Deputy Leader of Scottish Labour Alex Rowley MSP has called for a debt amnesty on pre-devolution council debts owed to the UK Treasury in a Member’s Debate in the Scottish Parliament.
Around £2.5 billion of Scottish council debt owed to the UK Treasury’s Public Works Loans Board dates back to pre-devolution.
Interest rates on these pre-devolution debts are around 8% but interest rates on post-devolution debts are around 4% which is the standard rate for a 30 year Public Works Loans Board loan.
Speaking in the debate, the Mid Scotland and Fife MSP made calls for the Scottish Government to make direct representation to the UK Treasury on the issue of all pre-devolution council debt owed.
Mr Rowley went on to say: “Scottish residents are paying 50% more interest on pre-devolution debt to the UK Treasury than we are on post-devolution debt.
“This means Scottish local governments are spending the equivalent of 44p in every £1 of council tax collected from Scottish residents on servicing debt liabilities – Unite Scotland estimates 10p of this in every pound derives from outstanding pre-devolution liabilities.
“It means that in the 17 years since devolution, Scottish councils have sent back a minimum of £3.3 billion to the Treasury in interest payments on pre-devolution debt liabilities alone.
“So on the grounds of fairness I suggest we have a strong case for pursuing an amnesty and I hope that this parliament and the government in Scotland will join the campaign and make the case to the UK government for this to happen.”
Mr Rowley previously wrote to the UK treasury who responded indicating that they would not be pursuing calls for a debt amnesty.
Commenting on the response from the UK Treasury Mr Rowley said: “We know an amnesty is a matter of political will. Councils across the UK have been renegotiating debt, as well as interest rates, and making massive savings with private lenders, so the idea that the UK Treasury cannot do this is fanciful. Let us firm up our position and our resolve to fight the case for a debt amnesty.”