Formal probe follows complaint that Scottish Executive loan breaches European law
The European Commission has started an investigation into the financing of the £4bn Glasgow housing stock transfer.

The investigation follows a complaint made initially by Mike Dailly of the Govan Law Centre and later taken up by Scottish Socialist MSP Tommy Sheridan. They say the Scottish Executive’s offer of an interest-free loan to the Glasgow Housing Association constitutes state aid and breaches EU competition law.

Uncertainty over the legality of the loan threatens to undermine investor confidence, vital if GHA is to take over Glasgow’s housing stock as scheduled in November.

Elizabeth Holt, head of the commission in Scotland, confirmed UK authorities had complied with a formal request for information regarding the transfer. The commission’s findings are not expected to be made public until September at the earliest.

Hugh Kerr, spokesperson for Tommy Sheridan and himself a former Labour MEP, said: “The commission clearly thinks something is wrong with the way stock transfer is proceeding.” The Scottish Executive and the GHA both deny the £300m loan constitutes state aid. They say European competition law does not apply in this case because GHA does not engage in commercial activity.

A Scottish Executive spokesperson said: “The commission has made no statement implying that the transaction constitutes state aid.” She said the commission's request for information was routine, given that the complaint had been raised by an MSP.

The GHA said the investigation would cause no delay to stock transfer.

But lawyer Mike Dailly, from the Govan Law Centre in Glasgow, said EU competition law could potentially apply to services associated with the public sector. He said: “The Scottish Executive has been aware of this issue for some time, but Margaret Curran [Scotland's Minister for Social Justice] has always given a holding reply when questioned in Parliament. I think that shows the executive is worried.”