Report says PKC is £243 million in debt
Greens claim 26% of council tax used to repay interest
Perth and Kinross Council spends a quarter of the cash it raises from council tax on repaying interest on debts, according to research by the Scottish Green Party.
A report published by the Scottish Greens shows PKC has long-term debt of over £243million, which is partly made up of loans of £194.5m from the Public Works Loan Board (PWLB) and £43.5m from controversial ‘Lender Option, Borrower Option’(LOBOs) loans from banks.
The Scottish Greens say the local authority’s repayments of these loans are the equivalent of 26% of the money it brings in through council tax, with much of these repayments going to the UK Treasury.
The PA previously revealed that PKC took out nine LOBOs loans with London and Dublin banks between 2004 and 2006 when interest rates were around five per cent and some of the loans were taken out over a period of 50 years. Interest rates subsequently dropped to a historic low of 0.5 per cent.
The Scottish Green Party’s report also finds that Scotland has the highest proportion of Public Finance Initiative (PFI) debt per person in the world.
The controversial initiative sees local authorities borrowing money from the private sector to pay for new infrastructure and this included the recent multi-million pound upgrade of the council’s offices in the city centre.
Scottish Green MSPs are now calling for the debts to be written off so that local authorities can focus their resources on protecting public services.
Mark Ruskell, the Mid Scotland and Fife MSP for the party, said: “Given the incredibly difficult decisions local authorities are having to make just now as they consult on next year’s budgets, it’s unacceptable that councils are using council tax revenue to deal with historic debts that enrich private banks and the UK Treasury.
“We are facing huge cuts to front line services like education and healthcare in Perth and Kinross, yet at the same time the council are trying to repay unethical loans from our own government.
“The Westminster Government should write off council debts to end the unfair squeeze on local services. We must also improve oversight so that our local authorities aren’t forced into such high-risk financing in future.
“A Scottish Governmentcontrolled Loans Board would offer greater stability and value, and I would encourage Scottish ministers to explore the idea.”
A PKC spokesperson did not dispute the Scottish Green Party’s findings but sought to stress that council tax income is not the “only source of income” it uses to repay its loans.
The spokesperson said: “PKC has taken out loans in the full knowledge that we will be required to pay them back and meet the costs of interest.
“The money borrowed by the council goes towards building and maintaining schools, repairing and maintaining roads and infrastructure and ensuring that we can provide essential services such as waste services.
“The overall percentage of income generated by council tax is only around 20% of our total annual income. This income from council tax payments is not specifically used for any one purpose but is put into a total fund that is allocated across the numerous council services; around 4% of this total fund goes Mid Scotland and Fife Green MSP Mark Ruskell
towards servicing and repaying debt.
“It is incorrect to imply that the council tax income is the only source of income used for repaying loans.”