Scottish Labour backs Union calls for “debt amnesty” on Scottish councils’ pre-devolution debt liabilities

Scottish Labour has thrown its full support behind a campaign calling on the UK Government to grant a “debt amnesty” to Scottish local authorities

Ahead of attending STUC Congress in Dundee, Labour’s Shadow Scottish Secretary, Ian Murray, has written to George Osborne, asking him to consider reducing the rates of interest currently being paid by local authorities on their pre-devolution debt liabilities. In 2015-16, this debt resulted in payments to the Treasury from Scottish Local authorities of £195 million.

In his letter to the Chancellor, Ian Murray said

I would urge you to give serious consideration to the request from Scottish local authorities and the Unite union to grant an amnesty on outstanding pre-devolution debt liability. This request has my full support, and that of the Scottish Labour leader, Kezia Dugdale.

Unite estimates that, since 1999, Scottish local authorities have paid back over £3 billion in interest on pre-devolution debt. Given the current financial parameters within which Scotland’s local authorities are being forced to operate, payments on this scale are both unfair and unsustainable.

The new powers transferred to Scotland by the Scotland Act will greatly enhance the Scottish Parliament’s control over our public finances. However, if this is truly to represent a clean break from the past and a fresh start for Scotland, relief should be granted on pre-devolution debt liabilities that continue to impose an unwarranted burden of debt on Scottish local authorities.

The Labour Party and Scottish local authorities are prepared to take responsibility for fixing local authority finances – but this can only be done on a level playing field, not one skewed by a historic burden of debt. Agreeing to an amnesty would be morally just, fiscally responsible, and in the best interests of the people of Scotland.

Unite calls for Edinburgh council debt amnesty as cuts crisis grows

Local government workers across Edinburgh will demonstrate at the city chambers tomorrow morning (Thursday 29 October) against proposals for 2,000 compulsory redundancies by May 2016.

The cuts are being pushed through as the City of Edinburgh Council (CEC) seeks to make savings of £141 million over the next four years while grappling with a total debt estimated by Unite to be as much as £1.6 billion.

Unite has tabled a number of alternative financing proposals to alleviate budget constraints including a collaborative effort to pursue a debt amnesty on all pre-Scotland Act loans from the Public Works Loan Board (PWLB), which could free-up £32 million a year in the council budget.

Unite Deputy Scottish Secretary Mary Alexander said

Mass compulsory redundancies are not in the interests of anyone – not the workers, not the public and not the council itself.

We know CEC has significant debts but we are not looking at recriminations, we are looking for solutions to the problem.

We need to explore how we can loosen the budget constraints but this requires a political will from the city’s elected representatives and council officials to work collaboratively with the joint trade unions.

Through our alternative financing proposals we believe there is a better way and our message is clear: Let’s work together to secure jobs and services under public control in Edinburgh for the next generation.