Council tax rise will go ahead next year

Finance Secretary Derek Mackay delivers the Scottish Government budget plans for the coming year. Picture: Greg Macvean.

City council leader Andrew Burns said figures announced by Finance Secretary Derek Mackay for next year would hand the authority a funding cut of up to 2.5 per cent and it would therefore have to go ahead with the tax rise, spending reductions and job losses it had budgeted for.

Councillor Burns welcomed the U-turn which will allow councils to keep the extra money raised from changes in the higher council tax bands instead of seeing it handed by the government to school heads. But he said that would not be enough to offset the need for savings.

In a “historic” budget – the first in which the Scottish Government set an income tax rate – Mr Mackay confirmed there would be no change to income tax rates or bands, but a UK Government tax cut for higher earners will not be replicated north of the Border.

He insisted his draft spending plans for 2017-18 would deliver £700 million of additional resources, including an increase for local government.

The planned direct funding of £120m for schools would go ahead, now financed by the government rather than by the higher band council tax.

And £107m would be transferred to health and social care joint boards.

But Scottish Labour leader and Lothian MSP Kezia Dugdale said councils would have a real-terms cut of £327m and accused the SNP of forcing councils to use their tax powers while the government refused to use its own.

In Edinburgh, the Labour-SNP coalition has already built into its financial plans a three per cent council tax increase – the maximum allowed following the end of a long-running freeze – as well as cuts of up to £20m, which include reducing opening hours of libraries across the city, and a “thinning out” of the workforce, which is expected to see the 1300 job losses already achieved rise to around 1600.

Cllr Burns said: “We are still analysing all the figures, but it looks like our assumptions about a reduction of between 2 and 2.5 per cent in our budget are going to be correct.

“While I welcome the fact the money from the higher bands will now be retained and that will help, it’s still not going to cancel out the fact we are going to have an overall reduction in funding.

“It will mean the planned reduction in staffing will have to be seen through and there will be further service cuts as set out in our draft budget.”