SCOTLAND’S most northerly council has been criticised by watchdogs for burning through its reserves as it takes a “very short term approach” to its finances.

The Accounts Commission said it had “very serious concerns” about Shetlands Islands Council and was unsure that it was “financially sustainable”

The Commission warned the authority would empty its coffers completely within a decade at its current rate of over-spending.

It said the council must deliver “urgent change” to address a funding gap of between £61 and £142million over the next five years.

The watchdog also said the Independent-run authority had to end its reliance on its reserves to balance its budget or they would be “depleted by 2020/31”.

It said: “This is a very short-term approach and cannot be sustained.”

The 23-member council is currently made up of 20 independents, one Green and one councillor each from Labour and the SNP.

The Commission said it had concerns about the council living up to its duty to provide best value for local people, including good governance and effective use of resources.

It said there had been “slow progress” on “vital improvements” required to its management, inconsistent spending decisions, and “a lack of urgency” in improving services.

The Commission acknowledged the council delivered some services well, with some of the highest satisfaction scores in Scotland, but its shortcomings meant this might not continue.

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 focusing on the challenges immediately facing the council and our community – around the cost of living, energy costs, connectivity and financial planning for the future.”