Argyll and Bute Council has become the first local authority to reject a nationwide council tax freeze, as others weigh up whether to also defy an ultimatum laid down by the Scottish Government.

Councillors voted to hike council tax in Argyll and Bute by 10 per cent, with Inverclyde and Orkney understood to be contemplating a similar move.

Council leaders said the increase, which will see charges for an average Band D property rise to £1,627.12, was necessary to help save local services. It comes after the Government pledged an extra £62.7 million for councils as a “significant offer of compromise” in a row over funding.

First Minister Humza Yousaf. Picture: PA

Humza Yousaf announced a council tax freeze during the SNP’s party conference last year without consulting local authority leaders. At the time, the First Minister vowed to “the people of Scotland that next year, your council tax will be frozen”.

Councils were later warned they would not get a share of the £147 million the Government had allocated to fund a freeze equivalent to 5 per cent if they increased the tax. The Scottish Conservatives said the decision by Argyll and Bute showed Mr Yousaf’s freeze was “no more than a hollow boast and gimmick”.

Deputy First Minister Shona Robison claimed the “disappointing” decision would leave the authority £400,000 worse off than if it had taken the funding offered by the Government.

“It will be for them to explain why they have chosen to ignore the additional funding that I set out yesterday for local authorities, and explain why they are increasing the tax by 10 per cent in the middle of a cost-of-living crisis,” she said.

“The funding we offered for the council tax freeze, as well as the increased funding offered yesterday, is higher than the amount that would have been raised by the level of council tax that the council’s own officials suggested was needed for a balanced budget.

“To date, almost 50 per cent of the population will see their council tax frozen, with ten councils confirming that they will take forward the freeze, and one more publicly stating its intention to do so. This will benefit council tax-payers at a time when the cost of living crisis is putting significant strain on household finances.”

Local authorities who have now voted to implement the freeze include Edinburgh, Glasgow, Aberdeenshire, the Western Isles, the Scottish Borders, North Lanarkshire and South Lanarkshire.

But Stephen McCabe, the leader of Inverclyde Council, which has yet to set its budget, praised Argyll and Bute on social media. “I salute your indefatigability,” he wrote. Orkney Council has also raised the prospect of a hike.

Argyll and Bute Council leader Robin Currie said a council tax increase was required to fund local services. He said the authority faced a “multi-million-pound budget gap” that threatened “council services people use every day”.

The Liberal Democrat, whose party is in a ruling coalition with Tories and independent councillors, said: “Our focus has to remain firmly on supporting people now, and on building the sustainable future we all want for Argyll and Bute. That focus cannot slip away in the face of severe and ongoing budget gaps.

“This service-saving budget is only possible with an increase in council tax. Council tax funds council services. Increasing council tax saves services.”

Speaking about the 10 per cent increase, he added: “It was a difficult decision to take, but it is the responsible one. Council tax reduction benefits are there to help those in greatest need. Communities across the area can continue to rely on the council services and support they need.”

Councillor Gary Mulvaney, the policy lead for financial services at Argyll and Bute, added: “The Scottish Government funding settlement available to the council on the basis of a council tax freeze would have meant cuts to services.

“Decisions made today keep services going for our communities. Decisions made today keep investment going in Argyll and Bute’s future.”

Scottish Conservative shadow finance secretary Liz Smith said: “This rise is a blow for those in Argyll and Bute, but it illustrates the impossible position councils have found themselves in after years of SNP underfunding and mismanagement.

“It also shows that Humza Yousaf’s unilateral decision on a council tax freeze was no more than a hollow boast and gimmick to please his own party members at their conference. There was no consultation, and Shona Robison’s combined threats and bribes did nothing to fix the black hole in council budgets.

“The SNP’s years of incompetence and neglect have led to savage cuts and crumbling public services, and left councils with no option but this rise, which thoroughly exposes the appalling failure to provide for essential services.”

On Wednesday evening, Ms Robison announced councils would get an additional £62.7m – with this made up of £45m due to the Scottish Government as a result of spending in adult social care in England, and a further £17.7m increase in the general revenue grant.

In a letter to local government leaders, Ms Robison said: “We will be allocating an additional £62.7m to councils in Scotland for them to use as they see fit. In the context of the wide range of demands on the Scottish Budget and challenges across the public sector, I consider that this is a significant offer of compromise.”

Councillors in Edinburgh separately voted for a council tax freeze on Thursday, along with record spending on roads and pavements and more money for schools and buses, as part of the city's budget for 2024/25.

Savings are expected to come from a reduction in the use of contract and agency staff. But there was criticism of plans to spend £500,000 on celebrating Edinburgh's 900 years as a city and a warning of serious cuts to come in health and social care. The council also agreed to raise council house rents by 7 per cent.

A three-party deal avoided a repeat of last year's budget embarrassment when tactical voting by the Greens meant the minority Labour administration's package was defeated and the Lib Dems' alternative proposals were approved.

Intensive negotiations between the parties led to the Lib Dems and Conservatives voting with Labour to pass the budget in return for extra spending on their priorities.

The council agreed to freeze the council tax, in line with Scottish Government policy, on the grounds that to do otherwise would result in a loss of government funding.

Finance convener Mandy Watt said: "It is not a good look from our residents' point of view to be saying we need more money from the Scottish Government and then effectively handing back nearly £17m to them and asking our residents to make up that difference. That's why, with some reluctance, we have incorporated the council tax freeze in our proposals."

It means the council tax bill for a Band D property in Edinburgh will remain at the current £1,447.69 for 2024/25.

Councillors also voted to freeze council tax in Fife on Thursday in agreeing the local authority’s budget. But council leader David Ross said: “It should be for democratically elected councils to decide their own council tax dependent on local needs, and not from Scottish Government based on threats to our funding.”

Argyll and Bute Council rejects freeze and hikes council tax by 10 per cent

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