Competition between departments blamed for £16.3 million budget black hole

Competition between council departments has been blamed for spending plans being drawn up for next year which are a whopping £16.3 million over budget, placing the future of Shetland’s oil reserves at risk.

Councillor Rick Nickerson, a former SIC employee himself, has condemned officials for seeking a 14 per cent increase in spending to £133.1m in 2010/11 in the face of the current economic climate of cutbacks.

At the Full Council on Wednesday he said it was not often he criticised officials but he was disappointed and had expected better, accusing them of being in competition with each other to spend on projects. “Collectively they do have a cheek coming forward with this amount of aspirations,” he said.

Councillor Betty Fullerton also called for an end to the practice of council departments thinking in “separate bunkers”.

Head of finance Graham Johnston agreed that budget managers had ignored the spending targets set for them by councillors. The council noted his “grave concern” at their actions in bringing forward a proposed £16.3m overspend and gave its consent for his group to get to work on cutting budgets into line.

A special council meeting may have to be called in January but otherwise members will see the fruits of the group’s labours in February when it comes time for the new budget to be set.

The council faces a tougher job budgeting its spending next year after the Scottish government cut £1.3m from the £95.8m it was expecting to get. Income from oil business at Sullom Voe has also fallen £2m below expectation due to fewer tankers at Sullom Voe, particularly with the Schiehallion field being out of action.

Its outgoings are also rising. The cost of caring for the elderly and other vulnerable groups is escalating every year, predicted to go up another £5.2m for next year, and the recent single status pay and conditions deal for council staff has added £4m to the spend.

Councillor Allan Wishart said when phrases like “very worrying”, “way off course” and “grave concern” were coming from the head of finance it was time for action. However Mr Johnston said the past history of the council gave cause for optimism and if all went well with his review team he was sure he would have a much better situation to report in February.

In the SIC bloated spending estimates are the norm for this time of year and even the slimmed-down budgets which are eventually set have a habit of not being spent by the end of the following year. Last year it turned out that £7.3m less was needed from reserves than expected.

Moving to defend council staff, councillor Jonathan Wills said their inflated budgeting was probably just them trying to make sense of the mixed messages emanating from the council chamber.

A bid to have Shetland’s community care services excluded now from any budget cuts next year failed to get much support on Wednesday. Mrs Fullerton, who is vice-chairwoman of the services committee, said she had grave concerns that the council might not be able to continue meeting the needs of people in care at the moment, never mind in the future.

For full story, see this week’s Shetland Times.