Scottish councils have done well out of Holyrood’s latest budget
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Councils in Scotland have found themselves the unlikely beneficiaries of Holyrood parliamentary arithmetic as they emerged from Scottish budget negotiations with a clutch of worthwhile prizes.
As well as a £90m increase in the core local government settlement and an increase in next year’s council tax cap to 4.79%, local authorities are to be handed the power to levy new taxes on tourism and workplace parking.
The tourist tax, in particular, is a significant fiscal lever which is denied to authorities elsewhere in the UK, although visitor levies are commonplace in the rest of Europe.
While the sums raised by the tax may be relatively small, and some authorities stand to benefit more than others, the concession is substantial in that it signals a greater willingness on the part of the Scottish Government to relinquish its grip over councils’ revenue raising powers.
The appetite of finance secretary Derek Mackay for fiscal devolution has been tested over the last year as councils, led by City of Edinburgh, have lobbied for the right to levy the discretionary charge.
The Scottish capital has calculated that such a levy, set at £2 per night per room, could raise up to £14.6m a year towards the cost of managing the influx of visitors to the city each year – enough to potentially tempt less favoured areas to argue that there should be an element of tourist tax equalisation built into the funding formula.
The other key element of the budget deal was the agreement to convene cross-party talks on the replacement of the council tax. If – and “if” is the key word - agreement is reached, legislation would be published by the end of the current parliament.
However, Scotland is hindered by the same sensitivity as the rest of the country over local tax reform, and political consensus may be thin on the ground.
That said, the Scottish Government has overseen a revamp of the current council tax arrangements which has meant higher bills for those in the top four bands – a reform that fell well short of the manifesto pledge of the incoming SNP government in 2007 to scrap council tax and replace it with a local income tax, but still one which shows change is possible.
The budget deal was the third to be struck between the minority government and the Scottish Greens, whose six parliamentary representatives have been pivotal in passing key legislation. This year, the Greens have used their full weight to increase funding for local services and press for the reform of local taxation.
The package, hailed by Mackay as “the most significant empowerment of local authorities since devolution”, received a characteristically low-key welcome from the Convention of Scottish Local Authorities, which noted that although councils were “now in a better place”, “challenges still remain”.
There’s no doubt, though, that the privileges won by Scottish councils will not only give authorities north of the border some much needed wiggle room, but also strengthen the case of councils elsewhere in the UK for greater fiscal freedom.
Kerry Lorimer, contributor