Scottish councils to get decent homes standard and wider borrowing power

It also announced that councils will be given wider borrowing powers to help them meet the target.

Speaking in the Scottish Parliament last week, social justice minister Margaret Curran said the Scottish Executive would consult on the timescale for imposing the decency standard. She said it was likely to include guidance on the condition of kitchens, heating and bathrooms.

She also announced that the controversial prudential borrowing regime would be extended to housing by April 2004.

Pat Watters, president of the Convention of Scottish Local Authorities, said: "We are pleased to see the extension of the prudential framework for housing and we acknowledge debt has to be managed within a business-planning framework."

He added: "There remains the possibility of more progress on investment through immediate flexibility on the issue of capital set-aside. Waiting until after 2004 and the prudential regime seems out of kilter with the overall intention of her statement."

The announcement marks a major turnaround for the Scottish Executive. Proposals to permit prudential borrowing – originally made in a consultation paper in March – excluded housing, saying this was "not the right time to introduce such a fundamental change to housing finance".

Pressure for prudential borrowing to be extended to housing grew after October's UK Housing Review, in which York University professor Steve Wilcox claimed Scottish councils could raise as much as £1bn if council housing were included. According to research published earlier this year by the Chartered Institute of Housing in Scotland, about 17 of Scotland's 32 councils have low housing debt and could sustain prudential borrowing.

So far, only three Scottish local authorities – Glasgow, Scottish Borders and Dumfries & Galloway – have voted to transfer their stock. Both the Glasgow and Scottish Borders transfers have hit funding-gap problems, although they are still expected to go ahead. Plans for stock transfer in Shetland were abandoned in October due to similar problems. Tenants are also being balloted in Aberdeen, although the council would prefer to retain its stock.

Councils in the rest of the UK have long called for borrowing powers, so that they won't be forced to transfer stock in order to meet the English decent homes target by 2010. But the Treasury has so far refused to give Engish councils borrowing powers because it would adversely affect the government's accounts – any costs of borrowing would be met from councils' housing revenue accounts.