Turn-around complete as SIC accounts held up as example of good practice

Shetland Islands Council’s accounts has been awarded a clean bill of health by Audit Scotland for the second consecutive time.

Auditors have issued an unqualified opinion of the council’s 2012/13 accounts – a repeat of the positive performance recorded over the 2011/12 accounts in September.

Members of today’s Audit and Standards committee were told Shetland was even being held as an example of good practice by other Scottish local authorities when they were presented with final, signed and audited accounts for the year.

Head of finance James Gray said SIC officials had worked well with Audit Scotland, and thanked finance staff for having pulled their resources together to carry out a worthwhile exercise.

“We’ve got away from being in a position where we relied on one person alone for the accounts. We’ve spread the work across the team,” he said.

Mr Gray also highlighted an authority in the west of Scotland where Shetland had been “congratulated” and held as an example of good practice.

The positive mood marks a considerable turn-around from previous financial years when the council was criticised for the poor quality and lateness of its financial statements.

The most recent papers highlight a total savings figure of £18.5 million for the year, thanks to £15.3 million of budgeted savings and a £3.2 million net underspend on the council’s general account.

However the total draw on reserves was still £20.653 million, which was described as “clearly unsustainable beyond the immediate short term”.

Pressures in the coming year are likely to include increased fuel costs – particularly for ferries. The cost of fuel was an “overriding factor” for the ferries service over-spending by £0.756 in the year.

Chairman Allison Duncan singled out head of finance James Gray and his staff for preparing a “comprehensive and well-prepared” set of working papers.

He told members: “This represents a major turn-around from the difficulties of two years ago. It is good to hear the good news in this report and I can’t sing your praises highly enough.”

Key among the questions raised by members concerned the new Anderson High School project, due to open in at the Clickimin site in less than three year’s time.

Billy Fox highlighted a list of five points contained in the report, which indicated maintenance costs of the new school would be higher than those for the school at the Knab.

He questioned why that should be the case, especially as maintenance costs had been “a major plank” in the argument for the new school.

“We’re being told we were spending £1 million a year on maintenance for the current building,” he said.

Mr Gray said the maintenance bill at the Knab site was short of a £1 million. But he said that was the amount that would be required if education continued in the long-term at the Knab.

“A new school would have lower maintenance costs than £1 million,” he added.

Mr Fox said he hoped the figures were not “laying the groundwork” for a maintenance contract which was higher than necessary. Mr Gray said Hubco and Scottish Futures Trust were aware the council was working to minimise costs.

Earlier in the meeting debate surrounded the £5 million wasted on the defunct Anderson High replacement at the Knab without a brick ever being laid.

The committee has already sought a report which is due to be presented to councillors at a future meeting.

Chief executive Mark Boden today took on the job of setting up a members’ group to investigate the issue.

However Andrea Manson insisted all it would find was that the council “changed its mind”.

“What’s the point in spending thousands of man and woman hours on this when there is more sense in looking at what we are going to do with the site?” she demanded.

She was backed by Vaila Wishart. However Mr Duncan believed the wasteful spending of £5 million needed a deeper analysis.

“We’re speaking about £5 million, and whether we can learn any lessons from this,” he said.

Michael Stout said more needed to be understood about why councillors took a change of heart.

“I’m not interested in the fact the council changed its mind. I’m interested in the process through which it went to change its mind,” he said.

“We have a responsibility to be clear how not to go down that road again.”

Mr Boden said councillors, in opting to move away from the Knab site, had changed their minds “after the last moment at which you can change your mind”.

He suggested members take part in a management training programme being recommended for senior managers.

The doomed Anderson High project at the Knab, he said, could yet prove to be a case study for all members.