Shetland Islands Council is to ask people for their thoughts on the least harmful way of making huge cutbacks to public services, as local trade union officials warn of the potential for “chaos” and continue to question the need for the cuts to be ushered in so quickly.
The local authority’s executive committee will meet on Monday to discuss what to do about its policy of maintaining SIC oil reserves at or above £250 million.
Amid ongoing trauma on the world’s money markets that policy looks sure to be breached spectacularly next year – with acting head of finance Hazel Sutherland estimating that the reserves will have fallen to £219 million by the end of March 2012.This year the council dipped into the reserves to the tune of £47 million to prop up spending on services, capital projects and economic development. Ms Sutherland’s latest report suggests that in order to protect the reserves – which peaked at £345 million in the more tranquil economic waters of 2003 – no more than £13 million should be taken out each year.
The SIC has set an ambitious timetable seeking to reduce the use of oil reserves to support revenue spending from £20 million this year to just £2.7 million next year, and then to zero in 2013/14. Revenue spending would fall from £120 million this year to just under £100 million in two years’ time.
Looking ahead to the budgeting exercise for 2012/13, Ms Sutherland’s report estimates that the Scottish Government’s revenue grant to the SIC could be cut by around £3 million, or just over three per cent. Extra costs to be faced include a predicted £800,000 on higher fuel and energy prices and the cost of moving into the new North Ness office complex.
There could also be a substantial impact on how much the council spends on building projects. Spending of £97 million over the next five years has been approved, not including finance for a new Anderson High School, but Ms Sutherland’s report says that investing the “capital fund” portion of the oil reserves on stock markets is likely to generate only £28 million over that period. A Scottish Government grant of £5.9 million is also in place.
Overall, the council is seeking a daunting £26 million-worth of savings over a two-year period. Local union representatives Brian Smith of Unison and the GMB’s Robert Williamson are unhappy with that and – mirroring the nationwide debate about the Westminster coalition’s spending plans – believe the SIC cuts are being made “too fast”.
SIC political leader Josie Simpson said a series of public meetings would take place from the end of October to gauge community feeling. Internal efficiencies would be the starting point but “will not be enough” on their own. Ms Sutherland’s report suggests over £5 million a year can be trimmed without impacting directly on services.
“It is important that the council debates how much money we want to take from reserves each year and how much we want to hold for future generations,” Mr Simpson said. “What [reducing the drawdown to £13 million a year] would mean in practice would be a very difficult budget exercise for the next two years.
“Council members will need to take difficult decisions in the months to come. We want to explain the financial choices which the council has and to hear from folk what is important to them when the council comes to discuss changes to services.
“Everybody will have their own ideas as to what needs to change. What I want to say at this stage is that we are committed to working with our staff and local communities to make the best choices we can to help Shetland remain a safe and vibrant community to live in.”
Mr Smith and Mr Williamson believe no savings target should have been set until the council had conducted thorough research into the potential impact cuts of this magnitude could have on the Shetland economy. They have been calling for a full debate on what services should be protected for months now and are growing exasperated at the lack of information being provided.
“We’ve asked again and again for information about the likely effect of not just the amount of cuts, but also the speed of cuts,” Mr Smith told The Shetland Times. “The most we’ve got was a half-page report by the director of development [Neil Grant] which said basically that the Shetland economy is in a splendid condition and could therefore withstand anything that was thrown at it.”
The unions want to scotch the notion that the local authority has suddenly run out of cash, saying the council has not spelled out why it needs to front-load the cuts in this manner.
“An idea is being put around that Shetland is incredibly poor,” Mr Smith said. “I heard a director had recently told her staff that we were bankrupt. We’re not, of course. We’re exceptionally rich and we have the enviable situation where we could sit down and speak rationally about these things, and not just say £26 million in two years.
“If you go to the general public and say ‘we want to save £26 million’, I suspect the result is going to be chaos. We’re being told that the best thing [is to] get the figures cast in tablets of stone first so nobody can disagree with it, and then you’ll get the answer, but it does seem to us to be entirely the other way around.”
The level of cuts is roughly equivalent to over 400 jobs and the unions say that, while Total’s gas plant is an undoubted boost to the economy, it does not follow that staff who leave the council will have suitable qualifications to work in that sort of industry.
“The judicious use of the funds available to us certainly has to be a huge issue,” Mr Williamson said. “But when everybody is running around saying we need this amount of savings, and we need to keep yun amount of money in the bank – well, actually, how does this family need to live?”
Mr Williamson said morale among staff was “pretty well non-existent” amid all the uncertainty and had been badly damaged by the restructuring of senior management this summer. Completed on the back of hard-hitting criticism from Audit Scotland last year, the unions say the way the reorganisation was handled has created damaging new fissures at the top of the local authority’s workforce.
Mr Smith said: “Morale at all levels in the organisation is very, very low. It’s noticeably low at the top of the organisation and, given that theoretically it’s the managers at the top of the organisation that are going to have to take this forward, we have a dangerous situation.”
The unions are also concerned at a perceived lack of accountability, with SIC chief exective Alistair Buchan having been given delegated authority to reorganise his management team with the assistance of outside consultants. They say the changes are being rung at a helter-skelter pace with “too many unasked, unanswered questions”. Mr Smith expands on this argument in an editorial in the latest edition of The New Shetlander.
Now the focus of reorganisation has shifted to staff team leaders – one rung below the top management tier. Mr Williamson said those employees were part of the single status negotiations and so any changes to their terms and conditions should be dealt with “formally, and not through some emergency measures”.
He said: “The sooner we get back to having our council back, the better. It seems to [have been] in the hands of Audit Scotland and consultants for a period of time when our senior officers and everybody else have effectively been sidelined.
“Now we have new appointments [to senior management] in we are very hopeful that they get the opportunity to guide this process forward, and that they’re not railroaded into somebody else’s idea of what the answer is.”
The unions’ message was echoed this week by former Shetland College head George Smith, who is believed to be considering standing for election to the SIC next year. In a letter to this newspaper, he said the council should have carried out a comprehensive assessment to determine the effects of cutting spending so quickly.
“It is not just the unions that should be concerned about how this council is going about its business,” he writes.
Earlier this month Mr Buchan launched a robust defence of his use of consultants, which had cost £300,000 by the end of July. He said they were one-off costs which would save money in the long-run, adding that the consultants’ input was necessary “to move this organisation forward”.