SIC struggles to maintain assets, committee hears
Rosalind GriffithsThere is a big gap between the amount the council can afford to spend and what it would need to maintain all its assets, a meeting was told.
The SIC could afford to spend between £10 million and £11 million per year, it was agreed at the policy and resources committee meeting today, but more than £12 million would be unaffordable.
However, the long-term financial plan (LTFP) which predicts capital spend until 2050, estimated that the council would need to spend £17.2 million per year in order to maintain the assets it has at present.
The LTFP shows that “ferry-related projects” could account for as much as 45 per cent of the predicted spend over the next 18 years, although this could change significantly depending on the outcome of a review by Transport Scotland.
No allowance has been made for new buildings, although the plan has allocated £3 million per year to be spent on buildings, but maintenance will be much reduced.
Capital programme executive manager Robert Sinclair said no major schemes would be undertaken. The council was “moving to reduce the council’s estate”, and rationalisation was under way.
Councillor Theo Smith asked whether reduced spending on buildings could be storing up trouble for the future, and about disposal of buildings.
Chief executive Mark Boden said “maintenance will have to drive decision-making”, with the most expensive buildings to maintain likely to be sold. Mr Sinclair said that depended on the market.
Councillor George Smith called the report “downbeat”, and urged the council to be “more ambitious as well as realistic”.
He said there was nothing new in the “holding” report, but, he added: “Let’s try as well as keeping our noses to the grindstone to be ambitious and creative.”
Other councils in worse financial positions were more ambitious, Mr Smith said, and although he accepted the report, he hoped the next one “would have more detail and more opportunity for the future”.
Committee vice-chairman Billy Fox questioned where the money would come from. In the past, he said, aspirations had been high, but now circumstances had changed with lots of unknowns, the biggest of which was the ferries.
He said: “This is a dynamic plan, it will change as circumstances change. “We are confidently predicting that £10 million to £11 million capital spend is sustainable within the long term asset management plan.”
However, Mr Fox pointed out that this would eventually drop to less than £5 million per year.
Councillor Steven Coutts said that in the face of declining capital spend the council was not lacking in ambition, and cited the new Anderson High School and Eric Gray Centre.
Mr Fox said the council had to be “realistic” and the coming years would be difficult. However, the culture within the council and among the public had been changed from the previous “unrealistic expectations of spending”.
John Tulloch
At some point the SIC is going to have to put up a fight with the Scottish government over issues like the under-funding of education – at least £10Mpa since 2008, AFTER 20 percent SIC cuts! – and as we have recently discovered, the substantial cuts in Shetland/Orkney ferry subsidies while those for the Western Isles have soared.
Our Islands, Our Future has failed dismally on these issues.
Scottish government 3-yr table of subsidy figures at: http://forargyll.com/?p=103120
Kevan Brown
I have seen Mr Tulloch’s name often in comments made about Shetland life. Could you give more details about the figures and so forth? Please understand, I’m not disputing what you’ve said. I’m simply very intrigued as to how the S.I.C. which was – during my own period of residence on the Islands – as an astute and politically savvy body, now finds itself in such straits?
Robin Stevenson
Kevan
Could I be so bold and offer an explanation on behalf of the good Mr Tulloch?
“It’s ALL the SNP Scottish Government’s fault”.
As is, the weather, the bombing of Syria, the bus being 2 mins late, the milk being sour, etc etc etc…You get the picture? 🙂
John Tulloch
Thanks, Kevan.
Robin Stevenson is largely right about it being the SNP’s fault. It’s a long story which goes back to the previous council’s profligacy AND the new SNP government at Holyrood in 2007.
Glaring examples are education funding and ferry subsidies.
1. Education: In 2008 the Scottish government arranged for government funding to be allocated and distributed to councils by COSLA.
COSLA use a secret “formula” which allocates education funding on a “per pupil” as opposed to a “needs” basis, disadvantaging rural areas. In 2014/15, this resulted in funding of £29m towards a budget of £48.5m i.e. £19.5m underfunding (40 percent).
The SIC cut education expenditure 20 percent but still needed to use over £10m from its reserves.
Even at £10mpa, this represents £70m under-funding since 2008, in education alone,
2. Ferries. Western Isles subsidies have risen by 41 percent over three years while Shetland and Orkney funding has fallen by 14 percent.
Had Shetland/Orkney subsidies kept pace they would now be £52Mpa, not £32Mpa – £20Mpa more higher!!
The current council has, creditably, put its finances in order but has been unable to defend levels of government funding.
SG ferry subsidies table: http://forargyll.com/?p=103120
ROBERT SIM
Let me ask you a question, John. If you had control of the funding for Shetland’s education system, would you restore the £10m p.a. at a stroke, without asking any further questions? And if you wouldn’t, why not?
Kevan Brown
Thanks to both Robin and John, for enlightening views – you’re surely the best of pals really?
I had a chum in London who said that the weather in the U.K. had never been the same since we joined the Common Market – “all those European winds, you know!”