Scotland politics

Four councils demand new tax-raising powers

cash Image copyright Getty Images

Four breakaway Scottish councils are demanding new tax-raising powers in a bid to alleviate the impact of funding cuts.

Aberdeen, Glasgow, Renfrewshire and South Lanarkshire councils want "greater fiscal freedom" from the Scottish government.

The authorities split from Cosla and formed the Scottish Local Council Partnership (SLGP) in April 2015.

The government said it was committed to delivering more powers to communities.

The plea from the SLGP comes as MSPs begin an investigation into the impact of funding cuts on councils.

The Holyrood administration came under fire last year when its then finance secretary, John Swinney, announced a 3.5% cut to local government revenues.

Jenny Laing, the convener of the SLGP, said councils had suffered the biggest budget cuts in a generation and there was "worse to come".

City region deals

She insisted that greater fiscal freedom was needed from the Scottish government, allowing local authorities to raise money and drive their own "economies".

Ms Laing added: "Tax-raising powers for business rates, a tourism levy and giving us the money from air passenger duty are just three ways we could offset the Tory-style austerity measures being imposed on us by the first minister and her team.

"Devolve tax-raising powers to councils now so we can shape and drive our own futures."

However the Scottish Retail Consortium (SRC) said local authorities should be helping struggling high streets rather than looking for more powers to raise business rates.

Just one council has used a new local discretionary rates relief power since it was enacted last October, according to SRC director David Lonsdale.

"Instead of raising taxes on businesses, already suffering after this year's £60m raid on medium and larger sized firms, councils and government should be focused on reducing rates to promote growth in the Scottish economy," he said.

A Scottish government spokeswoman said: "Ministers have already stated a firm commitment to delivering more powers for local communities, and believe that assigning a share of income tax to councils can be an incentive to grow their local economies.

"We have recently devolved a wide power for local authorities to reduce business rates bills, and are currently engaging stakeholders to explore local taxation of vacant, derelict and development land.

"Furthermore, we have committed more than three-quarters of a billion pounds on city region deals, and are working on delivering more."

Local government funding in Scotland has fallen by around 10% in real terms since its previous peak in 2009/10, according to the Scottish Parliament.

Holyrood's local government and communities committee will scrutinise the effects of the cuts.

Convener Bob Doris MSP said: "Local government funding has fallen for five years. We want to establish how local authorities have managed these reductions and how thy have impacted on services and service users.

"We will also be looking at whether other money being spent on local authority responsibilities, such as the health and social care integration funds, should be considered as part of local government budget."

Analysis - By Jamie McIvor, BBC Scotland local government correspondent

Image copyright PA
Image caption The Scottish government is aiming to give £100m direct to schools

Councils are heavily dependent on the Scottish government for cash.

The essential issue was - and is - the lack of control councils feel they have over the amount of money in their coffers.

Much of their money comes directly from the Scottish government.

Another element in the equation is the amount they raise in business rates - this no longer goes into a national pot but is directly related to the amount they get from the government. (Councils now also have a theoretical power to cut business rates - this could help local economic development but in the short term it would cost them money)

Finally, of course, comes the council tax which makes up 15-20% of a typical council's finances.

Any possibility of radical changes to local government finance have been well and truly booted into the long grass.

What is, in effect, a centrally imposed council tax freeze comes to an end next year and councils will be able to choose to put it up by up to 3%. The overall impact on individual council's finances will not be known though until they know just how much money they will get from the government in the coming financial year.

The higher rates of council tax will also be going up next year across Scotland as changes are being made to the relationship between different bands.

This will raise £100m to be spent by headteachers on schemes to raise attainment in schools. But some councils are concerned the money may effectively go into a national pot to be distributed back to individual schools - some council areas may receive back more or less than was raised locally.

But these moves disappointed some councillors who felt they were much too modest.

A commission examining what were called "fairer alternatives" to the council tax prepared a number of fully costed options last year. The government opted for relatively modest reform and easing the freeze.

A previous report from local government organisation Cosla argued that power in Scotland had been centralised away from councils in recent decades. It made the case that a suite of financial powers and moving to strengthen the relationship between how much councils raise in local taxes and how much they have to spend could strengthen local democracy.

Cosla hoped this report could feed into the debate on how Scotland moved on after the referendum - instead it made little impact on government.

But at its root is an important question. Is local government subservient to central government - or does it have its own areas of responsibility with sufficient control over its resources.

The next council elections are next May. Some in local government will be keen to try to get the debate going again before then.

More on this story

Related Internet links

The BBC is not responsible for the content of external Internet sites