'Tough decisions' needed to close Scottish council's £134m funding gap
The Accounts Commission says the council’s reliance on financial reserves is ‘unsustainable’.
A Scottish council admits “tough decisions” will need to be made to close a projected £134.3 million funding gap.
The Accounts Commission has published a new report warning that Shetland Islands Council will face this gap by 2029/30 as its reliance on large reserves to balance its budget is “unsustainable”.
It said the council has “strong services and a clear vision”, but warns both councillors and officials in the UK’s most northern local authority need to take a more long-term approach to its finances.
Auditors added they remain concerned about the pace at which the council is delivering its change programme, despite Shetland Islands Council improving its performance management over the last three years.
They added Shetland has also been slower than other councils to adopt digital technology to support staff and deliver public services.
Andrew Burns, deputy chair of the Accounts Commission, said: “People living on Shetland are getting a good service right now and we’ve seen some improvements in how the council is run since we last reported.
“But the council continues to draw on its reserves to balance its budget. That’s unsustainable and will impact future generations if not addressed.
“We’re calling on the council to urgently increase the pace of its change programme and prioritise the actions that will help it achieve financial sustainability in the medium to long term.”
This comes after Shetland Islands Council confirmed that council tax would be increasing by 7.3 per cent.
Councillor Emma Macdonald, leader of Shetland Islands Council, said they welcome the report as it recognises that services on the islands “generally perform very well, compare favourably to national averages, and have some of the highest levels of public satisfaction in Scotland”.
She added: “The report also highlights that we have a clear vision and priorities, strong partnerships and good engagement with the public about our corporate plan and our budget.
“The gap between the funding we receive and what services we are expected to deliver is significant - and it is an unsustainable situation.
“Despite the extremely challenging financial environment in which we operate, difficult decisions need to be made.
“We are determined to ensure the council addresses its unsustainable use of reserves, whilst innovating and collaborating to address our population challenges, reduce inequalities, and sustaining and growing our economy.
“As our working age population reduces, we know that digital transformation is essential to being increasingly efficient and sustaining service delivery. We’re ensuring there is a clear focus on this, and our change programme is moving ahead.”
Councillor Macdonald added: “Finally, I would like to thank all council employees for their hard work which these findings are testament to. We know that it is their commitment that means that we maintain high-quality services for the community we serve when facing staffing and financial pressures.
“The full Accounts Commission report will be considered by elected members at an upcoming meeting of Shetland Islands Council.”
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