SIC ‘not fit’ to make savings, chief executive warns

SIC chief executive Alistair Buchan believes the organisation is not in a fit state to make efficiency savings of the scale required in the current financial climate.

His remarks came after councillors heard that the local authority is a long way short of the ambitious £9.9 million savings target it has set itself in this financial year. At the six-month mark, only £2.5 million of real cuts have been achieved and, more alarmingly, only £300,000 of these are “ongoing, recurring” savings.

Mr Buchan, who has been office for nearly three months, told today’s meeting of the Full Council that he was kicking off a lengthy and potentially painful process akin to “turning a super tanker” and “you can’t do that on a sixpence”.

He is concerned that the structure of the organisation and its agreed policies are not suitable to bringing the budget down sufficiently and he plans to put a string of policy options of “varying degrees of severity” before members before the end of the year.

These would include a combination of efficiencies, changes to services and “other financial tools”, he said. A “judicious” use of oil reserves could provide part of the answer as the SIC awaits what is expected to be a fairly dismal settlement from the Scottish government next month, in the wake of the Tory-Lib Dem coalition’s eye-watering £82 billion programme of cuts over the next four years.

Acknowledging that substantial cuts will be needed for several years to come, Mr Buchan has asked departments to prepare for provisional reductions of between 10-15 per cent as part of an effort to provide a range of options to members when it comes to setting the 2011/12 budget.

A “spend to save” initiative has also been launched and Mr Buchan said he had instructed departments to “cut right back on discretionary spending”. He told The Shetland Times: “There tends to be in many organisations a rush to spend budgets towards the end of the financial year and I’ve given a very clear instruction that that’s not to happen.”

Mr Buchan is clear that the wage bill will have to come down but, while not entirely ruling out compulsory redundancies in the future, said he believed there is “an awful lot that can be achieved through natural turnover in staff”. But he is clear the days of “inconsistent messages regarding the need to achieve savings” must come to an end.

“I don’t think it would be honest to the people of Shetland to say that there won’t be an impact on jobs here, or on services for that matter – that is the reality facing the rest of the country,” he added.

During Wednesday’s debate councillors used words like “pitiful”, “pathetic” and “a disgrace” to deride the lack of progress towards the ambitious £9.9 million savings target for this year, although some members did point out staff were hamstrung by the policy guidelines handed down from a political level.

Central ward member Betty Fullerton said she found it “mind-boggling” that so little progress had been made since the 2007 elections. The language of thrift and prudence has been deployed often enough, but there has been relatively little to show for it so far.

“I think it’s just a disgrace,” said Mrs Fullerton. “We’ve been on this for over three years. I don’t know what we’re going to do about it [but] the message has got to get through to staff that this cannot go on.”

Several members believed the lofty savings target was totally unachievable from the outset and councillors had set themselves up for a fall. “I get no sense we’re going to reach these targets that we’ve set,” said Lerwick South member Gussie Angus. “There’s nothing on the horizon that gives me any comfort.”

North Mainland councillor Bill Manson said long-term savings undoubtedly had to be found, but blaming staff was not entirely fair because members would be “livid” if department heads went around merrily slicing off services or went against the authority’s existing policy of not laying off existing staff.

Mr Manson said some of the measures required will be “extremely unpalatable to the public” – as has been witnessed already in protests against closing Scalloway and Skerries’ secondary school departments, the axing of knitting tuition and the introduction of fees for music tuition in schools – and members must take the political responsibility for seeing through unpopular measures.

Head of finance Graham Johnston said there was “no doubt about the size of the mountain we have to climb here”, but history suggested there would be a substantial underspend in the final months of the 2010/11 financial year. While he did not wish to come across as complacent, he was not quite as pessimistic as some councillors.

* For full story, see this week’s Shetland Times.