Local authorities ‘overfunded by council tax freeze’

THE SNP government’s flagship council tax freeze policy is not underfunded, with local government’s share of public spending only falling slightly, Scottish Parliament researchers have said.

A freeze on council tax has led to local authorities being 'overfunded' according to a new report. Picture: TSPL

Nationalist ministers have faced criticism from opposition parties, councils and unions over the money they hand to local authorities, with claims of increasing centralisation and a failure to properly compensate councils for the SNP’s pledge to keep council tax frozen.

However, the Scottish Parliament Research Centre (Spice) found the council tax freeze is actually “overfunded”.

Local government’s share of public spending between 1999/2000 and 2015/2016 has shown only a “modest” reduction of 0.2 per cent, in contrast to Labour’s claim that “heavily centralised commitments, such as the underfunded council tax freeze, are placing an unbearable burden on local authorities”.

Police and fire services have recently come under central government control, meaning council budgets have decreased substantially, but they no longer have to fund these services, leaving them a similar pot of cash to fund remaining services.

Spice said: “Over the period 1999 to 2016, local government’s share of the Scottish Government budget has decreased from 36.2 per cent to 32.2 per cent.

“However, once police and fire budgets are added back in for 2013-14 to 2015-16 to provide figures closer to a like-for-like basis, local government’s share has decreased by only 0.2 per cent to 36 per cent.”

It added: “The money provided by the government to freeze the council tax has resulted in local authorities receiving more income than they would have done by increasing rates by RPI (retail price index).

“The council tax base has increased over this period due to factors such as revaluations of existing properties and new properties, which will have the effect of increasing council tax income despite the freeze.

“Therefore, on the basis that the freeze was intended to compensate for a foregone per annum increase in council tax, it could be said that the freeze, over the period 2008-09 to 2013-14, was ‘overfunded’.

“In total, over the six years, this has resulted in an estimated £164.9 million extra going to local government as a result of the freeze.”

SNP MSP Kevin Stewart said the report has “completely demolished years of bogus claims from Labour “.

However, Scottish Labour’s public services spokeswoman Jackie Baillie said the findings showed councils had been starved of cash since the SNP was elected in 2007 compared to the eight years Labour and the Lib Dems held power.

Ms Baillie said: “Since taking office the SNP have passed cuts on to local councils across Scotland. The reality is that under the SNP Government funding for councils has been cut by £755 million, putting at risk some of the essential services, like care home visits, that people rely on.”