iStockCouncil tax in Shetland is set to rise by 10% in 2025/26.
It comes after a decision was made by elected members at a meeting of the full Shetland Islands Council (SIC) on Tuesday.
It means the SIC joins a number of other Scottish local authorities in raising council tax above inflation, with some also opting for 10%.
An Orkney Islands Council committee today backed a 15% rise but that decision needs to be approved at a full council meeting.
The proposal for a 10% rise in Shetland – which is significantly more than previous increases – came from deputy leader Gary Robinson, who said it would be a start towards getting the SIC back to a more sustainable position.
It is expected that the SIC will need an “unsustainable” draw of more than £20 million from its reserves in 2025/26.
Robinson also highlighted that Shetland has had the lowest council tax rate in Scotland.
He also successfully proposed instructing officers to bring forward a longer-term strategy on council tax.
Shetland Central member Davie Sandison proposed a 7.5% increase but lost out in a vote 13-6.
It comes after a council tax freeze in 2024/25, which was incentivised by the Scottish Government.
The meeting papers for Tuesday’s session included a recommendation for a 5% rise in 2026/26.
But finance manager Paul Fraser said this was a middle-ground figure to include in the wider budget proposal, and was not intended to give elected members a steer.
A 5% rise would have seen the SIC take in an additional £573,000 from council tax, but after Tuesday’s vote that figure is expected to reach more than £1 million.
Fraser told councillors that freezes to council tax does not “build a base” – with the rate staying put while inflation rises.
Robinson also said that freezes reduce spending power “year on year”.
He added that while Shetland having the lowest council tax rate in Scotland is in some respects a good thing, “today we’ve heard there are negatives to it as well”.
With another continued large unsustainable draw needed from SIC reserves, which are currently valued at just over £400 million, councillors cannot “bury our heads in the sand” anymore, Robinson said.
The deputy leader said while it is not a “panacea”, a 10% rise would help the SIC to increase its efforts in tackling the unsustainable draw from reserves.
Sandison meanwhile said he felt the council tax rise needed to be above inflation.
He expressed concern about future funding and whether the Scottish Government might say “you had that chance, and you didn’t take it”.
However the councillor said he still had a worry about the significant financial pressures people in the community are under.
As such Sandison suggested a rise instead of 7.5% – with council leader Emma Macdonald – who said there was a “chronic underfunding” of local government in the longer term, with SIC officers “trying to do more with less” – then asking if Robinson and Sandison might want to meet in the middle.
However, Robinson remained steadfast in his view that a 10% rise would make more sense at this moment in time.
He said he was worried with a Scottish parliament election coming up in 2026 there might be another freeze on the cards.
If that did not come to pass, Robinson said the SIC has the power to raise council tax accordingly in a year’s time – perhaps at a lesser rate than 10%.
The deputy leader also said other organisations increasing council tax reflects that the SIC’s own costs are rising too.
The North Lanarkshire, Scottish Borders and East Lothian councils have already introduced a 10% rise, while Fife was 8.2% and Edinburgh eight.
During Tuesday’s vote Shetland Central member Ian Scott said he wanted register his opposition to both options and said he would vote against any increase.
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