The game of brinksmanship over whether Council tax should be increased has escalated today with the news that Iain Gray has taken over the reins from Glasgow Council leader Gordon Matheson in calling for more money to be charged to residents to safeguard local services.
Joe Fitzpatrick defended a continued freeze on Newsnight Scotland last night and the SNP have bolstered their defence by attacking Iain Gray’s calls as a “smash and grab raid on the public’s pockets”. That exaggerated rhetoric betrays the desperation of the SNP’s stance and lack of options that the party has left itself with. The blame game is riddled all over the latest press release, brandishing council cuts as Labour’s, yet they are SNP cuts at a national level and Tory/Lib Dem cuts at a UK level. This merry-go-round of mud slinging and ‘which cuts are whose’ cannot be political debate at its best, surely.
We only have to look at the recent BAA resolution for evidence that a compromise is required and the SNP will have to back down in some way. BAA workers, much like local councils, are receiving less in real terms. It is an unsustainable direction of travel. You can’t perennially freeze income and allow costs to increase through VAT rises and inflation, inflation which is already higher than expected. Middle ground (necessary before a vote on next year’s budget) will either involve allowing Council Tax to increase or providing more money to councils to plug the gaps.
As the Government is steadfastly against the former, the SNP can only get out of this hole with the latter. It’s going to cost them and it may well be money that John Swinney shouldn’t, but politically can’t-not, spend.
Iain Gray is correct though, local councils should be making local decisions surrounding what Council Tax should be now that the three-year concordat is over. It’s time to share the pain. Buying your way into a more palatable election campaigning position is not what good Government should be about.
Tuesday, August 17, 2010
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31 comments:
I have to wonder if it has not been going through the SNP leaderships mind that it may well be politically expedient to allow councils to increase council tax.
They will then get to blame these increases on Labour. They also cannot be tagged with the refrain of the Scottish goverments responsible for cuts to local services and still be able to use in next years election that we held council tax down but where forced by Labour to increase it to you the poor taxpayer.
But the best bit if the Concordat is dropped so is the bit with no ring fenced budgets. That could allow the SNP to put money into schools to reduce class sizes and not be stymied by councils not spending this increases on the schools.
Have to disagree with you on this one, the council tax freeze has been a breath of fresh air ,everyear we would worry about what our tax bill would be while our local council didnt behave in a responsible way with my hard earnd cash. If Labour in Glasgow want to raise the council tax let them do it and let them take the heat for it also.Typical Labour spend spend spend while we the public are doing our best to save.
No bother Jeff, I'll just pop over to HR and explain to them that whilst the government continues to rip the pish out of me for fuel duty, the oligarths who got power of our energy companies have lost none of their desire to empty my pockets, Scotrail are planning a 10% price hike and now I need to stump up a wee bit more to Glasgow city council to protect 'front line services'.
I'm sure they'll understand and magic me up some more money - that's what they do in the private sector apparently...
Fair point LH, the SNP may now have sufficient cover to lift the freeze with Labour onside. They'd look a bit daft to do so after the 'smash and grab' comment.
Conway, it sounds to me like you agree with Gray. My understanding is that an agreement with the Gov't is preventing Councils raising their local taxes. Collapsing that agreement would allow Glasgow to punt up its rates if it wanted while other 31 councils could freeze or increase as they chose.
Sure it's nice to keep C Tax as low as possible but whether it is now artificially and dangerously low is the key question. I'd say it's now best for individual Councils rather than the Government to decide if that's the case.
Hello Jeff, im a first time poster and I would like to say that Im a big fan of your blog.
I think that the SNP are well aware that a rise in Council Tax is inevitable, but by delaying recognising this publicly they are seeking political advantage.
The big problem the SNP face is that they need to ensure that the public are aware the financial mess is not of the SNP's doing.
