Let’s have a council tax freeze – oh, that’s a good idea!

Someone must have said that seven years ago before the SNP first introduced a council tax freeze.

How well it fitted with the prevailing SNP orthodoxy of freebies for hard-pressed ordinary, and hopefully SNP-voting, folk. It went along with no tuition fees in higher education, the abolition of bridge tolls, and other populist measures.

Well now it’s a chicken coming home to roost. Councils across Scotland are saying ‘So much and no more. We either increase the council tax or we cut services dramatically.’ In their consultation of residents some are even finding people are saying they’d be willing to pay more. And one, Moray, has confirmed its intention of increasing the tax in 2016/17.

I’ve written on this before (see footnote below) but now seems a good time to reiterate some of the problems of the council tax freeze and add some more.

Year by year a council tax freeze funded by increased Scottish Government grant decreases the proportion of council income raised directly from local taxpayers and from fees. That decreases the accountability of councils to their electorates and increases their reliance on the Scottish Government. To be blunt it diminishes local democracy.

In demonstration of that fact, every year extra government funding has been tied to an agreement (read requirement) for councils to do certain things. In 2015/16 these included access to free school meals for P1-P3 children and ‘extended pre-school entitlement’ (jargon for nursery education). Any of those individual priorities might be worthwhile but they might not have been any particular council’s preferred way of spending its money.

Assuming that larger houses are, by and large, occupied by wealthier people, they benefit more from a council tax freeze than poorer people.

Given the impact of inflation, a council tax ‘freeze’ is in fact a council tax cut in real terms year on year. Total UK inflation since 2009 has been about 19% (calculated here) so anyone paying £1,000 of council tax each year would now actually be paying about £810 in 2009 money.

People may not be paying more council tax but they pay ultimately for the freeze through their general taxation. It’s not ‘free’ money.

It will be interesting to see whether individual councils do increase their council tax levels in 2016/17. It’s a tricky calculation politically with the Holyrood elections due in May. To take the example of Moray, with a Conservative/Independent administration, would the Conservative party suffer in May in the local constituency and regional polls if council tax has gone up? Or might some parties in some areas say ‘What the heck, SNP are going to do so well in May [unfortunately – ed.] what’s it matter?’

And what of the SNP? Will councils with SNP administrations be under strict instructions from HQ not to increase council tax levels under any circumstances? Will they crumble under local pressure to preserve services? Nationally will they tough out any adverse reaction to increased council taxes? Or will John Swinney magic up some extra money to make yet another freeze just about achievable for one more year?

Two wider issues are clear. First, no political parties like the council tax as it stands. That’s why the Commission on Local Tax Reform was set up. But second, all parties know, although they won’t say, that its reform or replacement is going to be a tough call. That’s why the Commission didn’t make a single recommendation but presented options for the parties to consider. It’s also why the parties themselves didn’t object to that bland and arguably feeble conclusion and were happy for action to be kicked into the long grass of the next parliament.

On the assumption that we’re going to have another SNP government post-May it will be interesting to see if (I’d wager ‘how’) they fudge the council tax replacement in their election manifesto and what they actually do after. Some of us will be watching with a keen interest.

Footnote. If not sourced directly above, the facts cited here can be checked in my previous article on this blog about the freeze, or for a more dispassionate and technical analysis of the unintended consequences of a freeze, on my other blog.

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One Response to Let’s have a council tax freeze – oh, that’s a good idea!

  1. Niall Murray says:

    “People may not be paying more council tax but they pay ultimately for the freeze through their general taxation. It’s not ‘free’ money.”

    The question here though is who pays? The people who are paying through general taxation are not the same group as those who pay through council tax, though there is obviously a large overlap. You can look at this as free money for the better off (who are paying tax at all levels) by dragging the worse off into the group of people funding local services. Another SNP transfer form poor to better off in other words.

    Liked by 1 person

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