FINANCE secretary John Swinney faces a challenge to the Scottish Government’s flagship council tax freeze after Moray became the first local authority to rebel against the policy to plug a gap of nearly £12 million in its budget.
The authority said council tax bills could rise by as much as 18 per cent this year, which would see the annual bill for a Band D property increase by £204.
Mr Swinney’s draft budget last month cut Scotland’s overall local government settlement by 3.5 per cent, which Moray Council said had put services “seriously under threat”.
Moray Council leader Stewart Cree told The Scotsman “a deal with the public” was needed to fund threatened services and that other authorities may now “feel heartened” by the tax decision and follow suit.
He said: “This is something that’s long overdue. It’s a deal with the public. People are going to be taken aback and will find it hard to come to terms with this, but they would find it harder to come to terms with the cuts to services. We’re talking about decimation of essential services, leisure centres, swimming pools and also road repairs. We are responding in the only way we can to an unsustainable situation.”
Other local authorities, including Highland and Fife, are understood to be reassessing the council-tax freeze as they prepare their budget proposals. None of Scotland’s 32 local authorities have increased the tax since the Scottish Government introduced the freeze in 2007, soon after the SNP came to power.
However, the Scottish Government, which has previously threatened to cut the funding of authorities that do not sign up to the policy, said Moray’s decision was “unnecessary and premature”.
Mr Cree said the authority had been facing a financial shortfall of £6.8m for the year ahead, but that figure rose to £11.9m following the announcement of the council funding deal last month.
He warned that services would “continue to deteriorate” under existing arrangements, with leisure centres, swimming pools and libraries in the area at risk of closure. The authority expects to lose £1.1m it received in previous years from the government to offset the council tax freeze but expects to raise £5m from the tax increase.
Mr Cree said the authority’s independent-Conservative administration group’s proposal will be put before councillors at a meeting next month.
He said: “We are aware that we will have penalties imposed on us by the Scottish Government and we will forfeit the £1.1m that we are currently allocated to offset the council-tax freeze.
“However, in light of the scale of the deficit we are facing this £1.1m pales into insignificance when the only alternative would be further cuts to services – or even the loss of some services altogether.”
The Scottish Government said there was “no need” for the increase and stated that ministers had fully funded the council tax freeze.
A spokesman said: “The Scottish Government has fully funded the council tax freeze. Indeed recent independent research found that, compared to inflation, we have over-funded the council tax freeze by £164.9m since 2008.
“Discussions on the implementation of this package of measures are ongoing so the announcement by Moray Council is both unnecessary and premature.”
Local SNP MP Angus Robertson said: “Hard-pressed families in Moray are struggling with the day-to-day cost of living while Tory and independent councillors appear incapable of finding serious savings despite having had months and even years of opportunity to do so.”
However, local council umbrella body, the Convention of Scottish Local Authorities (Cosla), said the package of measures for local government within Mr Swinney’s budget, including the council tax freeze, had been “totally unacceptable”.
A Cosla spokesman said: “Not only have we got a huge cash cut (£350m or 3.5 per cent), but also additional pressures which will see job losses and services slashed.”
Jackie Baillie, Labour’s public services spokeswoman, said: “The truth is that council tax only accounts for a fraction of all revenues raised. The reality is that it is John Swinney’s budget choices that will put local services like schools and social care under threat.”
The Commission on Local Tax Reform, set up by the Scottish Government, recommended last month the current council tax system should be scrapped.