A new independent report from the Accounts Commission has said that Orkney Islands Council (OIC) delivers high quality services, valued by local communities, however, the council must shift its focus to the future, ensuring services remain financially sustainable.
The Commission acknowledged the particular challenges in delivering and maintaining services across Orkney in particular the difficulties in retaining and recruiting staff.
But that there were also significant opportunities for instance, its natural resources, which the report says it must use to its advantage.
Ronnie Hinds, Chair of the Accounts Commission said:
“Orkney Islands Council benefits from its rich natural resources and the legacy of its significant Strategic Reserve Fund, with money available to benefit the Orkney Islands and its local people.
“But facing a significant gap between the costs of its services and its annual funding, the council urgently needs to improve the delivery of its plans for transformation, halting the unplanned depletion of its reserves.
“We need to see a robust plan delivered this year on how reserves will be used, to achieve lasting changes for local communities and future generations. A vital part of this will be frank discussion and engagement with island communities.”
The Commission reports that OIC faces a significant funding gap of £27 million between now and 2028 and states that there must be greater urgency in its financial planning, management of capital projects and approach to tackling climate change.
OIC has a significant Strategic Reserve Fund of £188 million which has accumulated as part of its Harbour Authority Account.
One of the ambitious plans OIC has announced is for a Scapa Deep Water Quay and a logistics base at Hatston pier, part of the council’s Harbours Masterplan .
Commission Findings
1 The Commission welcomes and endorses the Controller of Audit’s report on Best Value in Orkney Islands Council.
2 We welcome the progress made by the council since our Best Value Assurance Report in 2017, including completion of the actions it committed to following that report, and commend the council for continuing to provide high-quality services that are appreciated by residents.
3 The council has effective strategic planning and performance reporting, with clear priorities set out in the Council Plan, supported by a Delivery Plan and subject to regular monitoring. The council also shows good compliance with the Commission’s Statutory Performance Information Direction.
4 We recognise that, as an islands authority, Orkney faces particular challenges, including in relation to staffing and capacity. At the same time, the council has potential opportunities offered by its wide range of responsibilities, abundant natural resources, and its positive relationship with the local community.
5 However, the Commission believes there is a significant gap between the council’s future transformation plans and ambitions and its ability to deliver on them. A greater sense of urgency is needed from the council in a range of areas, including medium-term financial planning, management of capital projects, and its approach to tackling climate change.
6 We note the scale of the council’s reserves and its stated intention to use those reserves in a sustainable manner. However, the council is projecting a very large budget shortfall over the coming years and has relied on use of its reserves rather than achieving significant savings to close previous budget gaps. We agree with the Controller that it needs to develop and implement detailed operational service plans to put its finances on a more sustainable footing over the next three years. We also urge the council to review its strategy for the sustainable use of its strategic reserve fund earlier than its target date of March 2025.
7 The council has seen slippage in the delivery of capital projects over a number of years. Related to this, the Commission is not clear on whether the council is on track to achieve its ambitious target of achieving net zero carbon emissions by 2030. The council must provide more clarity on when it will publish a revised climate change strategy and action plan.
8 While the council’s undertaking of a review of its community consultation and engagement is to be welcomed, the Commission would like to see this concluded sooner. We look forward to seeing the outcomes of this review, as well as any wider actions the council intend to take to ensure it maintains regular, structured engagement with residents throughout the year.
Fiona Grahame