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.