News / SIC rocked by housing grant cuts
SHETLAND Islands Council’s plans for housing have been thrown into chaos after being told to expect a £1.2 million cut in annual government funding as of 2015.
The blow, revealed at yesterday’s (Thursday) meeting of the council’s services committee, is further evidence of Shetland being at the receiving end of the squeeze on public spending.
Earlier this week, the Scottish government told lifeline ferry operator NorthLink to slow its ferries down in order save around £1 million on the company’s high fuel bill.
Yesterday the council’s head of housing, Chris Medley, said phasing out the housing support grant over the next five years would throw his department’s business plan into disarray and could also have a financial impact on the overall council budget.
It is likely to lead to an above inflation rise in council house rents, a reduction in the council’s ambitious plan to build new affordable homes, as well as cuts in its maintenance programme.
Earlier this year, the Scottish government had warned Shetland Islands Council to expect £3 million per annum less in grant funding for the next six years.
Shetland Islands Council is the only local authority in Scotland to receive housing support grant.
The annual grant of £1.2 million helps service the authority’s huge £45million housing debt, incurred in the ‘70s when the council embarked on a huge council house building programme for workers moving to Shetland to build Sullom Voe oil terminal.
Now the government wants the SIC to draw up a debt reduction strategy to see if the council would cope without £1.2 million a year.
In return, Shetland Islands Council might get a share of a £25 million pot to encourage the construction of affordable houses across Scotland.
Shetland has already asked for £4.3 million from this pot, but has been told that it is unlikely to receive that much.
Mr Medley said: “All the plans we have of building new houses, improving houses and keeping rents as low as possible, are all based on a business model that includes this housing support grant.
“If that is removed all of the council’s financial modelling goes out of the window, and needs to be rethought.
“It also adds to the problem with the budget the council already has,” he said.
Mr Medley will now have to draw up the strategy during the next two weeks for a special services committee to be held just before a meeting with Scottish housing minister Alex Neil in early April.
He added that even if Shetland was to receive a share of the £25 million capital funding, it would be far less than the money lost through withdrawal of the housing support grant.
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