News / Carmichael to step in over debt crisis
NORTHERN isles MP Alistair Carmichael has promised to put urgent pressure on the UK government to commit £10 million towards resolving Shetland’s historic housing debt.
His comments come as Shetland Islands Council leaders warned that their tenants face rent rises of up to 35 per cent next year unless the UK government agrees to stump up the cash in the next few days.
Over the last 11 months the council has been promised talks with the Scottish and UK governments to finally clear the £40 million it still owes for houses built during the Sullom Voe construction era of the 1970s.
Until last year the interest on the debt has been paid by central government through the housing support grant, but this has now been abolished by Holyrood.
On Monday last week SIC leader Gary Robinson and social services chairman Cecil Smith hoped to move the issue forward when tripartite talks with the two governments finally took place in Glasgow at the Highlands and Islands Convention.
The SIC had proposed they each contribute £10 million, leaving the council with a smaller debt that it could pay over a longer period at a lower rate of interest.
However while the Scottish government was willing to put up its share of the money, the UK government represented by Scottish under secretary David Mundell appeared less enthusiastic.
Fearing the financial package was about to fall apart with just days before the council has to set next year’s council rents, the SIC leadership approached local MP and Scottish secretary Carmichael to assist.
On Monday evening, Carmichael said he had been disappointed to hear about how last week’s meeting at the Highlands and Islands Convention in Glasgow had progressed.
Promising to act, he said: “I am seized by the urgency here and shall be seeking conclusive discussions with the treasury in the next one or two days so that some resolution can be found swiftly.”
The council needs a guarantee from both governments that they will accept the funding package by 15 November, so reports can be compiled for consultation to start with tenants one week later on rent rises.
Robinson said he was disappointed by Mundell’s performance after a meeting with the chief secretary to the treasury Danny Alexander last December had offered considerable hope that the decades old problem would finally be cleared up.
“Speaking to Mr Mundell it didn’t seem we had moved much further than we had last December,” he said.
If Carmichael can win agreement from the treasury, the council will be able to reduce the size of its debt to less than £20 million.
The Scottish government’s contribution is contingent upon the £10 million being spent on building new council homes in the isles.
“We have no problem with that because we need more houses and the difficulty we have at the moment is we can’t build more houses without incurring more debt,” Robinson said.
He added that if the amount owed can be reduced to a similar size to Orkney Islands Council’s £16 million housing debt, they will externalise it so they can gain a lower interest rate and extend it over a longer payback period.
Currently the council owes the money to itself, but has to pay back itself back at a commercial rate to balance its books.
The UK government has always promised to pay off the debt, but has not been forthcoming despite the huge contribution the oil throughput at Sullom Voe has made to the British economy.
On Monday the SIC issued a public statement on the issue, which can be viewed here.
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