Councillors to discuss spending weaknesses signalled by financial watchdog

Councillors will meet on Thursday to discuss progress on tackling weaknesses in the way they choose to spend community funds, identified by a damning report from Scotland’s financial watchdog earlier this year.

All 22 members have been invited to attend the audit and scrutiny committee to discuss progress after the SIC was warned by Audit Scotland in April that councillors had failed to demonstrate their ability to take tough decisions required to halt runaway spending of the isles’ oil wealth.

Chief among the criticisms made by the watchdog was the shambolic nature of prioritising spending on capital projects, which had resulted in the wish list spiralling to the extent that councillors were faced with a funding gap over the next two years of some £37 million – without including the financing of the estimated £49 million new Anderson High School.

Since then, new chief executive David Clark has put in place plans to draw up a five-year capital programme with priority projects totalling £100 million. The list has been narrowed down with a number of major projects likely to be officially put on the back-burner, although a team is still working on a clear list to be presented to councillors for approval.

Audit Scotland also raised scepticism about the council’s ability to maintain its oil reserves at the agreed £250 million floor policy if it did not change the way it went about its business. The report noted: “Councillors have yet to demonstrate they are able to collectively take the difficult decisions required to reduce the current draw on reserves in line with the agreed financial strategy.”

But a report from head of finance Graham Johnston last month showed the SIC’s coffers were in relatively robust health despite the worst recession since the 1930s. By his valuation, the reserves were worth around £280 million at the end of March, higher than expected thanks partly to a significant underspend on capital projects.