THE UK Treasury has allowed Shetland Islands Council into a special borrowing scheme which will save the authority at least £1 million over the next 40 years.
Lobbying with the help of local MP and Scottish secretary Alistair Carmichael has given the SIC access to the Public Works Loans Board’s certainty rate, which lets council’s borrow money at 0.2 per cent less than standard rates.
The council is now applying to the scheme to borrow £16 million to pay back its remaining housing debt after a deal was struck with Westminster and Holyrood last year.
The special rate will also apply to the £12 million the council will have to borrow as its share of the £36 million cost of building a new Anderson High School in Lerwick.
SIC chief executive Mark Boden explained that the council had not been allowed into the scheme when it opened for applications in November 2012 because at that time it did not know how much it would need to borrow until the long-standing £40 million housing debt had been resolved.
Since then the UK government has given the council £10 million, the SIC has written off £10 million and the council’s housing department has managed to save £4 million.
Boden said the savings had come through good management rather than staff cuts, with Shetland having some of the lowest housing management costs, highest levels of rent collection and lowest levels of arrears in Scotland.
“Now the debt is down to £16 million we have the capacity to do things like improve people’s property and maybe build new property which we couldn’t afford to do when the debt was £40 million,” he said.
“The extra £1 million we are saving can now be spent on good things for the community as opposed to interest payments.
“It’s a bit like moving your mortgage payments somewhere else so you get a better interest rate.”
Long awaited improvements to the council’s housing stock are already being made, he said.
New social housing will probably be built in partnership with Hjaltland Housing Association over the years as the Scottish government makes funding available as part of its commitment to give Shetland £10 million towards new builds following the housing debt negotiations.