Now that Labour has called for the increase the blame for the rise cannot be solely placed on the Government, and this is important as Scottish Labour have managed to distance themselves from any notion that cuts/unpopular decisions have to be made.
Pat Waters recently hit out at the Government's intentions to protect NHS funding, so the indication is that councils are prepared to put up a fight against their budgets being heavily reduced. By refusing to agree to Council tax rises early on, the SNP has made this the issue of contention leading up to the budget, so when they finally agree to the rise the councils will have a diminished time and ability to argue for their budgets to be protected. Hence, Swinney can cut their budgets by a greater amount while a rise in council tax can offset the damage to councils services.
A rise to council tax would also boost the policy of LIT in the run up to the election.
Joe Fitzepatrick said that he wants the government and councils to try as hard as possible to reach an agreement to freeze the council tax, but in reality I think that this is just a strategy to postpone decisions untill George Osbourne has stood up at the despatch box and stated the scottish budget will be cut by £X, so that the SNP can more clearly point to where the cuts are originating from.
Great comment Ali, thanks for writing it, and for your kind words.
I do hope that's the SNP strategy as it totally stacks up and ties in with the current lay of the land. I guess I hadn't looked far enough ahead to entertain such a possibility.
I'll watch the ensuing drama from a different viewpoint now.
Thanks again.
The problem is that the Council tax is a pretty inefficient means of rasing money for local government. A local income tax would eventually be easier to raise and cost less
to administer.
However the major problem is that, particularly with Westminster governments (but also true of the Scottish Parliament and Welsh Assembly). Those in government are quite content to see local government get the blame for poor services even if they were to lose seats. Because the central government is were true power lies.
What we need is to give more power to our councils and the means to finance and implement innovative policies. . But no central government is going to do this just look at what happened to the GLC who implemented genuine socialist policies which were popular with the electorate. Unable to defeat the GLC in elections (despite a compliant media) the Thatcher government abolished it.
This is all part of the union disconnect.
If you keep council tax lower people can then spend money on goods and services and you raise it on VAT. That also helps with employment.
The SNP are correct to blame the state of the public's finances on Labour and right not to want to raise the council tax and should not condone 'austerity'.
It is not their fault that the morons at Westminster are following 'austerity' economics.
In order to properly stimulate the economy the size of government should shrink to a significant degree. However, if you want to solve all these problems you take back the bail-out money, scrap Trident and bring the troops home from the various expensive conflagrations Britain is involved in. Problem solved!
That is the debate we should be having and not some pathetic excuse for an economics debate about the NHS v Council Tax spending.
I take the opposite view; I'm totally against Council Tax; I view it as an unfair tax on the poor, one which allows the richest to pay far less of their income to supporting services they use, and forces people who happen to live in good accommodation (be it theirs or someone else's) to pay far more than their income possibly allows.
No one likes paying tax, but Council Tax is almost as unjust as the poll-tax, and we all know how popular that was.
No, the Council Tax freeze should stay. I have other ideas for killing money shortages in Local Government.
Mandate a ban on "consultants"; if a Council lacks the local expertise on a matter (as my rather small local authority often does), let them hire the appropriate person on a loan-like system from a central-government system, so the consultant is paid the same no matter what, and Council's pay a fair amount. Not getting scalped by some London-based cowboys every time they need to move a road.
Mandate a set level of payment for the civil service employed by our Councils. Some of the wages the likes of high officers in GCC get are outrageous!! We're talking salaries that dwarf that of the PM, that dwarf that of the US President!! If the system they have in America, where the highest paid federal employee is the President, can work there, it can work here.
That'll shave off a few million here and there I'd imagine.
Now get rid of "equality commissioner", and the constant think-tank usage that a lot of local-authorities partake in, and a lot of the other happy-clappy New Labour drivel, and then, and only then, if there's still a shortage, we can talk about taxing the people more instead of taxing them first and allowing fat, bloated, useless mandarins to sit back on their unreported expenses accounts laughing it up.
