Shetland Islands Council (SIC) chalked up huge debts building houses to assist the UK state's drive to get the North Sea oil industry up and running quickly in the 1970s. Subsequently, over £300 billion in tax revenues has flowed into the UK Treasury from oil and gas.
In 1974 Scottish Office minister Bruce Millan pledged that government would "do everything possible to resolve any difficulties" arising from the need for housing to accommodate oil workers. The SIC built over 1,000 new homes between 1974 and 1989 to cope with a 37 per cent population influx.
Its colossal debt burden was worsened after Margaret Thatcher introduced the "right to buy" for council house tenants. It meant the SIC sold off over 1,500 of its homes at discount prices. That caused its rental income to plummet by around £5 million a year, leaving its housing revenue account saddled with huge debts.
The liability stands at around £40 million today, equating to £23,000 of debt for each of the remaining 1,800 council houses.
On at least three separate occasions since, ministers north and south of the border have recognised the UK state's moral obligation to reimburse the council – without ever handing over a cheque.
If something is not done to address the debt, Shetland's council house occupants – who already pay the second-highest rents in Scotland – will face a hike in rents of 10 per cent or more in 2014.