Highland Council ditches build plans

Highland councillors were told last week that until the council’s high loan debt is reduced, it cannot make a business case for taking part in the Scottish Government’s council house building initiative, as the subsidy level available through the government scheme would only cover around one fifth of the cost.

Deputy first minister Nicola Sturgeon urged councils to reclaim their social landlord role as part of a set of sweeping housing reforms set out by the government in November 2007.

‘It’s a real disappointment that we are unable to undertake new council house building in the Highlands at this time.’

Councillor Margaret Davidson

And the Scottish Government announced in April the following year it was making £25 million available to support new council house building across the country. But councils will have to borrow additional funding, as the pot of money will only offer up to £25,000 per home.

Highland has £10,264 worth of debt per home, totalling £146 million, the fourth highest rate in Scotland. Nearly 40 per cent of its rental income this year is being used to fund loan charges. Extra loan charges for the new borrowing it will need to fund 150 new homes over three years would mean a rent increase of two per cent above inflation in 2010/11, councillors were warned last week.

The council’s housing and social work committee concluded that it was more cost effective to provide affordable housing through housing associations.

Councillor Margaret Davidson, housing and social work chairman, said she would be seeking a cross-party meeting with ministers to discuss alternative funding arrangements for council housing. ‘It’s a real disappointment that we are unable to undertake new council house building in the Highlands at this time,’ she said. ‘The sums do not add up.’

David Goldie, the council’s head of housing, said: ‘I think it’s unfortunate that this scheme has not been tailored to the different housing revenue account positions that different local authorities find themselves in.

‘In particular, it has been based on an ability to utilise prudential borrowing, rather than being perhaps targeted to increasing supply where there’s the greatest demonstrated housing need.’

Highland Council, which has 14,500 homes, estimates it needs an extra 900 homes a year between now and 2021.

The Scottish Government gave councils until last week to make applications for funding from the £25 million pot.  It will be concluding its funding agreements with councils by the end of March.

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