Meeting of the Parliament 26 February 2015
The commission may choose to advise on the benefits and merits of each of the different options that it considers. If it provides an informative report outlining the range of available options, it will then be for the political parties to decide what to do. My party, for example, does not believe that a local income tax is the best way forward, but other parties may want to make a case for that option. If the commission is able to consider the merits of local income tax versus property tax, all that information should be there and should be useful.
More important—certainly from the discussion that we had at the first meeting—is that we will, I hope, engage with civic Scotland, with local government itself and with communities and individuals right across Scotland to discuss the merits and the principle of local taxation and local people paying for local services. There is a wider discussion and a wider debate to be had; I hope that the commission will, in the short timescale that has been set, be able to have that discussion and debate and engage people right across Scotland, because there is no doubt that the council tax freeze has been popular.
Right now, the Labour Party takes the view that it would be wrong to introduce increases in council tax charges when people have, in effect, had a wage freeze for the past four or five years and are currently facing a crisis in relation to family budgets. There needs to be a discussion with communities and with people across Scotland about the type of local government finance that they want. I read a report by Common Weal the other night, entitled “The Silent Crisis: Failure and Revival in Local Democracy in Scotland”. The report highlights that in 2006,
“the Local Government Finance Review Committee”
of this Parliament reported that
“there is the fundamental question about what the relationship between central and local government should be. There is long-standing and unresolved debate about their respective roles. The Committee’s view is that it is essential that the Scottish Parliament, the Scottish Executive”—
as it was then—
“and local authorities grasp the nettle and resolve what appears to be a corrosive argument about their relationship.”
That was back in 2006; we could argue that not a lot has moved on since then. Just in the past couple of weeks, the Cabinet Secretary for Finance, Constitution and Economy has been threatening to cut the budget to local authorities over the issue of teacher numbers. The ridiculous part of that is that local authorities across Scotland do not want to cut teacher numbers but need the money to be able to provide the education service in the first place.
The debate about local government and funding local government services seems to have been going on for some time, but has not been resolved. In 2007, we had a minority Scottish National Party Government that was committed to a local income tax. By 2011, when the SNP had a majority, a local income tax did not seem to be as popular, or perhaps it did not look as though it would actually work. We have travelled some distance, but we have not made a lot of progress when it comes to financing local government. I hope that some of my colleagues will highlight in their speeches why local government is so important and why we need to find a way forward.
Last year’s report by the commission for strengthening local democracy, which was chaired by COSLA, stated that
“50 years ago”
local authorities
“raised well over 50% of their own income through local taxation. As recently as 1998, around half was still generated this way.”
However, it went on to state that
“Today that has fallen to 18%.”
I contacted a number of council leaders. I got an interesting response from Gordon Matheson, who is the leader of Glasgow City Council. He said:
“I am disappointed that the remit of the group narrowly focuses upon council tax, which accounts for 17% of funding to local government and ignores the 83% block of funding that is allocated by the Scottish Government, typical of a highly centralised Scottish state. This is a major omission.”
He went on to say:
“Since 2008/9, Glasgow’s percentage share of the available local government settlement has reduced from 13.91% to 12.81% for 2015/16. In cash terms, this equates to a difference of £109 million for ... 2015/16 ... The distribution formula has a greater impact on Glasgow than the council tax freeze”.