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OFFER TO SCOTS COUNCILS ON HOUSING DEBT

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Calum MacDonald, the Scottish housing minister, is to offer every local authority in Scotland an opportunity to wip...
Calum MacDonald, the Scottish housing minister, is to offer every local authority in Scotland an opportunity to wipe out its housing debt, according to The Herald (p1).

As part of the government's New Housing Partnership, under which council houses would be transferred out of local authority control, it has been revealed that the winning bids for the partnership deals could also receive government funding to tackle the problem of outstanding debt.

The incentive was revealed in a letter from Mr MacDonald to Glasgow City Council on the eve of the deadline for bids for the first£23m of NHP funding.

In Glasgow 55% of the income from rents goes to service a debt of almost£1bn.

Frank McAveety, the council leader, said: 'If we can get a move on debt, we would be able to get the investment of private capital and the prize for Glasgow is the biggest regeneration since the war.

'We have been arguing for the last 20 years that we need help to deal with council house debt; this is the first time any government has said it would look at it. Obviously it is a bidding process, but we have everything to play for.'

Mr MacDonald said: 'The kind of plans I want to see brought forward from local authorities like Glasgow will place housing at the centre of a wider regeneration effort. It is the key to successful community regeneration and can be the engine which drives it.

Acknowledging that the sale of all council housing stock to new landlords would still leave an outstanding debt of about£2bn, he said: 'What we will be saying to Glasgow and other local authorities is that they need to maximise the value of the receipt they get. The total sum they receive is put against the existing debt.

'Where the Scottish Office comes in is through the NHP. Where there is still outstanding debt after that, we will undertake to meet any breakage costs (the levy which compensates the lender for loss) and the servicing of residual debt.'

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