News / SIC to give Hjaltland £3.5m to build 75 homes
SHETLAND Islands Council is dangerously close to breaching its spending policy after agreeing to dip into its reserves to find £3.5 million for 75 new homes in the isles.
Councillors agreed on Wednesday to hand over the grant to Hjaltland Housing Association to help them lever in money from the Scottish government and private lenders for the £11.2 million building programme.
As a result, over the next three years the housing association will be able to build 40 homes at Strand, in Tingwall; eight at Ladies Mire, in Brae; 12 in Lerwick’s Pegasus Place in and 15 flats on the site of the town’s former North Star cinema and music venue.
While councillors agreed on the need to build homes to reduce the 1,000 strong housing waiting list, they argued about where the money should come from.
SIC housing spokesman Allison Duncan called for the council to use its oil reserves, saying it was a good investment to build houses that had received planning permission, but otherwise would not be constructed due to government cutbacks.
However councillor Bill Manson warned that by spending the money they would be left with just £256.5 million in the bank, too close for comfort for their policy of keeping £250 million in reserve.
He said that a £6.5 million safety margin was too small and warned that if the government raised interest rates, as some are predicting, it will affect the bond market where much of the council’s spare cash is invested.
He added that while the SIC may have already agreed to significant spending cuts this year, he believed that they could find an extra £1 million a year without difficulty from “slippage”, money saved when projects are not completed on time.
“It’s very easy for us to say there is a great big pot there and to keep dipping into it,” he said.
“But if this floor level had been subject to inflation it would be £300m or more. In real terms it’s going down. You can buy less for it today than when that limit was set. The safety margin is very small.”
Councillors were advised they would lose about £245,000 a year in interest by spending the money, while the rental income of around £225,000 a year would all go to Hjaltland Housing Association.
However money would be saved on the need to house the homeless and on maintenance and management costs.
Councillors were also warned they are likely to be presented with a “significant” one off cost if they decide to roll out fibre optic cable for superfast broadband to rural Shetland.
Shetland North member Alastair Cooper said he thought the islands were “on the cusp” of a breakthrough in telecommunications.
“I think we have to back both of these things today and give a clear message that to take the community ahead we need to provide houses and make an opportunity for them to earn a living,” he said.
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