"We must face financial reality" says OIC chief executive
Cost cutting exercise on the way
(Story dated: Wednesday, Maarch 1, 2006)

Orkney Islands Council is set to embark on a cost cutting exercise which will have far reaching implications for services and for the community as a whole, Chief Executive Alistair Buchan confirmed today.

Announcing a programme of budget reviews to be carried out across the council by special working groups, Mr Buchan warns employees on the front page of their staff newsletter that the council cannot continue to rely on its reserve fund to shore up the grant shortfall from the Scottish Executive.

He said: “In all my time with the council I have been involved in a process which has seen the very necessary expansion of our services both at the “front line” and in support services. Historically, we have been under-funded and under-staffed and in order to provide the services the Orkney community rightly expects, we have had to expand.  We have done this at a time when most mainland councils have been implementing swingeing cuts; however starting from a very tight and comparatively efficient position this Council simply has not had the same scope for such cuts and in some areas we remain under resourced. 

“It therefore saddens me to have to say that reducing costs will have to be a dominant feature in all our thinking in the years ahead due in no small measure to annual grant settlements from the Executive which fail to recognise the full costs of pay and price increases legitimately incurred by Councils.

“For a number of years we have been using up to £7.5m per annum from our reserves to meet the grant shortfall, thereby protecting jobs and services.  The council has agreed that this can only ever be a short term measure and  over the next 5 to 6 years it will be necessary to continuously reduce this level year on year so that eventually services are delivered within the sustainable resources available to the Council.”

Findings from the budget reviews will be reported to the Council in October. Mr Buchan stressed that every effort would be made to protect, as far as possible, vulnerable service users and the livelihoods of the Council’s existing staff through maximising efficiency savings and working in better ways.

He added: “We will ensure that staff at all levels are informed and consulted at relevant stages of this process and we want to hear of ideas staff may have for savings. We will also continue to make the most strenuous representations possible to the Scottish Executive for a fair settlement for Orkney.

“The world has changed and we simply cannot ignore the financial realities facing the council.  I am asking colleagues at every level to work with us to achieve the necessary savings in a way that preserves, as much as we can, the services we provide to the community and the immense goodwill that I know exists within Orkney Islands Council.”