Eyes are on the UK Budget at the moment, and for good reason, but shortly after that we’re going to see what the Scottish Government lays out in its own budget and, given the scope of devolution, that is likely to have much more of an impact on Scottish public services – especially at a local level.
This means that recent news from Shona Robison telling Local Authorities that there’s “no money left” for public sector pay deals should be taken as a threat to local democratic autonomy.
Usually when I write an article like this I start by saying “imagine if Westminster treated Holyrood like this” but in this case I don’t really need to as we have the example of the UK Government’s cut to Winter Fuel Payments in England having a knock-on effect on the Block Grant which put Holyrood in the position of making the choice on whether to cut the equivalent Scottish allowance too. They didn’t have to – the Block Grant is calculated based on how Westminster spends money in England but Scotland is free to spend that Grant as it likes, not just on equivalent policies. In this case though, they did indeed choose to cut the payments.
Yes, the choice was somewhat of a Morton’s Fork in that the alternative was to increase a tax or cut spending elsewhere but, and this is the key difference between Holyrood and Scottish Local Authorities, they did have the power to introduce said tax and chose not to.
Lack of control
The current argument is different in that while Local Authorities could make cuts to services to fund a pay rise – not that such cuts will be easy given that many Local Authorities have reduced their services to near their minimum statutory functions already after years of cuts-after-cuts – they do not have the power to introduce new taxes by themselves, not even new taxes covering only areas within their devolved control. The only control they have in that respect is to introduce things like service charges which is why the price of your local leisure centre is likely to go up and why my own South Lanarkshire Council is introducing an annual fee to uplift garden waste (instead, strangely, of providing better composting services or charging to uplift NON-compostable or recyclable waste).
Instead, it is up to the Scottish Parliament to legislate to “allow” Councils to bring in new taxes – which we are seeing in some small but not unimportant areas such as the new tourist tax and the proposed cruise ship levy (the latter of which isn’t likely to be of much use to land-locked South Lanarkshire) so the precedent is there but there is still so much more that could be done. We often talk about the amount of financial and actual power that Westminster has over Scotland but if anything it’s potentially worse looking at Scottish Local Authorities from Holyrood. Where the Westminster Block Grant to the devolved nations is decided by the Barnett Formula, the Scottish Local Authority Block Grant is decided purely by Holyrood and many political games have been played with it including reductions if Councils try to increase their own devolved taxes (like Council Tax) or threats of reprisals if they don’t follow ill-conceived election manifesto promises.
Not that Local Authorities have much scope to adjust those taxes given that the two main ones – Council Tax and Non-Domestic Rates – make up less than a quarter of total LA funding and less than half of what is received in the Block Grant (and this is before we consider things like Holyrood imposing ring-fencing on Council expenditure, again often to meet centralised election promises.
Nae money
The truth is, when Shona Robison says “there’s no money left for pay rises” what she actually means is that she neither wants to give Local Authorities that money nor wants to give them the power to raise that money for themselves lest they decide that they don’t need to bow to the next threat of a reduction to force a Council Tax freeze. The Scottish Government would rather strangle Local Authorities by the budget purse strings than they would loosen them.
There’s no need for this. While it’s often said that the Scottish Government can’t introduce new taxes, that’s a massive oversimplification. It is very difficult for the Scottish Government to introduce a new national tax (like a new nationally controlled wealth tax) without permission from Westminster but they have almost unlimited power to introduce new LOCAL taxes so long as the revenue for those taxes flows to Local Authorities and not Holyrood. The scope of those potential taxes are vast and have been well discussed here and elsewhere.
For example, our proposal to reform Council Tax into a present-value based Property Tax would have been “revenue neutral” in 2019 albeit much fairer and would have saved more than half of Scottish households hundreds of pounds per year. At 2024 house prices, that same “revenue neutral” rate would raise something like £650 million in extra revenue and still save households money if their house is worth less than about £400,000.
Extending that tax to include land (the present Council Tax taxes – inadequately – the Laird’s mansion and immediate garden, but not their broader estate) could raise around £450 million in extra revenue (Perth and Kinross, heart of the present pay dispute, would receive about £33 million of that from taxing their land).
The STUC have presented other proposals including wealth taxes, aviation taxes and carbon emissions tax which collectively could bring in another £2.5 billion per year. And groups like the SNP’s own Trade Union Group have passed motions at conference around ideas like a local whisky bottling levy that could bring in another £1 billion.
