Assets sale plan to cut council tax by £200 per household

Published on Sunday 10 December 2006 00:55

SCOTLAND'S councils have been told they should get rid of nearly £350m in surplus assets to cut council tax by almost £200 per household.

Tom McCabe, the Scottish finance minister, has warned that there needs to be a more "professional" approach to the management of assets.

Officials estimate there could be as much as 346m worth of surplus land, property and other assets such as vehicles - a sum which could potentially equal about 17% of the 2bn raised across Scotland in council tax each year. A 17% cut in the average Band D Scottish council tax, which stands at 1,130, would cut the charge to 938. But local authorities have questioned the Executive's conclusions, and say they already sell off surplus possessions to help balance their books.

McCabe's remarks came ahead of this week's announcement on how much cash ministers will give local councils in order to finance key services. The money, known as the Revenue Support Grant, will be in the region of 7.7bn.

McCabe said that the council tax in its current form had "lost credibility" and said it was in need of reform, but was unwilling to be drawn on what kind of reform he envisaged.

Legal restrictions on how cash raised from selling off capital assets can be spent mean the money could only be used to help finance other capital projects such as new roads or new schools and could not directly be used to dramatically slash council tax bills.

The cash could help reduce council tax if it were used to pay off borrowing on new spending projects, such as PFI schools, which right now eat up cash in council budgets.

According to officials, the 346m already known to be surplus is just part of the 21bn of local councils' assets held across Scotland.

While the vast majority of these cannot be disposed of without impacting on services, the Executive believes that the 10.2bn of land and buildings held by councils holds potential for further savings over and above the 346m figure.