And for the record, I've said it on my blog and I'll say it again; there is no "mandate" on this matter. The Scottish Government kindly offered to supply Council's with a wad of cash if they'd agree to freeze Council Tax. All of Scotland's Council's agreed. They didn't have to. Nothing's stopping Glasgow City Council from deciding next year to go it alone and forgo the cash and just tax the people.
Jeff, the problem that I have with any notion of increasing council tax is that those of us that work with local government in Scotland know only too well that there is a long way to go before the culture of waste is eradicated. Until that happens, there is no reason to increase council tax. Lets also not let Labour off the hook for blocking parliamentary moves to scrap this regressive and unfair tax.
The "kidney machine gambit" (any cuts must fall on teachers, nurses and kidney machines ... and not the real areas of waste) is a very basic Labour tactic - and frankly deserves short shrift.
Sorry Jeff, that's just rubbish.
How can you say "You can’t perennially freeze income and allow costs to increase" in the same post that you advocate taking more money from everyone? It's entirely illogical!
Increasing regressive forms of taxation is in no way good politics, no matter how bad things are.
You say that local councils should have the power to decide themselves. They do. There is no onus on them to sign the concordat. They have the choice - they can take a couple of million from Mr Swinney and freeze council tax, or they can say "no thank you".
Also, Jim FitzPatrick is a Labour MP.
AliC, very interesting post. But I suspect the SNP have left it too late to frame the narrative they seek. They are being successfully backed into a corner by Labour, and they should have tackled the economic down turn much earlier and made sure that the previous Holyrood and Westminster Labour governments were nailed with the blame.
You cannot rely on the public picking up such a nuanced late message.
No Jeff i dont agree with Mr Gray ,it seems you have been away from Scotland to long already and todays post was meant to get a response. Isnt it time you changed what is normally a good blog into Green tactical voting.
Apologies for the problems I'm having with blogger meaning my comments were in triplicate!
That should only happen when it's a Council form. In unicorns or dragons blood, obviously.
Hi Jeff, you've misunderstood what the Concordat is here I'm afraid. It's actually an ongoing agreement and the signing of it signalled an end to ring-fencing forever - that is if the SNP and coucils have their way. There is no appetite within councils to see ring-fencing come back and I'd argue that any new administration proposing to do that would have their work cut out for them as COSLA and all council leaders and chief execs are against its return.
If the council tax freeze is not agreed, the Concordat will not "collapse" as has been reported in The Herald, because the Concordat is much bigger than the council tax freeze, if you see what I mean.
The only thing holding councils to the continuation of the freeze was the promise of their share of the £70m put aside to get councils to agree to it. What Matheson and now Watters want is an end to the council tax freeze AND their share of the £70m.
I think the SNP need to address the reasons why the freeze was needed, and what I mean by this is the year on year increases prior to its introduciton rather than the need for reform. If it hadn't been frozen, what would people in cities such as Edinburgh be paying now? How can we ensure reasonable hikes in the future? Should rates be reviewed on a three-yearly basis rather than annually? That sort of thing.
"L " i could put it any better myself thanks .
Jeff
I disagree.
This is a politically-motivated and orchestrated campaign by Labour, from the GCC announcement to Gray picking it up. The SNP's most successful policy has been the council tax freeze. It has been sensible, stabilising, popular, and well thought out. I'm sure Gray and Co would like to point out that this policy didn't last the course, and that is why they are running with this spin.
According to my local council budget, only 19% of council expenditure is raised through the council tax, so to see this as an untapped financial resource is plain silly and pure politicking.
Fuel, utilities, food, mortgage rates, etc.., are all due to go up, so to maintain the freeze in the meantime will mean one less thing to worry about. That is still sensible thinking.
