‘We Don’t Know Where We’re Going’ – Scilly’s Councillors Face Up To Looming Financial Crisis
The Council of the Isles of Scilly is facing a financial crisis because it doesn’t know how much it is spending, what it has got in its savings account and its councillors are unable to make decisions on what to do next.
Those were the views expressed at last week’s Full Council meeting, where the authority learned from its independent financial watchdog that its reserves, the savings account for rainy day costs, are half as much as it thought.
At the meeting, several members stated that they had been in the dark about the Council’s spending for most of the year, despite repeated demands to its officers to make the latest accounts available.
Cllr Gaz O’Neill told the meeting, “If we don’t know where we are, we don’t know where we’re going.”
Cllr O’Neill expressed frustration at a lack of progress on the budgets. “We’ve been asking to look at all the options for at least a year and here we still are. Everything we’ve been doing for at least the last year to rectify this has been completely and utterly ineffective,” said Gaz.
That view was echoed by Cllr Colin Daly. “We’ve just not taken it seriously and urgently enough. We’re the ones at fault for not doing that,” he told councillors.
Council Vice Chairman, Steve Sims, asked, “How can we make decisions going forward when we don’t know what the budget situation is? We all really hope that we get as rock solid a position as we can on 26th January because we have a lot of decisions to make.”
But it’s hard to understand why Cllr Sims doesn’t have that information. As the name implies, monitoring the Council’s financial position is the responsibility of the Finance, Audit and Scrutiny Committee, which Cllr Sims chairs.
And Cllr Fran Grottick pointed out that his committee hadn’t met since July this year.
It also emerged at the Full Council meeting that the senior management had, until at least September, been pushing back on requests by the external auditor to do a full month-by-month cash flow analysis, so they know exactly what they’re spending and when.
The management’s response, printed in the auditors report, was: “The Council appreciates the additional benefits of Cash Flow forecasting in such a way however doesn’t believe that at present times this presents best use of its resources.”
Cllr Grottick said she was, “picking up a bit of tension here” and felt the request was “a very sensible idea.”
The auditor told Cllr Grottick that it’s “absolutely crucial” for the Council to review its cash flow and senior management had now agreed to do this.
But Council Chairman Amanda Martin felt the authority should have been borrowing its way out of the situation sooner.
Cllr Martin said: “It’s fair to say for many years we agreed as a council to borrow prudentially, but we haven’t actually done that. We’ve dipped into reserves each time. So we’ve depleted our reserves rather than borrow at low interest, as we should have been doing. We’ve backed ourselves into a financial corner.”
We’ll find out early in the New Year whether councillors can get out of that corner on their own or whether they’ll need outside help.