial inroads” made were down to “slicing to the capital programme”.
“That’s done more to reduce that call than actual savings. The building industry is going to suffer for this.”
Chairman Gary Robinson put the figures into context for members when he said the council had gone from spending £100,000 a day to £59,000 a day from reserves.
He said council staff had worked hard to keep spending down.
“There are still challenges, particularly in social care, and I don’t think by any means we can be complacent.
“It’s important to recognise the effort all of our staff have put in to getting our spending down.”
He added the once-recognised tendency for departments to spend the last of their budgets before the end of the financial year had now come to an end.
Mr Robinson added seeing the results at the beginning of June was “a real achievement” and paid tribute to finance staff members.