Orkney councillors back 10% council tax increase and dipping into reserve cash

Councillors in Orkney have backed a 10% rise in council tax while also agreeing that the local authority should take the most it ever has from its reserves.

A special meeting of the policy and resources committee was held on Thursday afternoon during which members considered the council’s budget, council tax level and draw from the reserves for 2023 and 2024.

With what the council has called “a protective budget” it was agreed that the local authority will need to take over £17.4m from its reserves and generate £11.3m in council tax.

The budget itself is set out £101.7m. According to officers, this is a “watershed moment”, as the budget is over £100m for the first time.

The council says this is due to “a significant shortfall” in allocation from the Scottish Government.

The proposed increase in council tax would put Orkney’s Band D properties set at £1,369.21 a year – an increase of £124.48, or just over £10 a month, from last year.

Today also saw councillors back a proposal sayin a strategy should be created to bring Orkney’s council tax level up to the national average.

The aim of the budget is to prevent cuts to services in the next year. However, the feeling in the council chamber is that difficult decisions still lie ahead for 2024 and 2025.

However, this all still has to be ratified by full council. The next meeting of the body is on March 7.

During the meeting, the council leader, James Stockan said called the contribution from reserves “off the scale”.

He said: “We hold reserves for a rainy day. As far as I’m concerned, it’s pouring.

“We’re putting up as big an umbrella as we possibly can for our community.

The leader added: “We’re safeguarding our community from not having services for this year.

“But we will have to take this back over the next few years into a more sustainable position.

Councillor Steven Heddle said the report spelled out the situation the council is in.

He said: “The key thing to note is our council tax, at present, is low. By increasing it by 10%, it’ll still remain low.

“Our council tax has been low for decades. This is the reason we’re having to consider above-average increases.

“The low figure it has been at has compounded its decrease in value. This is to the extent it’s approximately 10% of our budget.

“The logical consequence of it having been so low for so long is that now we’re going to have to think about difficult decisions.

“This includes increasing it to a greater percentage than our neighbours over a number of years to get to a situation where our council tax is closer to the national average.

“Otherwise, it’s going to diminish to be effectively meaningless in terms of our budget.

“This would leave us at the mercy of the Scottish Government settlement to cover everything.

He added: “We’re at a situation where we need to change the direction around the council tax, regrettably, or set the county up for a big fall in the future.”

Orkney residents pay amongst the lowest Council tax rates in Scotland – only Shetland, Western Isles, South Lanarkshire and Angus currently pay less.

Mr Heddle certainly wasn’t alone in his thinking.

Councillor Kristopher Leask tabled an amendment, calling for a strategy for bringing Orkney’s council tax up to the national average.

Mr Leask said: “Financial pressure is going to be a continuing feature of our budget-setting over the life of this council.

“This is partly due to the freeze in council tax over the previous 10 years. This cost this council £850,000 per annum.

“That’s a significant £8.5m over the ten-year period which could have been spent on bolstering our long-term financial stability.”

Mr Leask said if they want to continue protecting services they would have to come in-line with the national average.

But, he said the change shouldn’t come “dramatically”.

The councillor also pointed out that the council leadership team is trying to demonstrate the Scottish government’s “unfair budget settlement, historic under-provision of ferry revenue, and years of stalling on ferry replacement”.

He said a 10% increase in council tax “shows the ends to which we are having to go to protect services and balance our budget, as does a plan to bring that up to the national average”.

The deadline for the council to set its budget is March 11.