‘Stark warning’ as Shetland council faces deficit of £143m in worst case five year scenario

Shetland Islands Council could face a deficit of almost £150m within five years according to a “worst case scenario” presented to elected members today. 

Finance manager Jamie Manson presented a range of projections as part of the council’s Medium-Term Financial Plan for the five years up to 2026. 

The forecasts ranged from a “best case ” of a £57.8m cumulative deficit over the period, a central scenario of £103.6 to a worse case of £143.6m. 

While Mr Manson said he tried to have a  “sunny disposition” he warned members that he would not be doing his job properly if he didn’t present  a “healthy dose of pessimism”.

He suggested the most likely outcome was  somewhere between the central forecast and the best case. 

The report highlighted declining revenue, particularly from central government, and rising expenditure. 

It also illustrated the dangers of using the council’s investments to plug the gap. 

The council took £10m from its reserves last year to cover the deficit.  The report warned that if that continued the reserves would so depleted by 2030 that the council could not make any sustainable draw.

Mr Manson said to do so would be “burying our heads in the sand”.

“We will need to take action before that,” he added. 

The SIC’s political leader Steven Coutts said the report presented a “stark message”. 

He and others were highly critical of governments for cutting funding, while expecting local authorities to continued providing services. 

Mr Coutts also highlighted the work achieved by the council in recent years to address spending challenges. 

He said that where there was a “political will” the challenges could be met. 

Councillor Allison Duncan also said the report indicated “huge challenges”.

More to follow.