There will be a huge financial hole to fill soon and we must think of new ways of making real efficiency savings. I'm not talking about shaving bits and pieces, but taking big steps like amalgamating local councils. Making them bigger. So Aberdeen and Aberdeenshire/Moray, Dundee and Angus, Stirling and Clackmannan, the three Ayrshires, the two Renfrews/Inverclyde, the two Dunbartonshires, etc..
This has already been talked about by leading councillors, in fact the quote I remember was "there should be no sacred cows" in reference to possible amalgamation. We need to think and move with pace to solve this mammoth issue and not get caught up in electioneering.
Have to disagree with you on this post. Lets not forget that is is New
Labour irresponsability which has councils struggling up and down the country. For example, according to the Beverage Report, an estimated £800 million will be spent on PFI/PPP repayments. This amount of money has been disappearing from council's budgets since 2003, and shows no sign of abaiting.
Those advocating Council Tax increases seem to imagine that people will be able to afford an increase no problem at all. This will not be the case. People will struggle, bearing in mind that inflation is still at 3% after 2 years of wage freezes. Gas & electricity prices shot up by a ridiculous amount, and the price of food is still rising. A council tax rise is the very last thing this country needs.
Of course if Gordon Matheson is looking for ideas for cuts, his very first cut should be his £60,000 salary.
Math Campbell: For your interest, Scottish Councils pay out a combined total of £44 million in "consultancy fees", Renfrewshire Council's share is about £1 million.
Fair enough, lots of good reasons to hold firm (an unfair tax, punish Labour for opposition to LIT, ) but this is largely from people who, as far as I can tell, favour fiscal autonomy because there's little point in a democratic body spending money it doesn't raise.
Is there not similarities in the weaknesses between the UK Governmentt determining the Holyrood budget and the Scottish Government determining the Council's budget? Just imagine any council leader going on about 'not having the financial levers to guide their area through the storm' and you get to thinking of a certain First Minister...
Sure, LIT ad/or LVT would be great and it's a shame the 3year freeze didn't lead up to Local Income Tax but it's not going to happen before 2012 at the earliest. We can't realistically implement 33% cuts up to that point in some areas while all people, rich and poor, pay the same. Or less in real terms.
I daresay the points about cutting back more waste is perfectly valid. I heard of an adult literacy and numeracy course being cut back in Edinburgh for the sake of £10k a year which is peanuts really. Particularly when the showcasing of a fake tram cost £500k so fair enough. I still think there has to be a balance between throwing good money after bad and the game if brinksmanship that will see local services go unnecessarily.
I say leave it up to the Councils to decide. If a political party is confident enough that the local area would prefer a C Tax rise, particularly with 2 sets of elections around the corner, then let them. SNP councils cam simply hold on to the freeze and reap the electoral benefit. Assuming, of course, that that is the correct decision!
Grogipher, fair play on Jim/Joe Fitzpatrick. So close and yet so far...
Andrew BOD,
Just because the Council Tax freeze was a good idea for the first 3 years it doesn't necessarily mean that sustaining it for the 4th year is a good idea too. After all, where does one draw the line? Assuming no LIT/LVT in the future (a strong possibility if Labour win the next couple of elections), should we have 10 years of Council Tax freeze? Even when salaries, costs, fuel etc increases? I just don't follow the logic.
As for the merging of councils, I have to say I'm sceptical. Weren't they broken up for good reason just recently? Why are those reasons no longer applicable? I think a tightening of belts and keeping things as they are is a better bet.
We can learn from England even and have councils specialising in certain areas of provision with other councils relying on them to provide such services. Is that not preferable to gargantuan 'Stratchclyde' councils.
Jeff
I agree that the policy of freezing should not go on indefinitely. I believe it should go on until there's a bit more economic certainty and solid growth. Certainly until the Holyrood election.
At this stage it looks as though Labour may win and if they want to change it they will have the opportunity then. The SNP Government have few economic levers, but this is one of them. If they lift the freeze at this stage, I believe they will create more economic uncertainty in Scotland, will be left looking weak, and will certainly be criticised by opposition parties about a major policy u-turn.
