Councillor with a plan to fix the budget

Monday February 4th 2019

Colin Cassidy

Businessman and Dalkeith Councillor Colin Cassidy

Written by editor, Phil Bowen

Colin Cassidy is a Midlothian businessman, the owner of successful business ‘Basically Tool Hire’ and is also an SNP councillor for the Dalkeith Ward.

Midlothian councillors are to consider next week saving measures to bridge a £7.4 million budget gap which will “decimate” local services, including ending school music tuition, stopping active schools, closing libraries, axing school buses and many other things, Read the extent of the proposed council cuts

However, the canny businessman thinks he has a plan to prevent the cuts and has spoken to Midlothian View about it.

Midlothian Council has an account called the ‘Housing Revenue Account’, referred to as the HRA. This account manages the rental income and costs for the council’s 6,864 council houses.

The HRA reserve balance is projected to be £38 million at the end of the current financial year up to 31st March 2019. According to the council’s own report it collects rental income of £29.5 million every year and after costs are deducted this rental is forecast to still generate an income next financial year of £4.5 million. This income is added to the HRA and is considered ‘off limits’ by council officers.

Colin’s view is that as the HRA is in a very healthy state of affairs the council should use some of this money to deal with its budget shortfall.

He says

“If the council used £7.4 million next year to fix it’s budget deficit then it would prevent the cut in services and buy the council another year to resolve it’s underlying issues with both its bottom up and top down service reviews.”

The businessman has challenged council officers as to why the HRA money cannot be used and has been told it is off limits, as it is due to be used for future unconfirmed council house building and cannot be used unless Derek Mackay, the Scottish Government’s Finance Secretary, approves it.

He thinks the officers’ assertion that the money is required for future house building is a red herring.

“In the real world, what person would use all their capital reserves to build a house? They wouldn’t, as they would borrow that money via a mortgage. Councils’ are in the enviable position of being able to borrow money at 2.5%.

“Therefore, if they were to borrow say £30 million to build 300 council houses, they would have to pay annual interest of £750k but those council houses would generate over £1 million in rent, as council house average rent is £70 per week, as well as provide housing for 300 households. This rent would be in addition to the rent from the current council houses and so the HRA would be able to pay down the borrowed amount.”

Councillor Cassidy thinks other councillors will back his plan to fix the deficit, save services and protect future council house building. If the 5 Conservative councillors backed the plan with the 7 SNP councillors, then they would have a majority among the 18 Midlothian Councillors. Though Councillor Cassidy is hopeful that the Labour group will also back the plan to avoid the cuts.

For reference, here are the council documents

Housing Revenue Account Report

HRA Report Appendix

Correction 06/02/18 20:10 : In a previous version of this article it was incorrectly stated that Councillor Cassidy had been in contact with Cabinet Secretary, Derek Mackay, about this plan, however this is not the case.

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