COUNCILLORS in the Highlands are hoping that a deal to reduce Shetland's housing debt by more than half will help boost its bid to win help from the government to tackle its £161 million debt.

The UK and Scottish Governments have agreed to contribute £10m apiece to Shetland after the island's officials argued that its £36m debt was connected to all the houses they had to build to establish the oil industry in the 1970s, particularly during the construction of Sullom Voe oil and gas terminal.

Highland Council, which currently pays around £17.3m a year to service its housing debt, says the same argument applies to the likes of the fabrication yards in the Highlands set up at the same time to build oil and gas platforms.

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Drew Hendry, leader of the Highland Council, said: "It is in the Highland Council's programme that we would seek to get the historic housing debt written off by the UK Government.

"We are writing to them following the Shetland settlement.

"We are examining it to see what we can take from it. We would also look to work with the Scottish Government as Shetland has done."

He said the council hoped to have talks with UK and Scottish governments soon.

Shetland Islands Council finance officials say that the remaining £16m is "not a problem debt" and will now be refinanced externally.