Comment: A high price for council tax freeze

Council tax payments have not increased in the city since 2007. Picture: Esme Allen
Council tax payments have not increased in the city since 2007. Picture: Esme Allen
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When the SNP took up government in 2007, its flagship promise was to freeze council tax. Since this was a promise that the Scottish Government had no direct way of delivering, it had to persuade councils to freeze council tax through an annual payment: in Edinburgh, just short of £7 million.

So the Scottish Government has local councils in an armlock. They are, theoretically, still able to raise council tax to invest in services, but the financial penalties for doing so are huge.

Game, set and match to Finance Minister John Swinney. Except that there has been a consequence. As council tax has withered, councils have had to focus more on other ways of raising income though charges – everything from care homes to parking and swimming pools.

Meanwhile, the city council has a £36m gap between spending and income next year, which it is seeking to bridge by some pretty unpalatable cuts – to schools and disabled services, for example. And also at a time when longer-term investment in improving schools, care homes, roads and pavements, parks and play-areas is not enough even to tread water.

It’s traditional, of course, to blame the tram. But the council tax freeze matters far more than the tram. Other, tram-less, councils face the same or even worse cuts.

And, frustratingly, John Swinney could have chosen another path. Back in 2007, the council tax freeze was, arguably, responding to a sense of council tax bills rising too fast, ahead of people’s willingness to pay.

An alternative response to that – rather than an absolute freeze – would have been for council tax to be allowed to rise by no more than inflation, with the £7m payment remaining to ensure that councils stayed within that limit.

If that had happened – if council tax had been pegged to inflation only – Edinburgh’s starting budget next year would be £52.6m higher than it is. More than enough to address the 
£36m gap: so no need to cut special needs school budgets and reduce services to disabled people.

Equally, over the seven years, there could have been up to £210m extra for Edinburgh services – enough to cover the £25m school repairs gap, to improve pavements, cycleways and roads, to invest in our parks and leisure facilities and to provide care homes fit for our older people. Investment in these facilities now protects us from much bigger bills in the future.

Sure, if this had happened, people would have gradually been paying a bit more in council tax over the seven years. By 2014-15, a Band D house would be £5.08 a week more than in 2007. It’d be £3.38 for band A, rising to £10.15 in the most expensive Band H homes, with people living alone getting 25 per cent off the bill and the poorest households protected through the council tax reduction scheme.

This is all “what if”, of course. I won’t be proposing that council tax increases next year because the financial penalties are massive in the current system.

Personally, I don’t even like council tax; I’d replace it with a fairer tax on land values tomorrow. But where we are now is not inevitable. It has been a choice, with real consequences for services and investment.

Councillor Gavin Corbett is the Green finance spokesman. An expanded version of this article can be read at www.edinburghgreens.org.uk