If they feel pressured at all into withdrawing the freeze, a compromise might be to agree a low increase percentage cap with COSLA to limit the affect on taxes, thus maintaining a degree of economic stability.
In terms of creating larger local authorities, the last restructure was fourteen years ago. The reason behind restructure was to move from two-tier to unitary. I see no reason to return to gargantuan Strathclyde or even Lothian, but some of the current authorities are mighty small, and some 'natural' regions/districts have been split up 'unnaturally'. Others have already realised efficiency savings by working together on various levels of provision. That's fine, but much greater savings will have to be made, and the only large-scale way to do this is by amalgamating administrations. Less Chief Executives, less head of depts, and possibly less councillors, would help to make those savings. As I had said earlier, this idea has already been mooted in more than a few local authority areas.
Although we probably disagree on this, it's again refreshing to see you agreeing with Labour, and at the same time being generally supportive of the SNP. This kind of non-partisan viewpoint is essential if politics in Scotland are to make a real difference. I applaud you for that!
Jeff you are wrong with your title as Labour are economically illiterate and that's being soft. You seem to be unable to grasp that Scotland contributes far more to the UK pot than it it gets given to keep it under domination.
Why no shouting that tax evasion as being a good way of reducing the deficit by over £70 billion, what public services would that protect.
Why accept cuts like sacrificial lambs rather than target the biggest criminals in the UK who are the most well off who are getting away scot free.
If they threaten to leave just wish them "Bon voyage" as leeches are just that.
Utter nonense Jeff.
Glasgow City Council is trying to argue that unless council tax is increased frontline services to vulnerable people will suffer.
There are two points to that.
1. This is emotional blackmail of the worst sort. They should not cut services to vulnerable people under any circumstances and in most cases will not even be able to because they are statutory services. They CAN cut spending on non-essential services.
2. Vulnerable people are the people who are most likely to suffer from a council tax increase. It is a completely dishonest, bogus and stupid argument to threaten, as Cllr Matheson did, to increase care charges if council tax continues to be frozen. People who would be hammered by an increase in care charges would also be hammered by an increase in council tax! Saying we will prevent increases in care charges by increasing council tax is just incredible. You may as well increase the care charges!
The council tax freeze should NOT be lifted until something is done about its regressive nature. It is a disgrace that Labour don't care that council tax rises will hammer pensioners and low income workimg households the hardest - and that won't go unnoticed in Glasgow.
We all know that, politically, Labour cannot support the SNP's LIT proposals. But they should be arguing for a short-term compromise such as increasing council tax for the highest bands only. That way low income families and pensioners could be protected. Any party which claims to care about the poor should understand that.
I would be sceptical on the consultants figures because Councils do not record expenditure in the same way.
It could easily include offices temps, people on short-term contracts, specialist music teachers, architects fees, etc.
Raising the Council Tax isn't the answer.
In the highlands where I live the Council needs to find £40m in the next few years and a 1% increase in council tax raised £1m.
So you can avoid a small part of the cuts with a small rise or a large part of the cuts with a large rise.
The current Labour line seems to be pushing the idea that if they could raise the Council tax by a little they could avoid the cuts all together and that doesn't wash.
Currently the £70m to freeze the tax from the Scottish Goverment is worth about the same as a 3.5% increase in the Council tax.
So a 1% rise costs about £20m.
With cuts expected over 4 years of £1.5bn and about a third of Scottish government funding being on local government (remembering that the NHS is to be protected from cuts) we are talking about probably close to £700m needing to be found by Councils.
To fill that gap with council tax increases would probably need in the region of a 10% rise each year for most of the next term of Scottish Councils.
Interestingly so far no advocate of raising the tax has come anywhere near spelling out what kind of annual increases they want to introduce and don't hold your breath waiting for details.
