Scotland’s First Minister Alex Salmond yesterday urged the UK government to get back around the table to help hammer out a solution to the SIC’s historic £40 million housing debt.
Echoing the local authority’s criticism of the UK Treasury for its failure to get on with setting up promised three-way talks, Mr Salmond said islanders deserved more than having the issue “brushed aside” by Westminster.
It came after local government minister Derek Mackay said the SNP remained “open-minded” about the potential for a “package” whereby the debt is paid off by a combination of Lerwick, Edinburgh and London.
That proposal was put to Mr Mackay by SIC political leader Gary Robinson during a meeting in Lerwick on Wednesday morning.
It is understood Mr Robinson outlined a proposal that would see each of the three parties stumping up £10 million. The remaining debt would be “externalised” to ensure the council gets a more favourable deal with the banks for repaying the much smaller sum left over.
Mr Salmond pledged that SNP ministers would do what they could to encourage the Tory-Lib Dem coalition to agree a date for discussions as a matter of urgency.
Those talks were promised by Chief Secretary to the Treasury Danny Alexander when he met an SIC delegation back in December. Since then council sources have complained about being treated “like a ping-pong ball” being batted back and forth between London and Edinburgh.
This newspaper’s petition calling on both governments to address the crippling debt has now been signed by almost 2,300 people – equivalent to a 10th of the Shetland population.
Mr Salmond said yesterday: “There’s a very strong conviction in these islands that in the 1970s a commitment was made by the Westminster government. I’m sure they’re telling the truth.
“I’ve seen correspondence which goes back into the 1970s and 1980s that the council has marshalled for me about the different expressions of that commitment that have been given.
“We’ll see what we can do to get … discussion taking place properly, not just being brushed aside [by Westminster].”
Mr Robinson said he was pleased the SNP government was “showing willingness” to discuss the situation.
“The difficulty has been getting Westminster to also come to the table,” he said. “Derek is going to support us in trying to get [them] back around the table, as was Danny Alexander’s original proposal.”
This newspaper has, on numerous occasions in the past two months, tried without success to set up an interview with Mr Alexander to discuss the Tory-Lib Dem coalition’s position on the housing debt.
Evidence of the strength of feeling within the community was presented to Scotland’s local government minister Derek Mackay by The Shetland Times and tenants’ forum worker Joann Johnson on Wednesday afternoon.
Ms Johnson reminded Mr Mackay, in a frank, forthright but cordial manner, of how Shetland’s debt was distinctly different to that held by other local authorities. It was incurred, she reiterated, by building houses to assist the UK state’s desire to get North Sea oil and gas up and running.
She also produced figures from a survey of council house tenants showing nearly 60 per cent believed it was primarily Westminster’s responsibility to deal with the debt.
Mr Mackay said he would write to Mr Alexander to establish why the promised three-way talks aimed at finding a solution have not materialised.
He said: “Westminster absolutely has to be called to account for the commitments they have made at meetings the council has been at – and much longer ago.”
At a wide-ranging public question-and-answer session with the SNP cabinet, attended by around 120 islanders in Mareel yesterday, SIC councillor Allison Duncan pressed finance secretary John Swinney on the subject.
Mr Swinney said the Treasury’s actions since December had not been “in the spirit of a tripartite response” and reiterated Mr Mackay’s pledge that the SNP would press the UK government to get around the table and hammer out a solution.
SNP figures point out that the debt was created long before the Scottish Parliament even came into being. Over the last 35 years around £75 million in grants have been made to help with interest charges and repayment of the debt.
But last year the Scottish government announced it was abolishing a housing support grant paid to the SIC. Mr Salmond said he “thought we had come to a settlement on the issue earlier this year when an ex gratia payment was made” for 2013/14.
However, that interim payment only covers this financial year. The council has warned that tenants’ rent may have to rise by 10 per cent or more in 2014/15 if the problem remains outstanding.
Figures within the Westminster coalition contend that a sum continues to be paid to Holyrood for the purpose of servicing the debt each year. They say the SNP is simply choosing not to hand that money onto the SIC.
On that point, Mr Mackay said local government finance was “incredibly complex, but the only way we’ll have full access to all the historic debts [and] economic powers is as an independent country with access to all our resources”.
One senior SIC source said it was clear that one of the two governments was being “at the very least a little bit elusive”. That is why getting all three parties round the table is seen as being so crucial.
But Mr Mackay repeated housing minister Margaret Burgess’s suggestion that the existence of the SIC’s oil reserves meant the council “has within its gift to resolve some” of the debt.
“Some of the answer is in Shetland’s own hands. There’s a balance and a range of options that can be considered,” he said.
He added that coalition cuts to welfare, imposition of the bedroom tax and the legacy of Margaret Thatcher’s “right-to-buy” were all damaging to social housing tenants in the isles.
The SNP was abolishing the right to buy council houses, Mr Mackay said, because “while people have benefited, we can’t have the strain of a debt on an ever-decreasing number of tenants”.