City considers council tax rise to close funding gap

Published on Friday 15 October 2010 12:25

COUNCIL tax could still rise in Edinburgh next year despite the SNP's announcement that it plans to continue the freeze.

SNP leaders announced at their conference last week that they would freeze council tax for another two years.

However, senior city council sources have revealed that any decision to freeze council tax in Edinburgh will depend on the detail of Finance Minister John Swinney's announcement in November.

Around 7 million a year has been given to Edinburgh in recent years by the Government as compensation for imposing a council tax freeze. But there is no guarantee that the amount offered will be as high next year.

It is understood that the offer has been taken up by Edinburgh until now because a rise of at least four per cent would have to be imposed in order to make tax changes financially worthwhile, given the level of compensation provided by the Scottish Government.

If less money is offered in return for the freeze next year, council chiefs may see it as more worthwhile to impose a council tax rise on residents.

Council leader Jenny Dawe insisted that if the Government compensation remains the same, the freeze will continue. She said: "For Edinburgh a one per cent rise in council tax delivers 2.2 million a year. In the face of having to find at least 90m of saving, council tax would have to rise to unacceptable levels to make any inroads into our funding gap.

"It would be very imprudent to consider flouting the freeze and thus losing the compensatory funding."

However, if compensation levels are lower than last year, it is thought that council officials may still recommend a council tax rise is necessary.

Any agreement to freeze council tax is likely to also depend on any conditions placed on the freeze by the Scottish Government, such as lowering school class sizes.

Councillor Ricky Henderson, finance spokesman for the Labour group on the council, admitted that if the terms of the SNP's offer remained the same as previous years it would be hard to refuse to continue the freeze. He said: "If what the SNP government are saying is that the circumstances will be exactly the same as recent years then it would be unrealistic to raise council tax because we would lose the 7 million that the freeze is worth."

A Scottish Government spokesman said: "We want the council tax freeze to continue next year, we are discussing the issue with local authority partners, and we will be in a position to consider the matter fully and publish a draft Budget after the UK Government publishes its Comprehensive Spending Review."