In reality what would probably happen is this;
Individual councils would go for 3% to 5% rises to keep the most unpopular cuts off the table, but the scale of the problem and its on going nature would mean that those cuts would be back on next years agenda.
The result is a sort of emotional blackmail where you have to keep paying a higher and higher amount to save the thing you love that is being held hostage.
Over the term of a Council to avoid cuts worth 3% to protect popular services you'd probably end up seeing an increase close to 15%.
I am no fan of the Council tax but if a freeze can't be maintained then my option would be a new concordat.
The government and Cosla signing up to LIT at an agreed rate for the duration of the new Councils from 2012 to 2016 with a review in 2014 to agree the rate for 2016 to 2018.
That way the Public the Councils and business would know what they would be getting or be charged and we wouldn't run the risk of Councils putting tax up year on year to protect services adhoc based on who shouts loudest.
The original idea if the Scottish Government could access council tax benefit money was for a 3% LIT rate. given calman and the rise in the Tax threshold towards £10k I think realistically we might be looking at LIT at 5% for 4 years.
That would be stable but I am not sure how many scottish household could sustain it on top of Osbornes tax proposals or what it might do to the Scottish economy.
Peter.
In the document that sets out the terms of the Concordat, the council tax freeze is listed in amongst policies such as the provision of free school meals and many other things that councils have not found possible to deliver. The reason why the Concordat has not broken down following the realisation that these policies would not be delivered is because it is in neither the government or local authoriies' interest to do so.
Peter, when you talk of a "new concordat" do you mean changing the priorities in the next Parliament? If so, I believe that should happen every Parliamentary term and is only right because if you look at the priorities set out in the link below you will see that they are likely to change. HOWEVER, having these priorities at all is actually against the spirit of the Concordat because the Concordat changes the way that council finance works, moving from an input focus where you are given a certain amount of money to achieve a certain aim, to an output focus where you are saying 'how can we most effectively spend money to tackle a certain problem. So policies like 1000 extra police are an input, whereas an output focused version of the same kind of policy might ask 'how can we most effectively reduce crime in our commnity?'
http://www.scotland.gov.uk/Resource/Doc/923/0054147.pdf
L,
Thanks for the comments.
I think we should renew the Concordat every term and I agree with you on the 1,000 extra Police.
In a way the first Concordat and SNP government is half way in what should be a huge culture change for Scotland.
We should be moving from input to output as, for all they had public support, we got ourselves into a situation where Police or Teacher numbers or Record spending and Investment, where seen as ends in themselves not means to an end.
It became like "Soviet Tractor Production"; You praise yourself s for more tractors while people go hungry.
The difficulty for the SNP is that, as that had become the political terrain over a decade of "Education, Education, Education" and "Record spending on the NHS" they were drawn to match it with 1,000 extra bobbies on the beat and the like.
They had to over at least some more of the same to win even if they didn't think it was the best way to go.
Unfortunately I think we might see it happen again to an extent in May.
Kenny Mackaskill got a lot of flak over progress on that promise in the first year.
However, he spent most of that time trying to free up resources first because he knew that to actually cut crime we needed to make sure they new officers were used in the right way.
Higher numbers on there own won't solve the problem.
If you look at Labours attacks over teacher numbers and jobs for new qualified ones the focus has been on it being a disaster that there has been a fall in absolute teacher numbers;
But is it?
That's a top down approach, the input view.
The output view says;
Get in right for the kid and the class, then the school and then the Council.
If we are doing all that iand getting results and then when you add all the teachers up and its less than before thats not a backward step..... its progress.
I'd like to see more freedom for councils to focus locally on outcomes we all want, but a concordat where we agree those outcomes together is far better than rule by decree based on the winning parties manifesto.
As to Council tax, I think setting it for a parliament by agreement is better for the public and the nation than each council making an annual choice for itself based foremostly on its own budget problems.
we all need to be taking a wider view of where the economy is and is going and what the public can afford.
Peter.
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