Councillors will decide on cuts without economic impact study

The full impact of multi-million pound spending cuts on Shetland will not be known until months after councillors set next year’s SIC budget.

A comprehensive study into the state of the isles economy will not be published until April or May, the local authority confirmed yesterday.

The revelation provoked an angry response from local trade unions, which have consistently said the vital research should have been carried out long ago.

It means the study will not be ready before a critical Full Council meeting on 9th February, when the 2012/13 budget must be agreed. In November councillors agreed in principle to cull £18 million from its spending in the next two years.

Unison branch spokesman Brian Smith said everyone remained “completely in the dark” about the “potentially catastrophic” impact spending cuts of that size could have on the economy, which relies heavily on public spending.

With only a fortnight until acting finance chief Hazel Sutherland’s proposals are published, plans for a second round of public consultation meetings now seem certain to be shelved. The council says it is still examining ways of telling the public what the proposed cuts will mean in practice.

Given that longer term studies into ferry services and social care are also incomplete, SIC corporate services director Brian Lawrie said this week there would be a strong focus on making cuts and efficiencies which do not impact directly on frontline services.

Political leader Josie Simpson, who will not seek re-election in May, said the council had to “aim for getting half” of the £18 million cuts pushed through in the next 12 months, with the remainder to follow in 2013/14.

“That’s the aim, that’s what we’re working on,” Mr Simpson said. “It’s not going to be easy, but as the Accounts Commission says, we have to do it. It’s a difficult time leading up to the May council elections, but we have to do it and that’ll be a big decision for us on 9th February.”

This week the Accounts Commission praised the local authority’s “prompt action” in getting its house in order following the ordeal of a two-day public hearing in 2010. The commission said the SIC had put in place “many of the building blocks” needed to show it is getting best value for taxpayers’ money, though it still wants to see further progress.

SIC chief executive Alistair Buchan, whose stay is set to be extended until next April, said this week that the SIC was on course to achieve its planned £9.4 million savings target for the present financial year.

Asked if the absence of the input/output study into Shetland’s economy when taking big budget-cutting decisions was of concern, Mr Simpson told The Shetland Times: “This is a two-year project so [the report] will fit into planning ahead when it’s ready. We have to safeguard ourselves as best as we possibly can so as not to stifle our local economy.”

But the unions continue to warn of the possibly grave consequences of cutting such large chunks of the local authority’s budget so quickly.

“Most people using common sense will realise it could be potentially catastrophic given the level of public services in Shetland,” Mr Smith said. “Nonetheless the council are apparently still hell-bent on a cut in the current year of 10 per cent or so. Absolutely no thought has been given to the strategy here and everybody should be extremely worried about what’s being proposed.

“We’ve made the point, of course, that before they ever embarked on this course they should have been working out what the likely effect on the economy, and on society, would be. When the unions first proposed that, it became clear that it had never occurred to them to do it.”

A new study this week estimated that Shetland’s economy grew by two per cent last year, the best performance anywhere in Scotland. At 1.3 per cent, the islands’ unemployment rate was the lowest anywhere in the Highlands and Islands.

These figures bucked the national trend, with the UK’s jobless rate tipping over eight per cent. The rate also compares favourably with Orkney’s two per cent unemployment, and is significantly healthier than the 3.4 per cent unemployment rate in Argyll and Bute.

The report, by consultant Tony Mackay, also estimated that the value of Shetland’s economy increased from £401 million in 2010 to £409 million in 2011.

Asked if those findings suggested Shetland was well-placed to cope with the proposed cuts, Mr Smith said that argument was illogical. Shetland’s good economic record was largely down to the strong presence of the public sector, he said, and the removal of that support “might have a very bad effect”.

Mr Simpson this week said it made sense to extend Mr Buchan’s term as chief executive until April 2013, an option inserted into the deal which brought him here from Orkney 18 months ago. That would provide “a bit of stability” for the new batch of councillors during their first year in office, after which a longer term appointment could be made, Mr Simpson added.