Council tax freeze scrapped in Scotland as core budget cut in real terms
Local authorities will have ‘complete flexibility’ to set council tax rates – raising fears households could be hit hard.
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Your support makes all the difference.Local councils will be given free rein to set council tax rates as the Finance Secretary announced a real-terms cut to the core budget of local government.
In the Scottish Government’s draft budget announced on Thursday, council funding was set at £6.973 billion out of a total of £11.145 billion, rising from £6.923 billion of £11.125 billion this year, both of which exclude funding allocated to tackle the pandemic.
According to a real-terms calculator tool produced by the Scottish Parliament Information Centre (SPICe), the core budget should have risen to just over £7.1 billion to keep up with inflation, a gap of £137.3 million.
Finance Secretary Kate Forbes told MSPs that health and social care funding as a result of UK Government spending would mean a real-terms increase for the overall council budget, although this would most likely be earmarked for health spending rather than for use in the core budget of local councils.
The budget also scrapped the council tax freeze that has been in place in recent years, raising fears from MSPs that households could be hit with bigger tax bills to offset the funding cut.
In the 180-page document, the Finance Secretary wrote: “In 2021-22, acknowledging the impact of the pandemic on households, the Scottish Government secured local government’s agreement to freeze council tax at 2020-21 rates.
“For 2022-23, councils will have complete flexibility to set the council tax rate that is appropriate for their local authority area.
“In setting council tax rates, we expect councils to take full account of local needs and of the impacts on household budgets of the decisions they make.”
Scottish Tory MSP Murdo Fraser said the allocation “represents a substantial real-terms cut”, asking the Finance Secretary: “Doesn’t this make it inevitable that we will see substantial council tax increases for hard-pressed households as a result of this Finance Secretary’s choices?”
Ms Forbes replied: “In terms of local government finance settlement, it delivers real-terms growth to the settlement.
“It protects the core budget in cash terms and it also ensures that local government are getting a fair share of the health and social care consequentials, which is something that they have long called for.
“Now, that additional £200 million will directly support investment in health and social care, knowing as we do how important it is to invest in the preventative side of health and social care so as to reduce the pressure in acute services.”
Councillor Gail Macgregor, resources spokesperson for local authority body Cosla, said: “It appears to be a disappointing budget for the communities that we represent as it does not give local government what we need to survive and nor does it meet our campaign aspiration to help those communities to ‘live well locally’.
“Once more, our core financial settlement has been hit.
“That said, we will take time to consider the finer details of today’s announcement and the full implications for both ourselves and our communities.”
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