BETWEEN 2011 to 2017 the SNP Scottish Government cut funding to Scottish councils by 3.7 per cent, taking a whopping £1 billion from council budgets and in turn public services.
This is despite the fact that last year Westminster gave the government a revenue cash increase of 2.2 per cent — a capital cash increase of 10.3 per cent, plus it has additional borrowing powers of up to £450 million.
Despite this increase in income and powers, the Scottish government chose to cut funding to local government in Scotland by £350m.
A cut made less savage through an intervention by the Greens but a cut none the less for Scottish councils. For the first time since they came to power in Holyrood in 2007 the SNP relaxed its council tax freeze (the tartan equivalent of Thatcher’s rate capping ) in 2017 and councils such as Edinburgh took this opportunity and raised tax for bands E to H.
Even then the Scottish Government had the cheek to take some of this uplift for one of its own policies, giving money directly to head teachers and giving councils the problem of filling the gap from the amount robbed from them by the government.
Edinburgh is a good example of the real financial problems councils face. Edinburgh’s revenue budget of £967.9m for 2017/18 is comprised of three main sources: general revenue funding of £346.5m, non-domestic rates of £355.1m, and council tax of £266.3m.
The Scottish Government, not Westminster, determines the general revenue funding and non-domestic rates funding. Until this year council tax had been frozen for ten long years by that government as a condition of grant with penalties threatened on any council bold enough to attempt to raise funds through this source. This meant that Holyrood, not Westminster, controlled all three main sources of council funding till this year.
Anti- or pro-austerity?
This control has seen the council budget and its workforce reduce drastically. In a recent communique to all staff, the chief executive pointed out that in the last five years alone, Edinburgh made cuts of £240m in the last five years.
It has reduced its workforce from the full time equivalent (FTE) of 15,589 in 2011 to 14,143 FTE in December 2016 . To date, the policy of no compulsory redundancy has been adhered to but for how much longer isn’t clear, given the funding situation outlined in the budget consultation by Edinburgh. This just went live for comment.
The wider context of funding for Edinburgh also needs to be taken into account. The Scottish Government has chosen the context of one year only for the budget despite the long-term context and the need to plan ahead. Audit Scotland has helpfully provided a wider context in its audit report for Edinburgh for 2016/17.
It commented that Edinburgh needs to make further cuts of £142m and should expect a reduction in grant revenue funding of £59m up to 2020-21. This is on top of the cuts of £240m already made.
Factoring in demographics, wage rises, city deals and other factors takes this figure of £142m to as much as £204m by 2022/23. The need for long-term planning is essential, unless of course the long-term plan is to absorb local government.
So what can be done? Westminster will announce the block grant for Scotland in November. A cut will inevitably mean even deeper cuts from Holyrood. A standstill grant means a case can be made for at minimum a standstill grant to councils. An increase in the block grant means a case can be made for an increase in grant to councils.
The second main source of funding for councils is non-domestic rates. Holyrood has direct control of this and can make decisions which help bring more funds or take away funds from councils. It is however their choice.
The third main source is council tax. Despite a promise made by the SNP in 2007, no action has been taken on this source of funding.
This means that in Edinburgh council tax banding starts at properties in this city below the value of £27,000. Believe it or not there are 23,667 properties in Edinburgh in this band.
Raising tax on property values set on April 1, 1991 , especially in a city where the average house price is £246,000, is a nonsense. This was recognised by the Scottish Government which, working with Cosla, commissioned a report published in December 2015.
It concluded that “the present council tax system must end“ and entrusted that its report would be taken forward in the form of primary legislation being enacted. This is still to happen despite the SNP saying it had the solution to local government finance in 2007.
Despite craiking on about the need for more powers, it has proved remarkably reluctant to exercise its powers despite its policy position and its commission.
Incredibly, though, the Parliament did find time in its busy schedule for a Bill to dock puppy dog tails. Its choices to ignore its policy and its commission and to use the powers it has to make change are choices made in Holyrood and both choices are a dereliction of duty.
Edinburgh is not alone in facing a crisis in local government funding. The cuts are being made all over in Scotland but with its own legislature powers and the report from 2015 it has the ability to change funding for public services for Scotland, not just for Edinburgh.
It is cartoon politics to portray Westminster as the baddie in respect of funding and powers for councils when there is a steadfast refusal by Holyrood to use its powers to prevent cuts to councils.
The consistent approach by the SNP is to take powers away from councils, offload cuts on them, refuse to accept its own evidence provided by its own commission, refuse to use its powers and threaten to take even more power away from local government.
It is not just fully and properly funding councils that are at stake in Scotland; it is the future of local government. Councils in Scotland of all political complexions have a real fight on their hands.
This article first appeared in the Morning Star
Featured image Scottish Parliament by Ryan Knight CC BY-NC 2.0