Trustees approve ‘fantasy’ budget

By NEIL RIDDELL

Trustees of Shetland Charitable Trust are “living in a world of fantasy” having approved a budget of £12.36 million and rejected two separate attempts to take immediate steps towards financial sustainability for the organi­sa­tion, according to an independent trustee.

The budget represents a 2.24 per cent increase on its 2008/9 spending and leaves the trust spending 11 per cent more annually than the sustainable £11 million a year level which it is hoping to reach by March 2012, meaning it is continuing to eat into the community’s oil reserves at a faster rate than they are being replenished.

The decision to vote the budget through came after councillor-trustee Rick Nickerson’s suggestion of a standstill budget, which would have shed around £270,000 from 2009/10 expenditure, was rejected by a margin of 13-5. A separate suggestion by councillor-trustee Jonathan Wills to cut the budgets of the three major organisations it funds – Shetland Recreational Trust, Shetland Amenity Trust and Shetland Arts – by 10 per cent failed to find a seconder.

John Scott, one of the two independent trustees, was infuriated by the proposal for a budget based on taking on no new burdens and making no service cuts, allocating a 2 per cent increase for goods and services and 2.5 per cent for staff. A group has been set up to identify how the charitable trust can reduce its budget within three years but Mr Scott said trustees had been talking about taking action for years without ever actually getting on with it.

“We’re increasing the budget,” he said. “I can’t see how we can accept that as working towards a sustainable budget. What message are we sending? We’re living in a world of fantasy and ignoring the financial reality. If our income [from investments this year] is half the £11 million we’ll be lucky. How as chairman can you bring this to the table? I don’t know what world you’re living in – I’m really appalled.”

The market value of the trust stood at £148.2 million as of Friday, a huge fall in the past 12 months, but chairman Bill Manson responded that the budget was in line with policies agreed by trustees and that if it was adjusted in line with stock market fluctuations every year it would be “up and down like a fiddler’s elbow”. He said he regarded the trust’s financial situation as “serious”, but the best way to tackle it would be gradually over a three-year period.

But Mr Nickerson said he was “very uncomfortable” with sanctioning the increase because the trust was “spending beyond our means”. He congratulated staff on trimming over £400,000 from organisations’ original funding applications but called for a standstill budget to “minimise pain across the board rather than cherry-picking”.

“It will spread a little bit of pain, send a very firm signal to the organisations we fund – a sensible broad stroke approach to keep our spending under some restraint [and] at least with inflation going down it will not result in huge cuts,” he said, but was only supported by Mr Scott and three others.

Having heard fellow councillor-trustees warn against a “knee-jerk” reaction for the umpteenth time in recent weeks, Dr Wills said: “My knees are not jerking and I hope we won’t have to hear that hackneyed cliché again.” He said it was clear the budget could not be afforded and that a prudent strategy would be to reduce funding for the recreational trust, amenity trust and Shetland Arts by 10 per cent each with a commensurate reduction in the trio’s maintenance budgets, but he was unable to find a supporter.

Councillor-trustee Laura Baisley found the suggestion of such cuts to be “preposterous” and suggested that more precise reductions should be calculated. “I want to see this review group going ahead,” she said. “There are one or two organisations I think need quite close scrutiny.”

Ms Baisley said some organisations had gone “a bit soft in the belly” and were not pursuing external funding perhaps as vigorously as they could be because they were always able to rely on access to plentiful local funding. But to “propose slashes here, there and everywhere based on size is really negative activity,” she added.

Trustees agreed to Florence Grains’ motion that the recommended budget be accepted and savings be looked for in a “planned fashion” in the coming months, with Iris Hawkins agreeing it was not sensible to be “jumping at things willy-nilly”.

The only saving trustees did agree to was in refusing to grant £309 to a disabled person who had missed the deadline for applying for the Christmas bonus back in 2007. Ms Baisley said the application was now 14 months old and, despite opposition from councillor-trustee Allison Duncan who claimed that pensioners in Shetland were among “some of the poorest people in Western Europe”, she won the day by 11 votes to eight.

The Christmas grant scheme, under which pensioner households are paid a £321 bonus each winter, has been allocated an estimated £1.35 million, though the scheme is under review and may have to change to satisfy charity regulator OSCR.

The community care budget totals £3.9 million, incorporating over £3 million on residential care along with smaller outlays for the citizens’ advice bureau, COPE Ltd., art therapy and social assistance grants.

Shetland Recreational trust is to get a £2.78 million grant, again 2.5 per cent up on last year, having applied for more than £3 million due to the spiralling cost of energy, before prices began to fall in recent months.

Shetland Arts Development Agency is getting £773,376, an inflationary increase of 2.5 per cent which is slightly below its bid.

Shetland Amenity Trust gets just over £1 million, 2.3 per cent up on 2008/9, around £58,000 below its request because the charitable trust believes it can meet the cost of pay increases from within its existing funding settlement.

The charitable trust is responsible, directly or indirectly, for the upkeep of over 30 buildings and maintenance will set it back £1.4 million this year.

? Trustees of the trust agreed to sanction an extra £86,900 spend to meet Shetland Recreational Trust’s funding shortfall due to steep rises in energy prices in the current financial year.

Their bid for extra money was substantially lower than the £275,642 deficit which had been anticipated earlier in the year and trustees were told the SRT had no reserves with which to meet the added costs.

Councillor-trustee Allison Duncan said not providing the cash could have “serious consequences” for the SRT and he won a vote by 15-2, with councillors-trustees Jonathan Wills and Caroline Miller voting against.