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banner Tuesday, 18 September, 2001, 15:07 GMT 16:07 UK
Treasury to pay council housing debt
Rundown housing
Many council homes need urgent repairs
The UK government will pay off billions of pounds in council housing debt - if local authorities in Scotland transfer their housing stock to community ownership.

The Scottish Executive confirmed on Tuesday that the UK Treasury will pay off the housing debt accrued by councils if they transfer all their homes into locally controlled housing associations.

Five Scottish councils, who are currently considering the move, stand to have billions of pounds of debt repaid if tenants vote for change.

But the context of the offer, which has been authorised by Chancellor Gordon Brown, has attracted widespread criticism from opposition parties as "political opportunism".

Henry McLeish
Henry McLeish: "Good news for tenants"
First Minister Henry McLeish announced the debt repayment offer while visiting a Glasgow housing association on Tuesday.

He said: "This is good news for the tenants and communities considering transferring council homes. It is good news for Scotland and for councils.

"It is an excellent example of joint working between the Executive, the UK Treasury and local government. It proves that we are stronger together.

"This policy demonstrates that social justice is at the heart of all the Scottish Executive's work.

"Existing high levels of council debt have placed a tremendous burden on tenants rents, with an estimated 55p in the pound going to debt servicing in some cases.

"The new arrangements will mean that this money can be invested into housing."

Controversial move

Social Justice Minister Jackie Baillie said: "It is the tenant's vote in a ballot that counts. Only if tenants vote to transfer their homes to community ownership will the Council's debt be tackled in this way."

Glasgow City Council leader Charles Gordon said the move represented an excellent example of joint working between Westminster, Holyrood and local authorities.

Scottish Borders Council Leader, Drew Tulley, said: "This will assist the new Scottish Borders Housing Association to attract investment which will benefit both tenants and the wider economy of the Scottish Borders."

Elsewhere, Dumfries and Galloway Council Chief Executive Phil Jones, said: "The council is seeking to minimise the financial burden on the local community and this announcement is a key milestone in achieving this objective.

So far, the executive's policy of promoting housing stock transfer into community ownership has triggered some controversy.

Housing protest
Many groups oppose stock transfer
Ministers argue that the housing association model gives tenants a greater say in management, rent, repair and modernisation issues.

They also say that it will free councils from the mountain of Public Works Loan Board (PWLB) debt which many have built up while managing homes.

At present, five councils in Scotland are considering transferring all of their housing stock to community control.

Only the 56m owed by Shetland Council is not of the PWLB type that can be paid off by the treasury.

'Higher rents'

The rest - Dumfries & Galloway, Glasgow, Scottish Borders and Argyll and Bute would all have their housing debt cleared if tenants voted for change.

But despite the apparent attraction offered by stock transfer it remains a highly controversial issue.

The Scottish National Party and Scottish Socialists both think it would be better to undertake a public sector housing finance programme.

SNP MSP Kenneth Gibson said: "The government should not lay down preconditions for the debt transfer and I am extremely disappointed that Gordon Brown has decided to blackmail tenants by saying that the debt burden will only be lifted if the tenants vote for the stock transfer."

My reaction to today's news is that it is not a total write-off

Sean Clerkin, CAHST chairman

Some people in Glasgow have formed the Campaign Against the Housing Stock Transfer (CAHST).

The group's chairman, Sean Clerkin, told BBC Scotland's News Online earlier this month that the policy represented "privatisation of public sector housing which will lead to higher rents for tenants within five years".

He said: "My reaction to today's news is that it is not a total write-off.

"The fact is that there is going to be a 300m write-off handed over to the Glasgow Housing Association.

"At the end of the day there is going to be higher rents for tenants to pay and there is going to be 800m in total costs - and, of course, privatisation."

Alan Mackay reports
"There exists some opposition to the government's move"
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