What does the fallout over council budgets mean for the future of local authorities?

The clock is ticking and for Scotland’s 32 councils that means this week facing up to a stark reality: sign up to John Swinney’s all-or-nothing budget or face tens of millions of pounds in penalties.

They are, without a doubt, between a rock and a hard place. There is no room to wriggle in a budget that already sees them having to face up to £350m-worth of cuts, a freeze on council tax, a commitment to teacher numbers, and a continued drive towards health and social care integration.

If they defy government and break the council tax freeze, effectively they get fined as well as lose millions of pounds in essentially ring-fenced money from the Scottish Government to deliver SNP policy guarantees.

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The offer has been described by one council leader as “tantamount to blackmail”. But with £408m at stake, there is only one politician with the upper hand and that is the Finance Secretary, Mr Swinney.

It all feels a very long way from 2007 when the historic Concordat was signed, marking a dramatic change in relations between local and central government that had, strangely, been absent under previous regimes.

Then, the newly installed SNP minority government needed friends and it found them in COSLA, the local government umbrella body, where ironically Labour-led councils had been consistently snubbed by their own party colleagues in the then Scottish Executive.

The Concordat built a bridge between what had become an increasingly wide divide. In eight years in government, the Labour-led executive met just once with its party colleagues in COSLA’s executive team and Jack McConnell, as First Minister and a former council leader himself, never once attended the annual COSLA conference. That hurt.

No wonder, then, that Pat Watters, the affable Labour councillor who then led COSLA as its president, saw the advantages in a partnership with the SNP that was described by the then First Minister, Alex Salmond, as one based on “a parity of esteem”.

The Concordat paved the way for single outcome agreements, the removal of ring-fencing, the right to retain efficiency savings and increased autonomy. It also secured a long-term council tax freeze.

Nine years on and faced with a draconian budget that COSLA believes could bring councils to their knees, some are rightly asking, where did it all go wrong?

The answer to that lies in a myriad of issues, not least to do with the councils themselves: with the diminishing profile of COSLA; with a change of personalities; in an inability by council leaders to recognise how the equilibrium of power had shifted and how to work that to best return.

And inevitably, with the rise of the SNP and its elevation to a majority government came an impatience from St Andrew’s House to simply get things done. One insider told me that the pace of change in terms of local government service delivery had been regarded as “glacial”.

But if the question was, ‘who was lobbying government on behalf of councils in that mix?’ then the answer was clearly, they had failed.

So no surprise, perhaps, that in the confidential draft agenda for the forthcoming SNP conference in March, ahead of May’s election, is an unusual focus on local government reform.

There are not one but three resolutions laid down by senior SNP politicians both at Westminster and Holyrood, all with an eye to change.

The most significant, in the name of MSP, Kenny Gibson, entitled ‘Reform of the Public Sector’, calls for conference to consider merging health boards and local authorities to create “more strategic bodies”.

It suggests devolving some of the current powers held by councils down to town and community level to allow decision-making to be “as close to people as possible”. And it further calls on a re-elected SNP government to consult widely on the proposal as soon as it can.

This might feel like a hammer to crack a nut in the context of the current and immediate financial debacle. But despite the noise from council leaders and trade unions about what the settlement could mean for jobs and services, it is difficult to find a cheerleader among other public sector leaders, who have faced their own budget cuts over the last few years, for the current structures of local government staying the same.

The issue for councils is that they have become sidetracked by a fairly limited debate on the council tax freeze. And while the idea of scrapping it is a salient one – it has done its time, it is essentially regressive, overwhelmingly benefits the better-off, diminishes local democracy, traduces accountability, locks councils into a centralised political agenda and removes the opportunity for more innovative, localised thinking on how to use resource to reduce inequality – it is also a red herring.

Council tax now accounts for just 12 per cent of the local government funding pot, so whether it is frozen or unfrozen makes little difference to the total available to spend.

And while a definitive cross-party agreement on the nature of local taxation will be welcomed, what is potentially more far-reaching is the debate about structural reform.

So, as local authorities across Scotland strive to fully realise the impact on their communities of the reductions in public spending, there is a wider debate taking place about alternative visions of the future shape of local government itself that could explain why this was the budget to get tough.

At its heart is the question of whether local government has primarily become an instrument for the implementation of national policy delivery or whether it remains a viable second tier of local democracy. That is the post-devolution conundrum that, until now, has dared not say its name.