WATCH: Tough times ahead for councils, audit commission says

Shetland Islands Council can expect a further period of austerity over the coming years, according to an Audit Scotland report commissioned by the Accounts Commission.

Shetland, along with the Western Isles, remains the local authority with the highest funding per head in Scotland at just over £4,000, compared with Edinburgh whose population receives around £2,400 per head.

But the report warns of a further few years of financial austerity for local authorities, due to a reduction in block grant from Holyrood, while councils rely increasingly on their own revenue raising powers.

The Scottish Government provides around 60 per cent of councils’ total income. Over the past six years, up to and including 2016/17, Scottish Government revenue and capital funding for councils fell by 8.4 per cent in real terms.

Publishing the report last Monday, Audit Scotland said: “Each council has its own particular challenges but all councils face financial shortfalls requiring further savings or using reserves. They need to change the way they work if they are to make the savings needed.”

The report warns that further reductions are expected while demand on key services, particularly social care, continues to rise. Councils also face increased cost pressures in areas such as pension provision.

The report states: “Councils face tough decisions around their finances that require strong leadership and sound financial management. Long-term financial strategies must be in place to ensure council spending is aligned with priorities.

“Decisions need to be informed by well-developed medium-term financial plans and budget forecasts that allow councillors and officers to assess the impact of approved spending on their longer-term financial position.”

Accounts Commission deputy chairman Ronnie Hinds echoed the concerns of the report, saying: “Councils are generally doing a good job with their finances in difficult circumstances. But pressures continue to increase on a number of fronts at the same time as they face the prospect of further reductions in their funding.

“It’s vital that councillors and officers set medium and long-term financial plans based on clear priorities for the services they provide to their communities”.

That financial reality would appear to deal a further blow to hopes of establishing fixed links between mainland Shetland and Bressay, the North Isles and Whalsay – a subject that was resurrected at a meeting of the association of community councils in October and has been the source of tit for tat correspondence between Whalsay Community Council member William Polson and SIC leader Gary Robinson.

In a letter to SIC chief executive Mark Boden, Mr Polson ties tunnel provision to the building of a fish processing factory and renovation of the harbour, which he says is in dire condition. He also says that council officials should perform a U-turn propose building the fish factory in Whalsay after having previously recommended rejection of the proposal.

The piers in Whalsay are in “imminent danger of collapse” says Mr Polson, while the case for the fish factories is supported by a Highlands and Islands Enterprise report. He also suspects the reasons given by the SIC Director of Development for the dismissal of the project were “erroneous and without foundation”.

According to Mr Polson, in a previous correspondence with Mr Boden, a Norwegian firm is keen to build two fish factories in Whalsay which would bring site rental money plus harbour landing dues to the SIC.

If the harbour was renovated and Whalsay linked by tunnel to mainland Shetland and given the huge fish stocks around the isles, then the isle would boom, according to Mr Polson.

But in replying to Mr Polson, the SIC political leader has stated that the council cannot make that sort of infrastructure investment, which would necessarily rely heavily on loans, without having some sort of guaranteed return on its money.

A meeting of the council’s Environment and Transport Committee on Tuesday heard that fixed links were still on the Scottish Government’s agenda as part of the Stag transport appraisal.

Mr Robinson said later: “The council is still engaged with the Scottish Government about our inter-island links and we have persuaded the Scottish Government to look at fixed links as well as replacing ferries and terminals and I think that really is important. We would be looking to the Scottish Government to, at the veyr least underwrite, if not undertake, the construction of any fixed links to the islands.”

In his correspondence Mr Robinson points out that Faroese tunnels have been paid for by tolls and that these links are far more heavily used than a Whalsay tunnel is likely to be. Meanwhile, the Scottish government has apparently stated it will only make grant money available for ferries and has blocked the use of tolls on any fixed links, thereby removing that source of revenue for such a venture.

He adds: “This leads me on to the wider issue of risk. The technical and financial risks of tunnelling are high. One tunnel near Bergen saw not one but several tunnelling companies fail when, in spite of thorough surveying, unexpected conditions were encountered. Such risk is far too high for Shetland Islands Council to bear. Any project would have to be underwritten, if not undertaken, by government and while I’m not precious about which government, the Scottish Government would seem to me to be the obvious one.

“You’ve stated on numerous occasions that the council rejected an offer of loan funding from the Norwegians – in truth the council has never been in a position to accept an offer – that’s not how it works. It would be strange days indeed if it were the case that anyone could bring an idea to the council and expect them to pay for it on the basis that loan funding was available. The normal rules of procurement dictate that public bodies decide to do something then run a procurement exercise – not the opposite way around.”

Mr Robinson adds that without a guarantee of business from any proposed fish processor it is “a simple fact that the council cannot borrow to invest without a reasonable certainty of return. It may have been different in the past but that’s how it is now.”

Finally, he invites local interests to set up their own business. “Notwithstanding all of the above why, if this is such a good idea, is the council being asked to contribute at all? Apply for a works license and don’t let us hold you back.”

The last two decades have seen the closure of a slew of fish factories in Lerwick and Scalloway, while Europe’s largest pelagic processor, Shetland Catch, relies on much of its supplies from North-east Scottish, Irish and Scandinavian pelagic boats while local vessels land the bulk of their catch to Norwegian factories.