Inter-island ferry fares will have to rise by five per cent, the cost of school meals and meals on wheels will need to be increased by 15p and 20p respectively and an annual charge of £160 must be imposed for children wishing to learn to play musical instruments, if the council is to meet its strict budget targets.
Costs will also have to be cut and savings found across the board to rein in a deficit of £6.7 million between proposed spending and what the council’s officials say it can afford, although there ought to be a freeze on filling vacancies rather than job cuts at this stage, according to tough recommendations made in a report by head of finance Graham Johnston now nestling in councillors’ in-trays.
They will gather at the Full Council meeting on Wednesday to deliberate on the 14-page report, which warns that with the prospect of cuts in support from the Scottish government in the years ahead, predicted to be as high as three per cent per year for the next six years (meaning a real cut of £18 million by 2016/17), the outlook for the council is “grim”.
Councillors adopted a budget strategy in August last year which included retaining the policy of keeping the council’s oil reserves above a “floor” of £250 million; limiting withdrawals from those reserves to £24.8 million in 2010/11; and continuing to wean themselves off using the reserves to spend on providing services.
By December a budget had been draw up. However, projected spending was £16.3 million higher than it should have been. This was whittled down by £11.6 million last month. Yet Mr Johnston warns members: “Even if all [these] measures … are acceptable to the council, there is still a great deal more to do to bridge the remaining budget deficit.”
The £5.3 million additional cost of the single status agreement, which was designed to harmonise pay across the authority, has not been successfully absorbed and additional costs in the areas of community care (due, among other things, to the new Montfield care home and increases in staff costs), schools (additional non-teaching staff and off-island placements), children’s services and transport are responsible for the gap.
It is for this reason, Mr Johnston explains, that raising charges in four areas and cutting spending on, for example, discretionary grants, property and infrastructure repairs and maintenance and overtime are necessary.
“As much as possible has been done to minimise the effects of these proposals, but there can be no doubt that there will be some adverse effect on services, service users, employees and the wider Shetland economy,” Mr Johnston warns.
“The scale of the problem makes it impossible to maintain the council’s sustainable financial policy framework without having these adverse effects to some degree.”
He goes on: “Members should be in no doubt that the implementation of many of the measures referred to above will have a significant impact on staffing levels … For the moment it is envisaged that the results will be achieved by not recruiting into vacant posts, but that is something which will have to be carefully monitored and controlled during 2010/11.”
Council tax is likely to be frozen again (it is currently £1,035 for Band D properties) under a deal with the Scottish government that will net the council £256,000 of additional grant support.
Mr Johnston reminds councillors that their decision-making will be closely scrutinised by outside authorities about to embark on an investigation into the way the authority operates.
“An exceptional combination of circumstances (spending pressures, cuts in government support, the world-wide financial crisis and distractions within the council) make the current budget setting exercise more challenging than ever before.
“It is also the case that the council is under exceptional external scrutiny, notably from Audit Scotland, at the present time, and can expect its conduct of the current budget exercise to be the subject of external commentary.”