08 April 2005
One of Scotland's most affluent councils has been strongly criticised by a local authority watchdog over the way it manages its finances.
Shetland Islands Council, which has prospered over the past 30 years as a result of North Sea oil revenues, has been ordered to produce an improvement plan within the next three months.
It failed to agree a balanced budget for three successive years and dipped into financial reserves to meet a shortfall between expenditure and income. As a result, the value of reserves fell by £16m, according to the Accounts Commission.
The council has no loan debts, and has investments of £280m which have allowed it to provide high-quality services and develop the local infrastructure. It also has an enhanced role in the local community through the provision of air services and ferries and in helping economic development.
The report says: 'The commission recognises that these factors result in unique circumstances and that service delivery in Shetland can result in higher costs. However, the lack of key management systems prevents the council from demonstrating whether Best Value is being achieved.'
Accounts Commission chair Alastair MacNish said there was scope for improvement in the management and leadership of the council and its internal arrangements for scrutiny. 'The council has a duty to spend public money efficiently and should balance its books without dipping into reserves,' he said.
Shetland chief executive Morgan Goodlad said the report was not a surprise. He added: 'In many of the areas highlighted it is encouraging that there is recognition that good progress is under way. However, we welcome additional external pressure to make further improvements.'
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