Trust fails to take budget action

By NEIL RIDDELL

DURING a week when it was confirmed the market value of Shetland Charitable Trust’s pot had plummeted by over £30 million since April, one of the trust’s two independent trustees hit out at the charity’s inability to get its annual budget down to a sustainable level.

Acting trust general manager Jeff Goddard told trustees at a meeting in Lerwick Town Hall last Thursday that although its market value has slumped by £33.1m to £151.3m on the latest figures available, the “alarming paper loss” did not require any immediate action as the trust takes a three-year view of its finances.

But based on assumptions about the future of global finance, Mr Goddard estimates trustees can afford to spend £11m a year plus interest “forever”. That means they still need to identify almost £1.8m in savings from the annual £12.8m budget, the bulk of which is spent on funding care homes, the Christmas bonus scheme for pensioners and the disabled and the work of Shetland Arts, the recreational trust and the amenity trust.

Independent trustee and Shetland’s Lord Lieutenant John Scott – who has previously branded chairman Bill Manson’s stewardship of the trust “pathetic”– raised his concern that, although moves are supposed to be afoot to cut the budget to a sustainable level, there has been no action so far.

“We do have a plan, but unfortunately we don’t stick to it,” Mr Scott said. “Absolutely nothing has happened over the past few years.”

The Christmas bonus scheme is likely to be the subject of change next year, with charities regulator OSCR raising concerns that payments made to wealthy pensioners could not be categorised as “charitable”. The trust has agreed to pay the bonus to all eligible households, which could lead to it incurring a higher tax bill for the scheme this year, before reviewing its parameters next year.

At last week’s meeting, trustees agreed to increase this year’s budget for care homes by £66,000 in order to cover the higher than anticipated cost of meeting fire and building regulations at three centres, at Overtonlea, Fernlea and Nordalea.

Trustee and SIC convener Sandy Cluness said safety at the centres was “paramount” and fellow trustees unanimously approved the extra money.

But councillor-trustee Jonathan Wills – who said he fully agreed the extra expenditure was necessary – asked if anyone around the table had any ideas as to what ought to be cut elsewhere in the trust’s budget in order to cover the increase.

Mr Manson replied that the money was additional to this year’s budget and the question of whether to make reductions in the 2009/10 spending plan would be considered in the upcoming budgetary cycle.

There is likely to be further pressure on the trust’s budget later this financial year with the SRT seeming certain to need more money to cope with a huge rise in the price of electricity. Since the recreational trust negotiated a new contract for its electricity it has seen its annual bill rise from £200,000 to £400,000 in the space of 12 months.

The SRT is also due to renegotiate terms next March for a separate £150,000 contract to provide electricity at its seven rural leisure centres in Unst, Yell, Whalsay, Brae, Scalloway, Aith and Sandwick. That, too, is likely to mean a sizeable increase in the recreational trust’s expenditure.

Mr Goddard said the SRT had been given an advance on the second part of its budget for 2008/9 to tide them over and that it was likely he would have to speak to trustees about the matter again in February.

• Meanwhile, the trust has agreed in principle to try and sell half of the Laser dinghies which it acquired following the staging of the 2005 island games in Shetland.

A report to trustees stated that, having purchased the 24 dinghies – along with 16 sailboards – at a cost of £122,000 in December 2004, the sailboards were being well-used by local sporting organisations but that it was not necessary to keep so many of the dinghies.