Grim reality hits home as councillors agree £9 million cuts package

Councillors today agreed a momentous £9.4 million package of spending cuts and increased charges, which will see bus and ferry fares rise by 15 per cent, the rationing of Care at Home packages and substantial efficiency savings across SIC departments in the coming year.

A group of officials and elected members spent much of December and January working towards a document containing 163 individual savings and rises in charges to plug a budget deficit of some £18.5 million in 2011/12.The remainder of the deficit will be accounted for by an estimated £5.2 million of cuts in capital spending and by drawing an additional £3.6 million or so from oil reserves. Thanks to those reserves, the SIC’s position is at least not as grave as that faced by most other UK local authorities.

A joint report from chief executive Alistair Buchan and head of finance Graham Johnston spelled out that guillotining £15-17 million of public services in a single year would have been irresponsible and “economically very damaging to Shetland as a whole”.

Instead the two senior officials stated an average seven per cent reduction in the annual £131 million budget represented “a judicious balance between making progress while not severely disrupting the Shetland economy”.

There have already been sizeable public protests against school closures, the introduction of music tuition charges and the axing of knitting lessons. That has taught members that they will have to bear the brunt of the Shetland public’s ire over the financial crisis and the Tory/Liberal Democrat coalition’s rapid timetable for cutting public spending.

Speaking after this morning’s three-hour meeting in Lerwick Town Hall, SIC convener Sandy Cluness said councillors had taken “a step in the right direction”. But he acknowledged there would be further substantial cuts in the next two years, with overall savings of £26 million – 20 per cent of the council’s annual spending – needed by 2013/14.

“It’s never going to be a good day, and there are areas that will suffer,” said a solemn Mr Cluness. “I’m concerned about the ferries, for instance – that’s going to create difficulties for folk. But I think in most cases we’ve managed to retain a reasonable quality of services throughout the whole council.

“Most people will realise how difficult things are for the council. Everybody knows the financial meltdown there’s been and can see that funding coming to the Scottish government from Westminster is going to be greatly reduced. Clearly we’re going to have to bear our share of the difficulties as well.”

Despite the gravity of the cuts, Mr Cluness and several other councillors remain confident that compulsory redundancies among the organisation’s 4,000 full and part-time staff can largely be avoided. Instead the wage bill will be reduced gradually as many departing or retiring staff are not replaced.

Department managers were instructed to look for savings in the second half of 2010, but the budget has come under additional strain with growing demand for social care, while the rocketing price of petrol and diesel has added an extra £638,000. There is also a one-off £841,000 contribution to this summer’s Tall Ships event.

The report heralds big savings of £1 million from buying in goods and services, while just under £400,000 will come from clamping down on mileage and essential car user payments to staff.

The biggest single chunk of cuts are mooted to come from the schools service, whose ongoing Blueprint for Education could – if its proposed 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.

Councillor Iris Hawkins is still furious at the prospect of Scalloway losing its secondary department, on which a final ruling from the Scottish government is imminent. In addition, the SIC is currently consulting on shutting four primary schools, with Olnafirth to come later in the year.

Ms Hawkins said it was “disrespectful”, “very presumptuous” and “wrong” to include such projected savings in next year’s budget. She described it as akin to telling communities they needn’t bother with consultations as “it’s all a sham anyway”. Her attempt to get school closure savings removed from the budget was defeated by eight votes to six.

With the ageing population dictating ever-growing demand, Care at Home packages including per­sonal care and domestic tasks are to be rationed based on eligibility. South Mainland councillor Allison Duncan and Lerwick South member Cecil Smith failed in separate attempts to overturn £920,000 of community care savings.

Mr Duncan said the cuts were “going too far” and called for a review of the service to find manage­ment savings, but could only persuade two colleagues to support him. Mr Smith stressed councillors had to be prepared to take responsibility when cuts begin to bite and not try to shift the blame. He accepted some cuts to care had to be made but was defeated eight votes to five having suggested restricting the savings to £460,000.

West Side member Gary Robinson, at 41 the most youthful of the 22 councillors, lost out 9-8 in his plea to safeguard £390,000 of spending on children’s services. He feared it was a case of “young folk paying for old folk”, saying the savings would not look so clever if the SIC ended up with a crisis like Orkney endured in the 1990s, or “worse still a Baby P scenario”.

But executive services director Hazel Sutherland said the department’s managerial team were “comfortable” with the proposed efficiency savings and “reasonably confident” they were achievable without causing too much damage.

A raft of small and medium-scale cuts and increased charges in the mammoth infrastructure department – which incorporates roads, planning, environment and transport – add up to around £2.5 million of the savings. Within that, reducing the amount of road resurfacing will save £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.

Executive director of infrastructure Gordon Greenhill acknowledged fewer road works would mean a reduction in the number of staff needed. There could also be a knock-on effect on the private sector if less work was being outsourced.

Bus and ferry fares will rise by 15 per cent, raising an estimated £146, 000. That includes a five per cent fuel surcharge, which would be removed should fuel prices fall. North Isles councillor Laura Baisley felt such a large hike was “totally unacceptable”, but she failed by seven votes to six in an attempt to restrict the fares increase to 10 per cent.

She said the move would “knacker the outer isles”, but Mr Robinson countered that some of his con­stituents in Sandness who commuted to Lerwick would face far higher costs as pump prices go inexorably upwards.

Of the 163 measures, which can be read in full on the SIC website, elected members agreed to rescind only eight, tallying just under £100,000.

That included three alterations to the children’s services department amounting to around £50,000, over­ruling a proposed reduction in the number of graduate placement positions offered and cancelling planned cuts in English language teaching for foreigners.

Mr Duncan managed to get universal agreement not to cut a Saturday flight in and out of Fair Isle. He and his fellow ward members are due to visit the island later this month to discuss ongoing reliability problems with its air service.

Vice-convener Josie Simpson also succeeded in gaining a concession for his native Whalsay. Plans to merge booking services for all ferries into one location, cutting one staff member, will not now happen and plans to save fuel by making the <i>Hendra</i> the shift boat and the <i>Linga</i> the day boat in and out of Whalsay have also been abandoned.

Two public toilets in Lerwick, at Clickimin and Grantfield, are to be shut because it is believed they are not widely used, saving £10,000 a year. Mr Greenhill said they could be razed to the ground if an alternative use cannot be found.

Lerwick South member Jonathan Wills tried his hand at maintaining 100 free black bags a year for households, rather than cutting the number to 52. He said it would be a “retrograde step” and would lead to more littering and fly-tipping, but lost out by 11 votes to three. Betty Fullerton wanted to cease supplying free bin bags altogether, but she was voted down 10-4.

The scale of cuts agreed yesterday will undoubtedly impact on the quality of services. They were partly the consequence of the Scottish government’s revenue support grant of £91.6 million being £3.4 million less than budgeted for.

More worrying still was a clear message from Mr Buchan and Mr Johnston that the Scottish government is likely to divert any spare cash to health rather than local authorities. All indications are that funding settlements may get “considerably worse” in 2012/13 and 2013/14 – meaning the SIC may have to save even more than the 20 per cent cuts it already has pencilled in for those years.

In 2005 the council agreed a policy of maintaining its oil reserves at or above £250 million, not taking into account inflation, which it has stuck to. Mr Johnston said that was based on a long-term assumption that its stock market investments would generate income of five per cent a year above inflation. The £250 million policy could be revisited this spring.


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