Drop the debt

Unite is calling on the Scottish Parliament to back a debt amnesty to help protect cash-starved council services.

As part of its Drop the Debt campaign, the union has written to the Parliament’s local government and communities committee, calling for an amnesty of all pre-devolution council debt owed to the UK Treasury.

The union estimates that an incredible 44 pence of every £1 collected in council tax in Scotland goes towards paying off debt. An amnesty for pre-devolution debt owed to the Treasury’s public works loan board (PWLB) could reduce that amount by around 10p in the £1, freeing up around £194m a year to invest in cut-hit council services.

Casino bankers

“The economic crisis caused by casino bankers is being used as an excuse to attack the public services we all rely on,” said Unite Scottish secretary Pat Rafferty.

“People in Scotland are suffering the results of that every day, with cuts affecting everything from social care and day services, to bins and recycling,” he added. “Many libraries, parks, and leisure facilities have been closed or are under threat.

“Politicians in Scotland need to do everything they can to protect our council services from this attack, and we believe a debt amnesty will help. We hope MSPs from across the Chamber will support the idea.”

Unite estimates that the total debt of all 32 Scottish councils is around £12.1bn – that does not include debts run up under the controversial private finance initiative.

Some ÂŁ2.5bn of this amount is made up of pre-devolution debts owed to the public works loan board. In the 17 years since devolution, Unite estimates that Scotland has sent back a minimum of ÂŁ3.3bn to HM Treasury in interest payments, just to cover this debt.

‘Massive amounts’

“We are talking about massive amounts of money that could be used to protect council services,” Rafferty noted. “Since 2010 at least 40,000 council jobs have been lost across Scotland, and some estimate that the figure could be over 60,000. Further cuts in government funding could lead to another 15,000 jobs being lost in 2016/17.

“Every one of those lost jobs is one less person providing services for their local community,” he added. “It’s one less person spending their wages in the local economy. And it’s one more person having to rely on our fragile social security system, as they are forced to look for new work in a low-wage economy where jobs are scarce.”

Unite points out that the Treasury has previously been willing to forgive historic debt – with some £900m of housing debt being written off when Glasgow City Council transferred its housing stock to Glasgow Housing Association.

“A debt amnesty is a matter of political will and the precedent is there,” said Rafferty. “It is not the whole solution, but it will definitely help.”

@davideyre