Council is still £80,000 a day over budget

Shetland Islands Council is still spending around £80,000 a day more than it can afford despite good progress on making savings so far this year.

The crisis-hit local authority had banked two thirds of its £15.6 million savings target by the midway stage of this financial year, its senior accountants told councillors on Friday.

Members of the executive committee were discuss-ing a report showing that council reserves slumped from £223 million at the end of 2010/11 to £193 million by April this year.

That is because the council withdrew £36 million to support spending on services in a year when its stock market investments yielded a return of only £6 million. The aim is to stabilise the reserves at a minimum of £125 million by the middle of this decade.

With most of the cuts still to come, however, councillors were told that – including capital spending – the SIC will likely have to raid its reserves to the tune of £29 million this year.

Lerwick South member Jonathan Wills said that if the SIC was a private company, “we’d be heading for administration”. He said: “The graph is downwards.

“Whether it’ll bottom out we’ll see, but I’m afraid I remain a pessimist.”

Other councillors, including political leader Gary Robinson and Allan Wishart, said they remained “hopeful” that the aim of getting council spending on an even keel within the next five years was achievable.