21 March 2008
John Swinney has insisted that the Scottish government's local income tax plans are 'robust' and can be delivered, despite the flood of criticism that greeted the publication of his consultation paper.
The finance secretary told the CIPFA in Scotland annual conference at Aviemore on March 14 that councils would receive the government funding needed to bridge the gap between council tax and LIT income and that the 'fair and effective' tax would work.
He hit out at the 'absolutely absurd' position the UK government had adopted by warning that it would refuse to give Scotland the £400m it currently pays in council tax benefit.
'I would not like to see the UK government acting in an obstructive fashion simply because they see an opportunity to thwart the wishes of the Scottish Parliament.
'It is up to the Scottish Parliament to make sure that doesn't happen,' he said.
Swinney was speaking to Scotland's leading finance officers just days after he had published his long-awaited consultation paper proposing an LIT set at a national rate of 3p in the pound.
The response to the proposals has been largely negative, with claims by opposition parties and the media that the scheme is flawed, due to a potential £700m 'black hole' in funding.
Swinney told his audience that his government was keen to press ahead with the plans as quickly as possible because of the overwhelming public backing for the abolition of the council tax.
He promised he would listen carefully to views expressed during the four-month consultation period.
But he stressed that the Scottish government had a 'robust' proposition that would guarantee the level of financial support needed for local authorities.
During a question and answer session, Swinney was asked how confident he was about winning the argument with Westminster over the retention of the £400m currently provided in council tax benefit, and the need for UK legislation to make this possible. He replied: 'I think the government position on this issue is absolutely absurd.'
The benefit was an integral part of the financial settlement for local authorities, albeit contributed by the UK government, and was a direct payment to councils to ensure services were funded by a sum of money for individuals who did not have the resources to contribute, he said.
Scotland was entitled to retain this money, he insisted. 'I am very confident that we have a strong argument to marshal with the UK government.'
Concordat 'worst settlement' for ten years, says Midwinter
The budget settlement for Scotland's councils is the worst for ten years, finance expert Professor Arthur Midwinter told the conference.
He argued that the much-acclaimed concordat struck between local authority leaders and the Scottish government blurred accountability and created a 'bureaucratic mess which lacks clear audit trails and creates a new tier of micro-management'.
A former adviser to the Scottish Parliament, Midwinter is visiting professor at the Institute of Public Sector Accounting Research at Edinburgh University and now financial adviser to Scottish Labour leader Wendy Alexander.
He said that once money for a council tax freeze was stripped out, the budget settlement provided for spending growth of only 0.5% a year.
It was an underfunded settlement that would require significant savings to meet a funding shortfall. He added: 'I think it is a very serious budget problem. My view is that this is the worst settlement for ten years.'
Midwinter was particularly critical of new Single Outcome Agreements, a key component of the concordat, arguing that 'they are not agreements at all'. There were major gaps in the framework. 'Single outcome agreements are not fit for purpose,' he said.
Midwinter was also scathing about the recently published consultation paper on a local income tax.
Arguing that it was a 'flimsy document' that failed to make serious arguments, he said: 'In my view, without doubt, it is the worst document I have seen since the poll tax.'
Stick to the PFI, says CBI
The Scottish government's plans to replace the Private Finance Initiative with a new method of funding public projects are based on 'muddled thinking', a leading business figure said.
Iain McMillan, director of the CBI in Scotland, said the proposed Scottish Futures Trust scheme, using a not-for-profit distributing model, was unlikely to produce real incentives for high-quality services and value for money. While risk-taking could provide excellent results, business needed the possibility of returns on investment.
He said: 'We want to see the debate continue. But much of the thinking around the SFT is muddled, and we do not want to see the effectiveness of our public services sacrificed on an altar of short-term populism.'
PFmar2008
