Council Tax Conundrums

Thursday February 24th 2022


This column has been written by Midlothian Provost and Conservative Group Leader Peter Smaill

In the dramatic Council meeting last week it was the Provost’s casting vote which determined that there would be a 2.38% increase in Council Tax for 2022/23. The anomaly of the Labour Administration (who wanted nearly 5 %) having to implement a policy not their own has been commented on; but, in reality, this result was essentially the Council Officers recommendation to balance the books.

Most Councils are settling for a slightly higher rate, as last year, of 3%.

The rise will produce £1.36m for Midlothian. But this will not in reality be spent in Midlothian. All of it and more – £1.5m- in effect goes to other Councils as a result of the SNP Finance Secretary, Kate Forbes, demanding extra subsidies for other Councils whose populations are shrinking – the so-called stability mechanism. Meanwhile, the SNP have failed so far to set up a Growth Fund for the Councils in the Lothians, whose financial stresses are caused by rising population, even though Ms Forbes appeared willing to do so a year ago.

The Conservatives wanted a nil increase for now, in line with our rent and fees freeze. The UK Government is the source of £2m extra which made this possible. We rightly stated (based on official figures) that top-quartile Midlothian has recently had the highest Council Tax rates in Scotland: in 2020/21 we paid at Band D, £1,409. The Western Isles, by contrast, only charge £1,193. Our population numbers, on which Scottish Government support depends, are many years out of date. We are contending for the bureaucrats to sharpen their pencils (or update their spreadsheets) so that Midlothian gets its fair share.

In addition the settlement was cushioned by a £6m change to a previously rigid asset accounting policy, which reform has freed up reserves. The Conservatives alone campaigned for this “fair value” recalculation in the Council budget debate in 2019. With a 1 percent Council Tax rise bringing in about £500,000, as a rule of thumb we would have needed almost a 12 per cent increase in the Council Tax to replicate the advantage. The £6m benefit is also a one-off, but could be extended. For example, schools like Newbattle and Lasswade High are also being expensed too quickly: they will likely last for 60 years, so costs should not be charged based on longevity assumptions of only 30 years.

What do future years hold? If Local authorities had a fixed and predictable settlement of an agreed proportion of the monies coming from the UK – the so-called “Barnett Formula” support – we could rebuild. But as thing stand each year we are short-changed. Free school meals sounds great, but not if £20m is allocated for the facilities, as against the real £100m kitchen expansion costs. That and a host of other factors means that there is a £251m real-terms cut to Local Authority funding. Midlothian will cop about £2.5m of that shortfall, implying around 5% on Council Tax and/or severe cuts to many services.

This yawning financial hole the new Council (post May 5 elections) will have to tackle; so, for now only there is some limited respite for council tax payers in these inflationary times. There has to be, in the longer term, a better way which does not hammer hard-pressed tenants and homeowners alike…………….

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