Local government in Scotland: funding issues remain top of the agenda for councils

Walk down any street in Scotland and you will see the work of your local authority.

Roads, schools and housing developments are obvious outward signs but when you take into account what goes on behind the scenes – caring for older people, ensuring everyone has a home and educating our children – the enormity of the task facing our much beleaguered councils comes into focus.

As we approach this week's joint Convention of Scottish Local Authorities (COSLA) and Improvement Service conference, we see that money, or the lack of it, is a huge issue for the public sector.

The Scottish Government believes the current council tax system is unfair

Councils are on the front line and are often the first port of call for those in need. It is apt that the conference will examine how local government can meet challenges by setting the agenda as opposed to reacting to the agenda of others.

For 2015/16, the Scottish Government has allocated almost £11bn to be shared among the 32 councils and the remainder of their money comes from council tax, which has been frozen since 2007. The majority of local authorities set their budgets in recent weeks and the financial squeeze became apparent as many were forced to announce large savings needed to balance their books.

For example, City of Edinburgh Council must find £67m over the next three years, Moray Council’s figure is £14.9m over the following two years and Falkirk needs to save £46m over the next three years.

Leader of City of Edinburgh Council, Labour’s Andrew Burns told Holyrood the situation is “really quite stark”. 

However, he added: “What we’ve attempted to do as a coalition is to protect frontline services, particularly for the old, the young and the vulnerable. We’ve tried as much as feasible to protect those services and to take the savings from back-office functions. I’m not demeaning back-office workers because they provide support for the front line but we’ve tried not to impact on the front line where possible.

“It is difficult, there’s no point in denying that there will be an impact on some service areas [but] we’ve taken a political decision to prioritise certain areas and that squeezes out problems elsewhere.”

In a wider sense, the issue of how public services are paid for in Scotland has long been a conundrum for politicians and policymakers. Council tax has been frozen by the Scottish Government, much to the consternation of some councillors who feel they should be allowed to control this tax. Councils are free to reject the freeze but it wouldn’t be practical as they would then see a reduction in the money they receive from central government.

Consequently, they would be forced to significantly raise council tax for it to make any difference and this is widely considered to be political suicide. In November, First Minister Nicola Sturgeon announced in her programme for government that a commission would be set up in 2015 to examine how local taxation could be reformed.

The newly formed Commission on Local Tax Reform, co-chaired by Local Government Minister Marco Biagi and COSLA president David O’Neill, met for the first time last week. It is tasked with looking at fairer systems of local taxation and potentially an alternative to the council tax to fund local government services. It is due to announce its findings in the autumn.

The Commission on Local Tax Reform will consider progressive, workable and fair systems

Biagi said: “The Scottish Government believes the current council tax system is unfair and we are acting on our manifesto commitment, and the recommendations of the Local Government and Regeneration Committee, to look at alternative approaches to local taxation. The Commission on Local Tax Reform will consider progressive, workable and fair systems, taking into account domestic and international evidence on tax powers and wealth distribution, the autonomy and accountability of local government and the impact on individuals who pay the tax. The members bring a broad range of expertise and experience and I look forward to starting this important work.”

O’Neill added that a great deal of work lies ahead for the commission but it is “a chance to take a step back and think about the best way to pay for the local services that communities rely on every day".

He continued: “Across Scotland, people are looking for the debate to break new ground, and that’s why I am de-termined that this commission will be listening to people and organisations from all parts of the country, and set-ting out what it would take to give our local communities a real say about what matters most to them, and the best way to pay for it.”