THE rash of letters and articles in The Herald on the transfer of Glasgow's housing stock have contained a number of inaccuracies.
Stephen McCabe's letter (December 15) makes the point that investment could be made in Glasgow's houses simply by spending the #120m currently servicing debt on improvements. Unfortunately, this approach would require a 20-year programme and not 10 years as envisaged by the feasibility study.
By borrowing #1bn (not #1.6bn as stated by John MacCalman) a 10-year programme can be achieved. This sum would peak in year 10 and be paid off over the following 10 years by the trust.
The issues raised today by Craig Binns are more complex, but can be addressed by some dreary arithmetic. Glasgow's housing debt has been incurred principally through the Public Works Loan Board over many years. The current aggregate rate of interest on the many separate loans is 8.8%.
For the trust to borrow the #1bn referred to above, indications are that the rate of interest would be 1% above the current base rate of 6.25%, that is to say 7.25%. This is 1.55% less than the council's present borrowing costs.
The extra costs of VAT on improvement work have been factored into the #1.2bn improvement programme contained in the feasibility study. This will partially be met from rents and partially from borrowing.
Craig Binns and Tommy Sheridan advocate the abandonment of the PSBR rules by Government. This is not an original idea as it has been the policy of the Chartered Institute of Housing for several years. My council agrees with them. Unfortunately the Government does not, so we have to stick to this definition for the foreseeable future.
At yesterday's Housing Committee, SNP Councillor Gordon Archer dissented from the decision to bid for new partnerships funding and complained that the bid was too ambitious. But if Glasgow had not entered a bid the Scottish Office would immediately rescind the #1m already made available for the feasibility study, leaving the tenants to pick up the cost.
Our bid for the trust totals 38% of the available funds over three years against the normal pro rata for Glasgow of about 20%. Anything less will not meet the amount necessary to deal with the residual debt and would make stock transfer financially impractical. As these figures show, the issue is extremely complex, a fact which is constantly exploited by other political parties and sectional interest groups for their own ends.
If the feasibility study indicates that the scheme is practical, the council has to agree to proceed. The tenants have also to agree the transfer in a ballot.
If the above conditions are met then the benefits will be considerable - #900m debt absorbed by central Government, #1.2bn of investment in Glasgow's rented housing stock, 4000 construction jobs created, and an opportunity for tenants to take real direct control of their houses.
Councillor Craig Roberton,
Senior Vice-Convener,
Housing Committee,
Glasgow City Council. December 16.
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