Scots settlement wont avert tax rises

16 Dec 04
Council leaders in Scotland have warned that the Executive's funding settlement for local government will not be enough to prevent substantial council tax rises over the next three years.

17 December 2004

Council leaders in Scotland have warned that the Executive's funding settlement for local government will not be enough to prevent substantial council tax rises over the next three years.

A rise of 4.4% has already been forecast for 2005/06 and councils say they are unlikely to be able to comply with demands by ministers to restrict rises to 2.5% in 2006/07 and 2007/08.

Under the three-year budgeting system in Scotland, councils are required to produce 'indicative' council tax figures covering that period.

The warning that above-inflation rises are inevitable follows last week's announcement of funding allocations for all 32 unitary councils. Finance Minister Tom McCabe described the settlement as 'tight but realistic'.

The figures represent an increase of 4.4% in the first year, 3.3% in the second year and 2.4% in the third year. McCabe acknowledged that councils had expressed concern over the allocation for 2007/08 and said he would consider their representations.

McCabe said the Executive expected local authorities to keep council tax bills as low as possible in 2005/06 and restrict the increase to 2.5% in each of the following years.

However, the finance spokesman for the Convention of Scottish Local Authorities, John Pentland, warned that councils would find it difficult to comply.

He urged ministers to release some of the extra cash due to be allocated to Scotland as a result of Chancellor Gordon Brown's promise of an extra £125m for local authorities in England – £12.5m of new money under the Barnett Formula.

Pentland called on the Executive to 'give the council tax payer in Scotland the same assistance offered to the council tax payer in England and Wales'.

Professor Arthur Midwinter, the Scottish Parliament's finance adviser, said the Executive was under no obligation to use the money for local government, but predicted that McCabe would come under strong political pressure to release some of it for councils. 'Local government has got a bad deal in terms of the Scottish budget as a whole,' he added.

McCabe said the Scottish Cabinet had not yet made a decision on how the £12.5m would be allocated.

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