SIC cheer as housing debt deal agreed
A landmark agreement to significantly cut the council’s historic housing debt has been signed off, paving the way for new homes to be built and lifting the threat of massive rent rises.
Councillors have given unanimous backing to a three-way deal between the SIC and Scottish and UK governments.
The total package from Westminster and Holyrood amounts to £20 million.
That will provide debt relief and support for much-needed future housebuilding projects. The SIC has already agreed to write off £10 million of the debt.
The debt, which grew out of the cost of meeting a growth in demand for housing during the 1970s oil era at Sullom Voe, stood at £40 million when a campaign was launched last year by The Shetland Times. Almost 2,300 people signed the newspaper’s petition before it was handed to to Scotland’s local government minister Derek Mackay in July.
Since the campaign was launched finance staff have been chipping away at that figure, getting it down to £36 million but it was still proving a burden.
Despite promises from governments of various colours over the years that the debt would be settled no resolution could be agreed.
A significant breakthrough ocurred in December when the Westminster government pledged £10 million to help address the debt situation.
The Scottish government has now entered into the agreement, prompting the announcement from the SIC today.
Today’s agreement means the debt now stands at £16 million. That was described by the SIC’s head of finance, James Gray, as “not a problem debt”. It will now be refinanced externally.
The news also means the threat of rent increases of more than 30 per cent has been lifted.
SIC leader Gary Robinson welcomed the announcement.
“This is a tremendous outcome. Our councillors and officers have put a great deal of energy and effort into reaching this point.
“The Shetland Tenants Forum was also closely involved, and I’m extremely happy that this means we will be able to maintain affordable rents for existing tenants. It also opens the way for much-needed investment in affordable housing.”
Convener Malcolm Bell added: “I’m very pleased that this process has led to such a positive outcome. I’d like to pay tribute to the UK and Scottish governments in bringing this matter to such a satisfactory conclusion – and particularly to the role played by our MP, Alistair Carmichael.”
• For more on the deal and reaction to the news see Friday’s Shetland Times.
John Tulloch
This is about the the best we could have hoped for so “Well done, all those involved in the campaign”.
It should be noted, however, that London are still paying the interest on the original sum to the Scottish government AND have paid £10 million towards the deal on top.
The Scottish government have got away with keeping the interest on the £40 million – equivalent, presumably, to having £40 million in cash invested“ – yet they have still had to have their £10 million share of the deal sqeezed out of them, long after everyone else paid up.
The “Our Islands, Our Future” campaign will be well-advised to ensure any promises extracted from these folk are set in concrete and not merely spouted in a column of hot air.
Stewart Mac
Great to hear there has finally been some action to resolve this, not quite wiping out the whole amount but significantly better than it was.
a significant portion of the make up of Council House rents in Shetland was listed as being to service this debt. Can tenants now expect to see their rents reduce by the appropriate amount I wonder? I suspect not somehow
Jim Leask
If rents are lowered Stewart, where would the money come from for investment in new housing stock? It’s important rents are not raised in line with what was discussed but it would make no sense to lower them when there are such long waiting lists for houses and flats.