City chiefs call for review of Scotland's council tax freeze

Published on Wednesday 2 September 2009 09:43

CITY council chiefs have called for a review of the Scotland-wide freeze on council tax which has seen bills pegged for the past two years.

They said that in the current economic situation local authorities needed to have at least the option of raising tax rates to make sure they had enough money to deliver essential services.

And they also warned that some of the commitments made by councils in their concordat with the Scottish Government – which include cutting class sizes, improving school buildings and providing extra support for carers – might have to be reconsidered.

The comments were included in a written submission from council officials to the Scottish Parliament's local government committee. But today city finance leader, councillor Phil Wheeler, distanced himself from the idea, saying he doubted if an increase in council tax was a realistic political option.

Council taxes have been frozen at 2007 levels since the SNP came to power at Holyrood, with local authorities rewarded with extra cash in return for agreeing to leave their tax rates unchanged.

The freeze was included in the concordat between councils and the government which included commitments on a range of local authority services.

But the council's paper outlined the increased demand on council services such as debt advice, housing and social care during the recession, at a time when there was less money coming into council coffers.

It warned: "The longer the recession continues, there are possible additional pressures resulting from higher levels of unpaid council tax and other sums due to the council."

And it said the council's "balancing act" would become more and more difficult as the squeeze continued.

"There may be a requirement to reconsider specific commitments within the concordat."

And it added: "The appropriateness of an ongoing council tax freeze requires to be reviewed."

Professor Alan Alexander, a member of the Accounts Commission which oversees local government, told MSPs yesterday that Edinburgh's submission was a good description of how demands on councils were increasing thanks to the recession.

He continued: "There is a perfect storm for local government here. They have that increasing demand; they cannot raise council tax; and there is going to be little if any increase in the money that comes from the centre."

Cllr Wheeler said Edinburgh had received around 7m each year in return for freezing the council tax.

He said: "We would have to have a good reason to walk away from that. We would need to raise council tax by quite a bit to make up for the loss of that subsidy."

He said there would be a major political risk in putting up the tax after it had been frozen for two years. "I don't think it's realistic unless the government were to abandon the penalty. As long as they are prepared to pay the subsidy, we are better to stick with it."