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Plenary, 12 Jan 2006

12 Jan 2006 · S2 · Plenary

Item of business

Local Government Finance

Gordon, Charlie Lab Glasgow Cathcart Watch on SPTV

To a greater or lesser extent, each of the Opposition parties in the debate claims that it wants enough money for local councils, partially or wholly funded by a new and more popular type of local taxation. I have news for them: there is never enough money and people never like paying taxes. Those are just two of the lessons that I have learned during years of trying to make sense of the byzantine complexity of local government finance.

For me, the learning curve has been steep and long. Alas, like some here I could mention, I cannot claim to have run away from the circus as a boy to join a firm of chartered accountants. On being elected to Strathclyde Regional Council in 1987, I found finance dry and boring. I found service issues such as transport and education to be sexier. When I became Strathclyde's transport convener in 1994, it was quite a shock to have to fight to retain my £0.5 billion budget in a tough, competitive, corporate budget round. The first lesson that I learned was that all services, sexy or otherwise, have to be paid for from a balanced budget.

However, I suspect that most politicians do not like to talk about finance. Many do not like to think about it and too many still do not understand it. I know that I did not feel confident in 1997 as deputy leader of Glasgow City Council, when my leader, Frank McAveety, asked me to take control of Glasgow's £2 billion budget. I sent for the director of finance—the legendary Jimmy Andrews, who gave 50 years of service to Glasgow. I pointed at a pile of budget papers on my desk that was too heavy to lift and I asked a technical question: "Jimmy, what's the answer to this dead hard sum?" "What answer would you like, councillor?" he replied. I felt a great weight lift from my shoulders. I was not alone. Budgeting was not a science, but an art. That was another lesson learned.

Years ago in the United States of America, a persistent bank robber was serving his last and longest jail term when he was visited by a young sociologist—I see that Des McNulty has left, which is a pity because he is a sociologist—for a research interview. The first question was, "Why do you rob banks?" The answer came, "Because that is where the money is."

Behind such obscure jargon as aggregate external finance and revenue support grant, it is all about money. That is a fact for me and every other member, for councils, for the Executive and for the Government. If we had more money, we could do more things with it. If the money is under the control of elected councillors, they are directly accountable to their electorate for the services they specify and the taxes that they levy.

John Swinney's motion calls for the national taxpayers of Scotland to give an extra £93.2 million to local councils on the condition that there is a real-terms freeze in council tax. Let us leave to one side the plain fact that to the man on the Sauchiehall Street omnibus, a council tax freeze means a zero increase, which the SNP's obfuscation would not deliver. Let us explore the SNP's condition or, as it is called in the jargon, ring fencing. Imposing that condition is wrong in practice because it removes the choices that having more money could bring to councils. It is also wrong in principle because it usurps the role of elected councillors. Perhaps John Swinney is a centraliser by inclination; it is a species that is represented in every part of the chamber after all. If so, I wonder what he would do if councillors used the cash for other things and ignored his condition. Would he make the cap fit, so to speak?

In 1996, the Tories' botched reorganisation of local government removed £400 million from Scotland and £50 million from Glasgow. In the three years after that, Glasgow's council tax rose by 50.5 per cent but, in the seven subsequent budgets, there were no above-inflation increases. Glasgow's gross tax increase in the past five years has been 10.9 per cent against a Scottish average of 23.5 per cent.

The SNP has a brass neck today because it has resisted every one of Glasgow's attempts to reform the local finance system.

Time is short in the debate, so this speech will have to be foreshortened. Obviously, the Burt committee has its work cut out. We need reform not abolition of the council tax. Also, if we reform the grant system, we had better remember that it is a zero-sum game and there will be winners and losers. Burt and his colleagues have much straining to do; let us hope that their straining produces more than a mouse.

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Plenary, 12 Jan 2006

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