The spectre of “real term cuts” could loom over Shetland Islands Council in the next financial year, following a below-inflation budget allocation from the Scottish government.
Revenue support of £98.8 million is being proposed by the SNP administration in Edinburgh, just 1.6 per cent up on the previous financial year.
Over £20 million of the funding is coming in the form of ring fenced grants, which will mostly be used to cover costs associated with the SIC’s ageing fleet of inter-island ferries.
Ferry services have faced staggering maintenance costs of £18 million, but government support for ferries has reportedly dropped from £56.7 million to £51.3 million.
Political leader Steven Coutts has warned that, with inflation now running at well over four per cent, the revenue support will need to be thinly spread to help cover the cost of SIC services.
The Shetland West councillor is also concerned about a shortfall in additional funding to help cover the spending required to help combat the Covid pandemic.
The National Islands Plan, which was recently launched as part of the Islands (Scotland) Act 2018, is already facing having its funding cut from £10.5m to £5m.
“The proposed figures for Shetland are broadly similar to what we received in the 2021/22 year. But with inflation running at over 4.5 per cent, this is a significant real terms cut in funding,” he said.
“It gets ever more challenging each year with continuing real term cuts and increased demand.”
Mr Coutts said an increase in ring fencing had also been a matter of concern.
“There’s an erosion of local decision making and local choice,” he said.
Isles MSP Beatrice Wishart said: “Looking at SNP-Green proposals for the budget you can see their priorities are not the Northern Isles. “Shetland Islands Council faces a real terms cut when you adjust for inflation. We simply can’t expect local authorities to perform their required functions with costs increasing and a budget that will struggle to stretch any further.”
In a statement, the Scottish government said: “The budget confirms that, even in the face of the economic uncertainty caused by the pandemic, we are providing councils with a real terms increase to their budgets for the coming year of over five per cent.
“Councils themselves asked for financial flexibilities this year such as the ability to take their own local decisions on raising council tax, which we were pleased to provide.”