Scottish council tax freeze could end after Moray proposes 18% hike

13 Jan 16

The Scottish Government’s eight-year council tax freeze could end after council leaders in Moray agreed in principle to an 18% increase.

Though the proposal has yet to be ratified by the full council at a budget-setting meeting next month, the proposal could also prompt other authorities to break ranks and put up council tax in order to protect front-line services. In addition, several councils have broken away from the Convention of Scottish Local Authorities, which has been party to the freeze policy.

Moray, which is led by an Independent/Conservative coalition, is facing cuts of nearly £12m next year. It calculates that the proposed increase would raise some £5m, which would be matched by a similar sum taken from reserves, so partly offsetting both the projected budget shortfall and a likely clawback by ministers of funds allocated to compensate councils for the freeze.

The freeze was introduced in 2008 by the then minority Scottish National Party government at Holyrood, and though a government compensation package has held it in place ever since, the budgetary effects of reductions in Scottish funding from Westminster have brought it under increasing strain.

Finance secretary John Swinney confirmed in his Budget statement late last year that the freeze would remain in place for another year if the SNP returned to office in May’s Holyrood election, pressure has been growing for a radical rethink of local government finance, not least to give Scotland’s 32 local authorities greater control over their budgets.

At present, the council tax accounts for only around 12% of councils’ spending and, while Swinney has recently given them greater flexibility to vary business rates, the dominant role played by central government funding has brought increased calls for more local discretion.

Last month, a cross-party commission, co-chaired by the Scottish Government and COSLA, called for the early replacement of the council tax by a fairer and more transparent system, possibly a hybrid of a property-based charge and an element of income tax.

In a statement this afternoon, COSLA said: “As the COSLA president David O’Neill has already articulated, COSLA got a crystal clear steer from council leaders at the end of December that the package of measures for local government within the [Scottish Government’s] Budget, including the council tax freeze, is totally unacceptable.  

“Not only have we got a huge cash cut (£350m or 3.5%), but also additional pressures included which will see job losses and services slashed. This is all because of policy choices from Scottish Government.

“It is for this reason that the package of measures including a council tax freeze is now unacceptable,” the statement said, adding that this remained the mandate to which COSLA was working.

“Therefore to say that they have agreed a freeze for the ninth successive year is simply inaccurate,” it added. “However we are still in active negotiations with the Scottish Government around the 2016/17 settlement.”

  • Keith Aitken
    Keith Aitken

    covers Scottish affairs for Public Finance from Edinburgh. He was formerly economics editor and chief leader writer on The Scotsman and now has a busy freelance career as a writer, broadcaster and event chair.

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