Wednesday, 13 September 2017

Chuffin' heck: where's the boom?


A decision by Scottish Borders Council to borrow £7.7 million and settle their share of the Waverley Railway (north section) reinstatement, then use house builders' development contributions to pay off the loan over ten years may turn out to have been a bit risky.

Despite upbeat predictions a decade ago by politicians and estate agents that the second coming of trains in 2015 would spark a house construction boom in Midlothian and the Central Borders, thereby generating large sums of dosh for the two local authorities, there is no sign of a building bonanza in and around Galashiels.

On the other hand new figures published this week by the Scottish Government show house start-ups and completions by the private sector in Midlothian are at record levels. At the same time building industry activity in the Borders has slumped to an all time low.

The housing demand near the northern stretches of the railway line may or may not be directly attributable to the return of the Iron Horse after a gap of 46 years. But the sharp contrast in house building rates in neighbouring council areas is distinctly puzzling.

Here are the statistics which should give local economists, councillors and other stakeholders considerable food for thought. In the Borders case the completions and starts are for the whole region rather than for the narrow corridor where developer contributions are levied. The Scottish Government tables show:

Private Sector housing starts for Midlothian & Scottish Borders:
BORDERS – 2016: 211; 2015: 272; 2010: 215; 2006: 692; 1996: 254. Note: The 2016 figure of 211 is the lowest since 1998 (197).
MIDLOTHIAN – 2016: 847; 2015: 593; 2010: 205; 2006: 309; 1996: 306. Note: 2016 figure of 847 is highest since records began (1996)
Private Sector housing completions for Midlothian & Scottish Borders:
BORDERS – 2016: 235; 2015: 347; 2010: 429; 2006: 618; 1996: 523.

MIDLOTHIAN – 2016: 642; 2015: 583; 2010: 266; 2006: 169; 1996: 209. Note: 2016 figure of 642 highest since records began (1996).

Figures for house completions in the Waverley Developer Contribution area (includes Lauder, Galashiels, Melrose and Selkirk) in the five financial years to 2015/16 can be found in the Scottish Borders Council Housing Land Audit 2016.
The numbers are - 2011/12 89; 2012/13 101; 2013/14 110; 2014/15 91; 2015/16 118.
According to the audit, approximately 32% of all Borders completions fell within the Waverley Developer Contribution area. The report does not specify whether these statistics are for all completions or just the private sector.

But what is clear from both sets of data is that so far the Borders Railway has not kick-started a housing boom in communities bordering the southern sections of track.

It is to be hoped the council attracts enough contributions from house builders to meet the cost of the £8 million loan they took from the Public Works Loan Board [PWLB] in February with an interest rate of 2.05%. This advance is repayable over 10 years.

In April, SBC borrowed a further £10 million from PWLB in April at 1.90%, also over 10 years. Information posted on the PWLB website does not specify what each loan would be used for.

Borders councillors were told at the beginning of this year that by repaying their 'bill' for the railway upfront after borrowing the cash rather than meeting their commitments in instalments through to 2038 by handing over developer contributions they could expect to save around £4 million of public money.

A Freedom of Information request submitted to SBC in June 2014 asked for the total number of development contributions obtained for the railway project so far (2004 to 2014). The council reply showed there had been 241 developer contributions valued in total at £743,127 - far less than the number required to keep up the council's payments. 

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