Local Authorities, already strapped for cash and slashing funding for vital public services, desperately need this money, and Jubilee Scotland is launching a new piece of work to break the chains on Scotland’s debt crisis.
The majority of this debt takes one of four forms: Public Works Loans Board (PWLB), Private Finance Initiative (PFI) and Public Private Partnership (PPP) contracts, the Scottish Government’s flagship Non-Profit Distributing model (NPD), and Lender Option Borrower Option (LOBO) loans.
The Guardian has established that Scottish councils owe more than twice as much per head than English and Welsh local authorities, equal to debts of £6,166 per household, compared with £3,100 per home in England and £2,825 per household in Wales.
Unite the Union estimate that 44p in every pound raised through council tax by Local Authorities in Scotland is wasted repaying largely historic debts, to the UK Treasury and to private banks. In some local authorities the figure is much, much higher – over 100% in Comhairle nan Eileann Siar. The levels of debt Scottish Local Authorities have is double the average in England and Wales and amounts to more than £6000 per household.
- An amnesty on all pre-devolution Scottish local authority debt to the Treasury’s Public Works Loans Board
- The creation of a Scottish Local Capital Consortium, jointly established between local authorities in Scotland to negotiate cheaper borrowing rates than from the PWLB and private banks
- A Scotland-wide strategy to audit and buy-out existing PFI/PPP, NPD and LOBO debts, including through existing PWLB or new SLCC funds, support from the Scottish Government, and utilising Local Authority pension funds
- Longer term, we will support changes to local taxation and local authority funding to allow councils to fund much needed infrastructure projects without relying on PFI/PPP schemes or unaffordable borrowing
There is precedent to many of solutions we are proposing. The Treasury wrote off £900 million of debt when Glasgow City Council transferred its housing stock to Glasgow Housing Association, and roughly 60 Local Authorities across England and Wales have established a Local Capital Finance Company to arrange loans on more favourable terms than through the PWLB.
Over the next few months there’s going to be lots more information on all of this and on what we can all do about it.