The independent body that holds councils to account, raised serious concerns about whether the council is delivering on its duty to provide best value for local people.

There are concerns too around:

• The absence of clear plans to address a funding gap over the next five years of between £61 million and £142m
• The council’s ongoing reliance on using reserves to balance its budget. Reserves are forecast to be depleted by 2030/31 on current spending levels. This is a very short-term approach and cannot be sustained
• Slow progress in making vital improvements to the way it manages and reports on performance
• A lack of urgency in putting plans in place to transform how services are provided - the approach so far has been too slow
• Not consistently involving local communities in determining how the council spends money on delivering services.

The Commission recognised that services delivered by Shetland Islands Council perform well, with some of the highest satisfaction scores in Scotland. Failing to address the issues highlighted in this report, however, risks the council’s ability to sustain this, it added. The Commission said the council works well with its local partners, including responding well to the multiple challenges of Covid-19. There are distinct challenges around geography, population decline and an ageing population, which the council and its partners are working to address, it said.

William Moyes, chair of the Accounts Commission, said: “Councillors must provide the strong leadership needed and have greater involvement in developing robust and viable plans to address the significant issues in our report. Clear links must be made between plans to save money and plans to change how services are delivered. The council needs to make much faster progress with its Change Programme and ensure it is resourced effectively.

“The Accounts Commission remains deeply concerned about the council’s capacity and ability to make the changes needed. A further report will be needed within 18 months.”

Council leader Emma Macdonald said: “We have already been working to address some of the issues which are highlighted, and our members and officers will now focus on developing an improvement plan, taking into account all the points raised in the audit.

“I am pleased to see that the Commission has recognised how well our services perform, and that we have among the highest service satisfaction scores in the country.

“As the summer recess ends, councillors and officers will be focussing on the challenges immediately facing the Council and our community – around the cost of living, energy costs, connectivity and financial planning for the future – and look forward to demonstrating to the Commission the progress we make on our improvement plan over the next 18 months.”