Increasing public transport fares by 15 per cent, reducing the annual fuel poverty grant, rationing of “Care at Home” packages and cutting the evening class programme by one third are some of the measures councillors are being asked to consider in setting a much reduced SIC budget for next year.
A daunting task faces elected members when they meet next Thursday to consider an eye-watering £9.5 million package of proposed cutbacks, increases in service charges and efficiency savings to plug a budget deficit of some £18.5 million in 2011/12.
Councillors have already learned over the past 18 months that they will have to bear the brunt of the Shetland public’s ire for the financial crisis and the Tory/Liberal Democrat coalition’s rapid timetable for cutting public spending.
To make matters worse, the SIC is having to deal with an extra £638,000 fuel bill amid rocketing petrol and diesel prices, a one-off £841,000 contribution to this summer’s Tall Ships event and ever increasing demand for social care.
Yet the position is less grave than that faced by many other local authorities in Scotland, with the council here able to soften the blow by drawing an additional £3.6 million from its oil reserves. The remainder of the revenue deficit will be met by £5.2 million cuts to the SIC’s capital programme.
Head of finance Graham Johnston’s report to members recognises that using the reserves to breach the gap will “ultimately jeopardise the council’s ability to maintain financial policies and fund future programmes”. The council is committed to maintaining the oil reserves at or above £250 million.
But a financial resources working group which met in December and January recognised that guillotining £15-17 million of public services in a single year would be irresponsible. Such a move would “not be feasible, and would be economically very damaging to Shetland as a whole”.
Mr Johnston believes his proposal, equating to a seven per cent reduction in the local authority’s £131 million annual budget, represents “a judicious balance between making progress while not severely disrupting the Shetland economy”.
He acknowledges that the scale of reductions will have “some adverse effect on services, service users, employees and the wider Shetland economy”. Some of the measures will be “very challenging to implement” and will require “close collaboration” between members and council management.
An exhaustive list of 163 items will be considered by members next week, with a raft of medium-scale cuts and increased charges in the mammoth infrastructure department – including roads, planning, environment and transport – accounting for up to £2.5 million.
Councillors are being asked to consider increasing ferry and bus fares by 15 per cent, which would raise an estimated £146,000. Five per cent of that would be a fuel surcharge, which would be removed should fuel prices fall. Altering the terms of the private Foula ferry contract should yield £115,000.
Reducing road resurfacing could provide short-term savings of £187,000, while spending on maintaining, repairing and replacing streetlights, traffic signs, footpaths, drainage, sea defences and road verges also form part of the plans.
The biggest chunk of savings will come from the schools service, whose ongoing Blueprint for Education could – if its proposed programme of school closures are approved – save up to £3 million this year. That includes savings from moving towards national staffing levels in primary schools and reducing the number of classroom assistants, cleaners, janitors and clerical staff.
Amid the grim financial picture, it is understood some senior officials are incensed that the SIC’s two most senior politicians, convener Sandy Cluness and vice-convener Josie Simpson, are continuing to lobby and vote against the deeply unpopular school closures.
In social care, where the ageing population dictates ever-growing demand, “Care at Home” packages including personal care and domestic tasks will be rationed based on eligibility. That should save £450,000.
Mr Johnston’s report highlights that part of this year’s £18.5 million deficit results from the Scottish government’s revenue support grant of £91.6 million being £3.4 million less than budgeted for. The SNP administration only set out its funding plans for one year rather than three, with the news for local authorities widely expected to get worse after this May’s Holyrood elections.
That adds up to an uncertain future and more grim news in the years ahead, which Mr Johnston recognises: “Realistically, the remaining local challenges, and the prospect for even tighter financial settlements from Holyrood for 2012/13 and beyond, will mean that strategic financial matters will remain very high on the council agenda for the foreseeable future.”