Treasury Called Upon to Scrap Council Debt Payments Amid Bankruptcy Threat

The SNP’s Shadow Financial Secretary to the Treasury has ramped up calls on the UK government to scrap council debt payments for this financial year – after research revealed councils in Scotland are due to make almost £800 million in payments this year.

Despite being under severe financial pressure – with reports of some being on the brink of bankruptcy – the Treasury still expects Scottish councils to pay off huge debts through the Public Works Loan Board (PWLB).

Findings from the BBC also found that councils across the UK are facing shortfalls, with some local authorities in Scotland among the hardest hit due to the pandemic – with the health crisis costing Highland Council more per head of population than any other UK local authority (£411 per person).

The SNP Scottish Government has already taken steps to alleviate some of the financial strains – providing £405 million in advanced payments this financial year, rising to £455 million by the end of July.

Commenting, Stephen Flynn MP (pictured) said:

“The near £800m debt burden placed on Scottish councils by the UK government is eye-watering and simply cannot be justified given the ongoing impact of Covid-19.

“Councils across Scotland are working on the front-line providing support to many of the most vulnerable people in our communities during this pandemic and delivering key services.

“However, it’s clear that the financial impact of the health crisis is hitting them hard and swift action from the Treasury could transform their financial position.

“It is critical that if we are to support local authorities during this unprecedented challenge the Chancellor seriously considers measures to scrap the PWLB debt payments for local authorities for the current financial year.

“With the UK government revealing that local authorities in Scotland will be expected to pay a total of £793 million in 2020-21 through PWLB repayments, scrapping debt repayments would be a welcome relief at a time of real need.”