Grants cut as economy feels the pinch

A squeeze will be put on the economy following a decision to push ahead with cuts in council grants for key industry sectors such as agriculture and tourism, although promotion for events like the Tall Ships or Hamefarin will be given a boost.

The move is being made following a reduction in the economic development budget for 2010/11 of 24.6 per cent, from almost £9.9 million in 2009/10 to £7.4m for the new financial year – although that excludes a £1m carry-forward following a recent underspend in commitments.

Fisheries and aquaculture will see a signi­ficant 16 per cent reduction, from £4,303,850 to £3,626,350 as part of the step.

The bulk of that money goes towards the NAFC Marine Centre in Scalloway, as well as Shetland Seafood Quality Control (SSQC) and the Shetland Shellfish Management Organisation (SSMO).

Tourism and heritage faces an even bigger reduction, at 59 per cent, taking the 2009/10 budget of £1,411,000 down to below £600,000 for the new financial year.

Meanwhile, grant funding for general industry will be cut by a quarter from just over £1m at the moment to £797,000.

There is also a 44 per cent reduction in agriculture, from £866,000 to £485,000 to reflect a “significant” underspend during the current financial year.

Telecommunications and creative industries are also facing cut-backs in grants and loans – last year’s budget stood at £732,000 but a 40 per cent cut will see that reduced to £422,498.

Less severely affected is the energy sector, which is busy with new renewable energy projects and is associated with the oil and gas sector as well as decommissioning. Its grant funding goes from £480,000 to £345,000 – a cut of 28 per cent.

Funding for community enterprise schemes designed to help people and communities face a 12 per cent reduction – from £260,000 to £230,000 – while business guidance and engagement will be cut by 67 per cent from £150,000 to £50,000.

A 16 per cent increase has been put aside for the 2011 Tall Ships Race and this year’s Hamefarin, which includes the Flavour of Shetland festival.

The 2009/10 events budget goes up from £242,810 to £280,970, and there is also a 31 per cent increase for marketing and promotion, which covers the new tourism organisation Promote Shetland.

Members accepted that cuts had to be made in the short-term to reflect the harsh economic climate when they met yesterday, but some wondered why more money was being spent on promotion when – once cuts are made – there will be less in Shetland to promote.

Lerwick South councillor Jonathan Wills said the committee should accept the report with reluctance, adding the public accepted there had to be cuts in the current climate.

“I don’t think the sky will fall in,” he said. “There is still a useful programme of economic assistance. With some reluctance we have to accept this. Hopefully it will be short-lived.”

Shetland North councillor Alastair Cooper said the council had to recognise local government funding was getting “tighter and tighter,” but he was concerned the door may be shut on sound business ideas if all the available funding was tied up.

“We need to be pro-active,” Mr Cooper said. “I’d like to believe in the event of someone coming in the door with a good project and we’ve spent the budget we would be able to get the funding from somewhere.”

Shetland Centra councillor Iris Hawkins said people shouldn’t just think there is a blank cheque waiting to be drawn from the reserve fund.

Mr Cooper’s view was shared by Shetland South member Rick Nickerson who was worried about the consequences for future enterprise if all the money in the pot was allocated to existing projects. “What leverage is there for new projects that come along this year?” he wondered.

However head of economic development Neil Grant, the author of the report, said the department still had £1.7m-worth of funding up its sleeve for any such eventuality.

North Isles member Laura Baisley said Shetland was beginning to reflect the wider UK economy, with all focus centred on advertising and promotion and little on industry itself.

She was backed by Shetland West councillor Florence Grains, who wondered if Shetland would be left with anything to promote if the recommendations went through.

“Marketing and promotion are increasing but the big reduction is in tourism and heritage. Are we marketing something that, at the end of the day, we won’t be able to deliver anyway?” she asked.

Mrs Grains also worried how a reduction in agriculture would be seen in an industry many in the past have believed the council has neglected.

Lerwick South member Cecil Smith agreed with that point of view, and said the 31 per cent increase in marketing and promotion jarred with the cuts in other areas. He said: “What are we going to promote and what are we going to market when we are having cuts in agriculture and fisheries.”

Their comments left it to fellow town councillor Allan Wishart to jump to the defence of raising the marketing budget.

He agreed with Dr Wills’ assertion that the “sky would not fall,” and added Shetland had to be prepared for when the good times role again.

“Marketing and promotion is very important,” Mr Wishart said. “When things do get better, as they will at some stage, we need to be able to run. We do need to keep our profile up.”

Mr Grant admitted the budget was “tight”, but said reductions had been made because the anticipated draw-down from the current year’s budget was much less than what was available.

“This budget has what we need in terms of finance to deliver the aspirations for next year. We need to be more focused on what we are trying to achieve,” Mr Grant said.