The SIC is having to make “draconian” cuts because of reckless spending resulting from shambolic governance and an absence of strong leadership since the turn of the century.
That was the view of council audit and standards committee chairman Allison Duncan. He was speaking this afternoon after members digested a “first-rate” report from finance chief James Gray outlining how the local authority found itself overspending to the tune of more than £30 million a year by 2012.
Mr Gray suggested the impending threat of school closures and big cuts in ferries might have been avoided had councillors not squandered tens of millions of pounds in the past decade.
Spending on fiascos such as the Bressay Bridge, Smyril Line, AHS and SSG Seafoods cost the council over £25 million. But Mr Gray identified a bloated payroll as the fundamental cause of overspending. Employee costs spiralled from £54 million to £93 million between 2003 and 2012.
Mr Duncan said past councils had received umpteen warnings from Audit Scotland and previous finance directors to curb spending.
Many councillors were reluctant to publicly apportion blame to individuals, though several privately endorse Mr Duncan’s opinion that former convener Sandy Cluness was responsible “for a lot of this”.
He said the convener’s office sat empty too often during the 2007-2012 council – whereas successor Malcolm Bell is working round the clock to the extent that Mr Duncan is “surprised his wife hasn’t asked him for a divorce!”
He told the committee: “I, along with our political leader Gary Robinson, asked [Mr Cluness] to resign in the last council because of the spend, spend, spend attitude and he refused to do so. It’s put us in a very difficult position now.”
Education and social care were the main departments where staff numbers mushroomed.
Corporate services director Christine Ferguson, who was in charge of community care for part of that time, said a “lack of coherence” meant departmental aspirations frequently conflicted with an overall need to cut costs.
“I was not only here, but actually a senior manager in what is now seen as one of the worst-offending services,” she acknowledged. “Finance policies at corporate level recommended a reduction in spending… separately we had service priorities and targets which were at odds with that.”
After hearing that, Mr Duncan branded past governance arrangements “an absolute shambles”. “That’s not the word we use,” Ms Ferguson objected.
Asked by Mr Duncan whether there had been a lack of control over recruitment, she responded: “All the council’s policies and procedures were adhered to in that regard.”
Earlier, Mr Gray had set out how the draw on oil reserves had been “far too high” for too long. In the early 2000s, overspending had mainly gone on capital projects (“a tap you can turn off very quickly”), but the reserves were subsequently raided to top up year-to-year spending on staff and services.
Even when the brakes were applied on public spending nationally following the 2008 financial crash, SIC expenditure “wasn’t checked – it continued to grow”.
Mr Gray set out measures to avoid a repeat, including: a clearer outline of what was being drawn from reserves, better financial planning, maximising income from fees and charges, and recognising that stock market investments go down as well as up.
North Isles councillor Gary Cleaver was eager to know why there had been a “massive recruitment drive” in education and social care.
He pointed out there had not been a “sudden baby boom” resulting in more schoolchildren needing taught. And in social care, there has been a “demographic time bomb ticking for decades”. So why had the council not been “reshaping services to deliver them with the staff we had?”
Ms Ferguson said more had been spent on care to meet added demand due to an ageing population and a “huge increase” in the number of people with disabilities. Providing care is a “complex and enduring issue” and the SIC had invested in a “very high quality model”.
Pointing to disaster stories elsewhere in the country, often owing to fewer resources, Ms Ferguson said that “in many ways you get what you pay for”. But “I fully accept the disconnect between service policies and financial policies in the past”, she added.
Councillor Billy Fox raised a chuckle by asking whether Mr Gray had tallied up how many times he’d made a sharp intake of breath while piecing together his report. “My sharp intake of breath was when I first came to Shetland two years ago,” came the diplomatic response.
* See tomorrow’s Shetland Times for more, including reaction from Mr Robinson, Mr Bell and Jonathan Wills.