The report on the General Fund Revenues Estimates 2012/13 being considered by Shetland Islands Council on Thursday is asking councillors to approve revenue savings of anything up to £33 million in 2012/2013. It advises that the socio-economic impact of any significant change to the council’s finances has to be taken into account.
This appears to have been satisfied by the commissioning of a report from the Hutton Institute. The conclusion of this report is that an estimated total loss of local employment of 597 would result from a reduction in revenue spending of £26m, the target at the time the study was commissioned.
In addition to revenue savings of anything up to £33m, the council has already agreed a reduced funding level of £10.4m for its capital programme in 2012/13. This compares with an estimated capital programme expenditure in 2011/12 of £21.6mn, a saving of £11.2m.
If these budgets are approved and carried through there are likely to be reductions of £11.2m in capital expenditure and anything up to £33m in revenue expenditure in 2012/13. Given that the Hutton Institute estimated job losses of 597 as the result of a £26m cut in revenue expenditure it could be interpreted from this that the combined cut of up to £44.2m under consideration might result in a loss of employment of 1,014.
The Hutton report finishes by suggesting that actual job losses would be influenced by expansions which might take place in the oil and gas, fish products and tourism sectors. These expansions would, however, only materialise in the event that greater demand for these goods and services result from changes in world demand. While it goes on to calculate the growth which would be required in those sectors to offset the reductions elsewhere, it does not appear to be suggesting that such changes are imminent or likely.
It appears therefore that while the council has commissioned a report on the socio-economic impact of the proposed changes, it has so far not shown any sign of taking them into account.
Clearly, the council must make savings in expenditure, but needs to be open about the effect of these savings and engage with the community and stakeholders before making decisions which could have such a detrimental effect on us all.