Nine councils spending at least 50% of tax income on paying debts

Nine councils across Scotland are spending more than half of their tax income on servicing historic debts, according to the Scottish Greens.

Edinburgh City Council is one of the authorities spending 50 per cent or more of their tax income on historic debts. Picture: Steven Scott Taylor

A report published by the party shows long-term debt being held by Scotland’s 32 local authorities totals £11.5 billion.

On average, 42% of the money raised through council tax is paid back to the UK Treasury or banks as loan repayments, the analysis found.

This ranges from just 17% in Orkney to 103% in the Western Isles, with a total of nine local authorities, including Glasgow and Edinburgh, spending 50% or more of tax income servicing debt.

For most councils, the debt consists of loans from the Public Works Loans Board (PWLB), an executive agency of the Treasury, and long-term loans provided by banks.

In 2015-16 Scottish councils spent almost £1 billion on repayments to the PWLB and still owe the board a total of almost £9 billion, the report said.

It also found Scotland has the highest proportion of PFI/PPP debt per person in the world.

The Greens are calling for the debts to be written off to allow local authorities to direct funds to public services.

Finance spokesman Patrick Harvie said: “Given the crisis facing local authority finances, it’s unacceptable that councils are using council-tax revenue to deal with historic debts that enrich private banks and the UK Treasury.

“The unethical nature of the loans from private banks justifies cancellation of these payments and the Westminster government should write off council debts to end the unfair squeeze on local services.

“We must also improve oversight so that our local authorities aren’t forced into such high-risk financing in future.

“A Scottish Government-controlled loans board would offer greater stability and value, and I would encourage Scottish ministers to explore the idea.”

A spokesman for council body Cosla said: “Councils are extremely responsible with regard to borrowing money and they work to a code in managing their borrowing.

“Loans are taken out to fund vital infrastructure which is integral to the services which are provided to support communities.

“Councils operate within strict guidelines through well-established Treasury management policies and they apply the Prudential Code on affordability, to ensure that debt is not a burden on the council or its communities.

“Nonetheless, we are all very aware that councils are facing extremely difficult financial circumstances, with the prospect of another difficult financial settlement, and anything that can be done by the UK Government, as part of the Autumn Statement, to help alleviate these pressures and free up resources to protect services to our communities would be welcome.”

A spokesman for the Treasury said: “Historic debt is the responsibility of individual local authorities. The government has no plans to change this position.

“Responsibility for borrowing decisions lies with the locally-elected members of the council, who are democratically accountable to their electorates.”