Rent rises on the cards as ‘rich’ Shetland is left to deal with housing debt

Council house tenants in Shetland may have to face rent rises of £8.13 a week from next April after a committee of the Scottish Parliament rejected an attempt by isles MSP Tavish Scott to soften the blow from the abolition of housing support grants.

Mr Scott won no support for his amendment to the Local Government Finance Bill in committee stage on Wednesday morning to put in place a transitional arrangement to protect tenants from the loss of £760,000 to the local authority.

Some 40 per cent of rental income is used to pay debt repayment charges on the council’s £40 million housing debt, built up during the oil boom of the 1970/80s on a promise by the then Tory government that it would be repaid, a promise which was never kept.

Mr Scott said without an agreement rents could rise and investment in badly needed new council housing could fall.

“I will continue to make Shetland’s case as the Bill proceeds through parliament but it is very clear that the council is seen as rich by the central belt and should sort out housing debt from its own reserves.

That is unfair given the pain the islands currently face on schools, ferries and other public services as the council seeks to balance its books. The local government minister was totally unfair today to the SIC in saying that the council’s uncommitted reserves are far higher than the reality. I will be raising this with the SIC as the perception that Shetland is loaded is one that dominates in Edinburgh. I do however expect ministers to get their facts right. “

He added: “It would be very wrong for the Scottish government to place the full housing debt burden of £40 million on 1,800 local tenants. Some 1,000 people are on the housing waiting list and 40 per cent of housing rents are used to finance debt repayment charges. So £4 out of each £10 in rent goes not on improvements to houses but on paying interest. That has to change and that is what a good transitional scheme would allow to happen. As Shetland’s Tenants Forum have made clear, if HSG is abolished then local young people will have no incentive to apply for a house just to be told they will probably have to wait for five years.”

SIC convener Malcolm Bell had supported Mr Scott. He said: “Shetland Islands Council has made its case to the Local Government Committee on this subject, and welcomes Mr Scott’s help in highlighting the position for Shetland’s tenants in the event that some sort of transitional agreement is not forthcoming. In the meantime, officials and members will continue to have a dialogue with the Scottish government to try to reach an acceptable settlement that protects our tenants from unacceptable rent increases.”