Fay Young – Time to end the social injustice of the council tax freeze

 

Perhaps I should be grateful to John Swinney. Since 2007 Scotland’s Finance Secretary has spent £500 million on freezing council taxes. “By the end of the current Parliamentary term, [Band D] households will have saved £1,200 since the freeze was introduced in 2007.” So says the SNP press release which conveniently skates over the cost of this ‘saving’ and the cuts it has imposed on all local authorities.

Twilight for council tax? Photo Alan Stockdale courtesy Leith Open Space

In fact I’m likely to ‘save’ a lot more than this; over £2,000 by the time Scotland goes to the polls in 2016. Most of the houses in my street are in Band G, and at a rough guess we’re saving around £250 a year thanks to Mr Swinney’s generosity.

That’s partly the postcode lottery of home ownership. I happen to be one of those lucky old codgers whose house value has shot through the roof during the last couple of decades, as gentrification transformed our inner city neighbourhood from slightly shabby to fashionably upmarket.  We’re not at the top of the tree though. Scottish Government figures show that owners of Band H properties (the highest grade in council tax banding) are benefiting from the council tax freeze to the tune of £370 per year.

And at the other end of the property ladder? Those small flats a few streets away from me, maybe? According to Professor Arthur Midwinter, an expert in public sector accounting, writing in the Scotsman: “The annual saving in Band A is £60, or 0.3 per cent of net household income, compared with £370, or 0.8 per cent, for Band H residents.”

Is that fair? The richer households benefiting nearly three times as much as less well off homes? It seems odd policy for a government that professes to be on the side of the poor.

Let me make a quick point. On a personal level I have nothing against John Swinney. The Finance Secretary seems a decent human being. Which makes his harmful economic policy all the harder to understand. Freezing local authority taxation benefits the wealthy most, but at the cost of services to the poor, who depend more on services such as social work, education and library services.

“The council tax freeze is now a major problem facing councils, as well as being an inefficient use of public money.” said Professor Midwinter a year ago when he estimated that the freeze has cost 40,000 jobs, cuts in services and increased poverty levels across Scotland.

A better way would have been to prevent council tax rising above inflation, in the view of Edinburgh Green Councillor Gavin Corbett writing earlier this year.  If that had happened he reckons Edinburgh would not be having to merge school libraries, cut special needs school budgets and reduce services to disabled people On the contrary, they would be able to spend money on school repairs, invest in parks and improve provision in care homes for the elderly.

Of course that would cost all householders a little more – except those whose incomes are low so that they qualify for housing benefit. They do not have to pay council tax at all, so would be unaffected.

How much would it cost us? For the average Band D house, estimates Councillor Corbett, it would be £5.08 a week more this year than in 2007. It would be £3.38 for those in Band A homes, rising to £10.15 in the most expensive Band H homes – about the price of a decent bottle of Prosecco.  People living alone would get 25 per cent off the bill and the poorest households would pay nothing more,  protected through the council tax reduction scheme.

Most of us might even be up for it. A Mori poll for the Convention of Scottish Local Authorities showed that two out of three people would be prepared to pay more to protect council services.

But according to Mr Swinney’s latest budget the freeze continues. The cost to Edinburgh over the last seven years is already £112.7m., with a yawning funding gap bringing the prospect of more painful cuts.

An honest, grown up discussion of how we prioritise and pay for local services is long overdue. Local taxation is a mess and urgently needs to be changed across the whole of the UK.  Council tax was introduced in a hurry in 1993 to replace the ill-conceived and ultimately uncollectable poll tax. Council tax bands are based on 1991 property values and bear little relationship to real life. A local income tax has been suggested as a better way of funding local services but governments in Westminster and Holyrood have ducked the challenge of finding a fairer and more efficient alternative.

Meanwhile, in the Looking Glass world of Scottish politics, central government devolves blame for painful cuts to local authorities and many of those worst affected voted Yes to independence while many of those who benefited most from John Swinney’s generosity voted No. There’s gratitude for you.

(Arthur Midwinter, former Professor of Politics at the University of Strathclyde was a budget adviser to the Scottish Government finance committee, 2002-2007 and is now advising the Scottish Labour Party on how to create a fairer and more sustainable fiscal framework.)

Fay Young is a freelance writer and blogger with special interest in environment and social issues.