Budget plans will push up council tax says adviser

Key points

• Warning over council tax rise

• Executive spending plans criticised

• Opposition politicians attack Executive

Key quote

"The Executive is piling new duties on to local authorities, but refusing to give them the cash they need to deliver. The result is that council tax bills go up and services are cut" - Alasdair Morgan, finance spokesman for the SNP

Story in full COUNCIL tax payers will be hit by an above-inflation rise as a direct result of the Scottish Executive’s spending plans, one of Scotland’s leading financial experts warned yesterday.

Professor Arthur Midwinter, a consultant to Holyrood’s finance committee, said the squeeze on local authority finances announced last week would almost certainly lead to council tax hikes over the next three years.

Prof Midwinter went on to pour scorn on claims by Jack McConnell that the Executive would outdo Westminster in public sector efficiency savings.

Last month, the First Minister made great play of insisting he would go further than the savings from public sector budgets drawn up for the Treasury by Sir Peter Gershon.

However, Prof Midwinter told MSPs yesterday savings south of the Border were proportionally three times greater than the 650 million identified in Scotland because they amounted to 7.2 per cent of overall spend, compared with just 2.6 per cent here.

Tom McCabe, appearing before the committee on his first day as finance minister, immediately appeared to back down over Mr McConnell’s earlier claims, saying: "I would like people to judge us on what we achieve and look back.

"If, at that time, people wish to make comparisons between what we achieve here and what’s done down south, that’s their business."

Last night, opposition politicians launched a vociferous attack on the Executive spending plans, claiming hard-pressed council tax payers would once again have to tighten their belts.

David McLetchie, leader of the Scottish Conservatives, said: "We warned when the spending announcement was made that council tax was set to soar once again.

"We would use planned increases in the budget to make substantial reductions in council tax of up to 45 per cent."

Alasdair Morgan, finance spokesman for the SNP, added: "The Executive is piling new duties on to local authorities, but refusing to give them the cash they need to deliver. The result is that council tax bills go up and services are cut.

"All of this simply because of the political cowardice of the Executive. They are using the council tax as a stealth tax to pay for their programme."

Wendy Alexander, a Labour backbencher and former enterprise minister who has raised a number of concerns about the Executive’s efficiency targets, said she was "bemused" by the policy so far.

In a speech to the Centre for Public Policy for the Regions in Glasgow she said: "We are apparently aiming only to make a third of the efficiencies that are planned in the rest of the UK."

Professor Midwinter’s warning on council tax came after former finance minister Andy Kerr last week announced a 9.7 per cent increase in funding for councils as he unveiled the Executive’s spending plans for the next three years.

Council leaders immediately warned the three-year settlement was "very tight" and raised the spectre of above-inflation council tax rises.

Yesterday, Prof Midwinter agreed, saying the funding increase amounted to just 1 per cent in real terms, but was supposed to pay for more teachers, more police, free personal care for the elderly and road improvements.

The committee’s budget adviser said the problem was compounded by Executive plans to temporarily withhold some of the cash from councils as part of the efficiency drive - something that has not been used since before Labour came to power in 1997.

The move is in contrast to the approach taken with Executive departments which are to be given full budgets and then encouraged to make savings.

"It’s clear local government is not being treated in the same way as Executive departments and agencies," said Prof Midwinter. "I would have to advise the committee that ... it would not be surprising if council tax, on average, increases above inflation over this period."

However, Scottish Executive official Richard Dennis described the efficiencies as "challenging but deliverable".

"If local government works with us and meets that efficiency ... then there will be no need for council tax rises," he said. "I think the minister on the day said he saw no reason why council tax rises would depart from the trend we have seen in recent years."