The Government should wipe out £2.5bn worth of pre-devolution debt owed by Scottish councils, according to trade union Unite.
The union said erasing the money owed to the UK Treasury Public Works Loans Board would help ease the financial crisis facing local authorities in Scotland.
The move, which is part of a package of measures put forward by Unite, has now been backed by the Scottish Labour who has written to the chancellor asking him to reduce the rates of interest currently being paid by local authorities on pre-1999 debts.
Unite Scottish secretary, Pat Rafferty, said: ‘The call for a debt amnesty for Scotland’s local authorities is getting ever stronger and ever louder.
‘It is scandalous that some councils are paying interest rates of over 10% resulting in 10 pence in every one pound of council taxpayer’s money being funnelled from vital services to pay outstanding pre-devolution liabilities.’
As part of the strategy, the union is also calling for the refinancing or elimination of PFI deals.
