There will be no new council houses built in Shetland for 25 years unless the UK and Scottish governments help the SIC pay off the long-standing housing debt run up to enable the oil industry in the 1970s.
That was the grim message delivered at a council executive committee today, which also heard that council house rents are due to rise five per cent in each of the next two years, such was the state of finances in a “painful” housing and revenue budget.
Debt negotiations with Westminster and Edinburgh over the 40-year-old housing debt are effectively stalled, the committee heard. And the UK government has dug its heels in over settling its third of the debt, which would also allow the council to make use of a further £10 million promised by the Scottish government.
A report by director of finance James Gray, which was passed by the committee, said that the price for keeping rent increases at five per cent, instead of a threatened 35 per cent, was that the SIC will have to write £10 million off its outstanding debt. This means a £575,000 drop in annual income for the council which the £10 million would otherwise have been earning as part of an investment portfolio.
The Scottish government could still pay its promised £10 million, but effectively it will be of little use without Westminster closing the remaining gap.
SIC political leader Gary Robinson said it was “a disgrace” that the council alone was having to shoulder the burden and that it was time for the governments to stump up.
“Both the Scottish government and Westminster are well aware that anything from the Scottish government is useless without a Westminster contribution.”
Vice-chairman of environment and transport Michael Stout expressed his “anger and resentment” at the grossly unfair situation where Shetland was bearing the burden for providing a national asset. “We have Westminster in particular standing there with folded arms and refusing to help,” he said.
Mr Gray said that even if the council wrote off its £10 million share of the debt, that did not mean the matter was closed. But according to some of the committee members, the debt issue is “right down to the wire”.
Education and families vice-chairman George Smith said: “This is an extremely difficult report because we have in some sense revealed our hand . . . saying we are going to right off £10 million.”
Executive manager for housing Anita Jamieson told councillors that while the feared 35 per cent rise was off the table, tenants were still concerned about the affordability of the proposals because rents were high and associated costs going up. “Not everyone is able to afford this,” Ms Jamieson said.
Their fears had been outlined at a drop-in tenants’ meeting in Islesburgh Community Centre on Saturday.
Lerwick South councillor Jonathan Wills, whose constituency contains Shetland’s biggest council housing estates, said: “These are still quite substantial rent rises when many people are on benefits. They are going to suffer because of the actions of this Liberal Tory government.”
The SIC issued a statement following the meeting in which it made clear its frustration with governments over the debt issue.
The statement read: “For well over a year now, councillors and officers have been in discussions with the UK and Scottish governments in an attempt to address the authority’s historic housing debt.
“Negotiations are underway with the Scottish government to play its part in addressing the issue, and a proposal was also put before the UK government to cover £10 million, to be matched by SIC. Together, these measures would have allowed the council to maintain its rents at an affordable level.
“However, with no confirmation from the UK government on its participation in the arrangement, and in order to set next year’s rents, SIC has had to act to prevent massive increases.”
SIC tenants are being surveyed on the proposed rent increase. That survey closes on 4th December, with the results due to be put before members on 11th December.
Mr Robinson said: “We have done everything we can over the past year to try to resolve this situation. However, without confirmation that the UK government is willing to play its part, we’ve had to make sure we put forward an affordable solution for tenants. If we hadn’t, we’d now be looking at huge increases in council house rents.
“We still see this as a three-way discussion; we’ve done our bit, and the door’s still open for the UK and Scottish governments to make a commitment which would mean we could give our tenants more certainty for the future.”
This year’s Shetland Times “Drop the Debt” campaign and petition was supported by more than 2,250 people before it was presented to Scotland’s local government minister Derek Mackay in July. At the time he said: “Westminster absolutely has to be held to account for the commitments they have made.”
The executive committee decision taken today will be considered by the full council on 11th December.