29th September 2016
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Steps taken to reduce SIC’s exposure to ‘Brexit uncertainty’

The SIC is trying to minimise the potential risks of ‘Brexit’ when it comes to its multimillion-pound investments.

Jonathan Belford.

Jonathan Belford.

Finance chief Jonathan Belford told members the council’s stock market investments have risen to £300 million. He added that,”our investments are done on a global basis” not solely within the UK markets, therefore they were not “taking the full impact of that uncertainty”.

Mr Belford said regarding the impact of Britain leaving Europe “there’s no particular guarantees, that’s for sure. Most of the conversations I have heard end with ‘we will have to wait and see’.”

However, the council had an investment strategy. “to minimise risks such as this in order to get the long-term benefits for the council”.

The executive finance manager presented a report to members of the policy and resources meeting on Tuesday.

He explained the council’s reserves had risen by £13 million in the first three months of the financial year.

Though he also stressed the need for a long-term view, as the council relies on its ability to draw from investment returns each year and not cut the capital value of the investments.

Members were told it is estimated about a 7.3 per cent return can be achieved each year – £12million per year for council services.

When quizzed by SIC leader Gary Robinson, Mr Belford accepted the percentage return could be on the higher end of the scale.

Councillors were keen to tell the public, despite the increase, difficult decisions still lay ahead.

“Financial markets are volatile,” Mr Belford said.

“We have seen that year on year; I suppose day on day is more like it some weeks.”

He said in “a perfect world” council investments would have risen by £20 million last year, however, that was not the case.

Mr Belford also explained that some of the council’s cash reserves had been committed to projects.

Some £15 million has been borrowed by the SIC a couple of years ago, tied in with the new Anderson High School, though only £2 million had been drawn down by the SIC.

Deputy leader Michael Stout said it did not mean the council “can start throwing lots of money around” and the council was subject to increasing levels of austerity.

Both Mr Belford and Mr Robinson believed there was a reduction in Scottish government grant funding on the horizon.

“The [annual Scottish] government grant could be reduced to £80-odd million,” said Shetland North councillor Alastair Cooper.

“The £300 million could be very much lower 12 months from now.”

He added: “The Shetland public need to understand we’re not sitting on £300 million where we can spend the lot tomorrow.”

• For the full story and comprehensive coverage of this week’s council meetings see this week’s Shetland Times.

AboutAdam Guest

Reporter for The Shetland Times. I have also worked as a senior news reporter at The Press and Journal, The Barnsley Chronicle and as a freelance reporter for The Doncaster Free Press. Alongside news reporting I specialise in music and sports journalism. Pork pie lover.

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3 comments

  1. Ali Inkster

    This money should never be seen as an excuse to accept funding cuts from holyrood. It should never be used for day to day spending for that very reason. Just as in the past the sic would use the ct funds to cover spending cuts from sooth these funds will soon diminish if they are used to pay for services that are meant to be funded by central government. We subsidize the rest of the UK quite substantially if they can’t find it to hand back the money we need to provide the standard of living we deserve then maybe we should stop subsidizing them.

    Reply
    • Johan Adamson

      What should it be used for then Ali? keep it in the counting house? Tunnels? Music for schools? IT for schools?

      Reply
      • Ali Inkster

        There is going to come a time in the not too distant future when we will wish we did.

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