Council will raise tax and draw on reserves to maintain services

Schools and ferries are two areas where the council may be forced to make cuts if it is to continue to balance its books.

That was the fear expressed by some councillors on Tuesday as the local authority set its budget for 2019/20.

“Radical action” could be required in order to avoid an unsustainable draw on reserves in future years, said Lerwick North member John Fraser on Tuesday afternoon, as members discussed the authority’s financial future.

This came as councillors agreed a budget which will see frontline services maintained for another year – but only thanks to a £3.5 million draw on reserves and a three per cent council tax hike.

Members were earlier told that for every £1 million taken from the reserves there would be a dwindling return on investments of around £75,000 and that this could rapidly accumulate in the event of continued reliance on reserves.

Across two tense meetings at the town hall councillors directed blame for the authority’s precarious financial position in various directions. The Scottish government came in for heavy criticism for failing to fully meet the council’s request for ferry funding.

SNP member Robbie McGregor defended his party and said that Scotland only received what “is given to us by the masters of our British nationalist councillors here in Shetland”.

Lerwick North member Stephen Leask took aim at the SNP’s “absolutely diabolical… stealth taxes”, such as the proposed tourist tax and workers’ parking levy. He said that Scotland was the highest taxed part of the UK.

However, Mr McGregor had earlier pointed to some of the perks of that higher taxation, such as free prescriptions and free university tuition, and asked what councillors would like to see cut in order for more money to be directed to Shetland.

Shetland South member George Smith said that Holyrood has “choices” and that the choices they make often favour Central Belt constituencies over rural areas. Mr Fraser picked up on this point and asked whether Shetland was being punished for failing to elect an SNP MP or MSP.

However, Lerwick South member Amanda Hawick said that “we as a local authority also have choices”. “We are not living within our means”, she added.

Shetland North councillor Alastair Cooper said that he agreed with Miss Hawick. Back in 2010 the council had come in for criticism for not “living within our means”, he said, adding that he felt the current council was starting to go “outside of the framework”.

“I think before the end of this council we’re going to have to sit down and take some pretty tough decisions”, Mr Cooper said.

• More in Friday’s Shetland Times