These are not small sums. Any one of those taxes would be enough not just to pay for public sector wage increases but to completely wipe out the projected deficits that Local Authorities are facing. It wouldn’t just stem the flow of cuts but would actively reverse them and allow Councils to start rebuilding their stock of delivering services to local people. I honestly cannot imagine why this is even a debatable point as it seems so obvious that I can’t imagine a rational reason to not do it.
Unless, of course, the point is to keep that firm grip on the purse strings to actively prevent too much Local Authority autonomy – a view that has been expressed to me as a “good thing” by too many in political circles (including elected office) especially when the voters in a particular Local Authority had the temerity to vote for the “wrong” political party.
The Scottish Government has the opportunity to prove me wrong though. My colleague Rory recently took pelters from party people when he last suggested a tax rise to fend off the Winter Fuel Cuts on the basis that while cuts can be announced at any time, new taxes can only be announced at the budget. Well, the time for that budget is almost upon us so I would hope that we’ll get that announcement now. I want to see the STUC’s short term proposals implemented as soon as possible. Commitments made to the slightly longer term changes such as Council Tax reform and the land tax (particularly given that the 2021 manifesto promise to launch a Citizens’ Assembly on Council Tax reform appears to have been broken) and a plan made to bring in the long term tax changes that Scotland needs.
The alternative, of course, is to not do that and to prove us right and tell us that the Scottish Government believes that holding power over Local Authorities is more important than protecting public services.
Or we’re in charge
The truth is, when Shona Robison says “there’s no money left for pay rises” what she actually means is that she neither wants to give Local Authorities that money nor wants to give them the power to raise that money for themselves lest they decide that they don’t need to bow to the next threat of a reduction to force a Council Tax freeze. The Scottish Government would rather strangle Local Authorities by the budget purse strings than they would loosen them.
There’s no need for this. While it’s often said that the Scottish Government can’t introduce new taxes, that’s a massive oversimplification. It is very difficult for the Scottish Government to introduce a new national tax (like a new nationally controlled wealth tax) without permission from Westminster but they have almost unlimited power to introduce new LOCAL taxes so long as the revenue for those taxes flows to Local Authorities and not Holyrood. The scope of those potential taxes are vast and have been well discussed here and elsewhere.
For example, our proposal to reform Council Tax into a present-value based Property Tax would have been “revenue neutral” in 2019 albeit much fairer and would have saved more than half of Scottish households hundreds of pounds per year. At 2024 house prices, that same “revenue neutral” rate would raise something like £650 million in extra revenue and still save households money if their house is worth less than about £400,000.
Extending that tax to include land (the present Council Tax taxes – inadequately – the Laird’s mansion and immediate garden, but not their broader estate) could raise around £450 million in extra revenue (Perth and Kinross, heart of the present pay dispute, would receive about £33m of that from taxing their land).
The STUC have presented other proposals including wealth taxes, aviation taxes and carbon emissions tax which collectively could bring in another £2.5 billion per year. And groups like the SNP’s own Trade Union Group have passed motions at conference around ideas like a local whisky bottling levy that could bring in another £1bn.
These are not small sums. Any one of those taxes would be enough not just to pay for public sector wage increases but to completely wipe out the projected deficits that Local Authorities are facing. It wouldn’t just stem the flow of cuts but would actively reverse them and allow Councils to start rebuilding their stock of delivering services to local people. I honestly cannot imagine why this is even a debatable point as it seems so obvious that I can’t imagine a rational reason to not do it.
Unless, of course, the point is to keep that firm grip on the purse strings to actively prevent too much Local Authority autonomy – a view that has been expressed to me as a “good thing” by too many in political circles (including elected office) especially when the voters in a particular Local Authority had the temerity to vote for the “wrong” political party.
The Scottish Government has the opportunity to prove me wrong though. My colleague Rory recently took pelters from party people when he last suggested a tax rise to fend off the Winter Fuel Cuts on the basis that while cuts can be announced at any time, new taxes can only be announced at the budget. Well, the time for that budget is almost upon us so I would hope that we’ll get that announcement now. I want to see the STUC’s short term proposals implemented as soon as possible. Commitments made to the slightly longer term changes such as Council Tax reform and the land tax (particularly given that the 2021 manifesto promise to launch a Citizens’ Assembly on Council Tax reform appears to have been broken) and a plan made to bring in the long term tax changes that Scotland needs.
The alternative, of course, is to not do that and to prove us right and tell us that the Scottish Government believes that holding power over Local Authorities is more important than protecting public services.
First published by Common Weal and reproduced with the author’s permission
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