Reform of local government funding is now urgent
As the City of Edinburgh Council meets today to set its budget, council leader Andrew Burns says the system of local government funding is now broken, and without immediate reform the damage will be irrevocable.
Our local Budget will be formally decided at today’s Special Full Council Meeting at 10am. All the relevant reports and papers are available on the council website.
I want to emphasise just how serious this situation is. I have blogged before about why I’ve long-believed local government funding is broken, but I’m sadly more convinced than ever after this year’s financial settlement.
I’ve been a local councillor since the very first days of devolution, being elected to the City of Edinburgh Council in May 1999 at the same time as the Scottish Parliament was established. And there is just no doubt that this year’s local budget settlement has been the most challenging I’ve had to face in those near two-decades of public service.
I think it important to stress that I say all of this, as my close colleagues well know, as someone who has only ever had an interest in local politics, never having had (nor never will have) any aspiration or desire to be a Holyrood or Westminster politician. Those establishments are Parliaments and they legislate. Councils deliver local services, and that’s where my interest has always been and will remain.
So, it frankly pains me that this year’s budget settlement from the Scottish Government is going to damage those local services. And I am now more certain than ever that the system of local government funding in Scotland is broken.
“The present Council Tax system must end, with any replacement designed to be fairer, more progressive and locally empowering.”
But this is not only about Council Tax. As the Local Tax Commission concluded, change also needs to be ‘locally empowering’. They recommended not just changes to the main element of revenue raising, but also that all local authorities should have access to a range of local tax varying options. Paragraph 13.15 says:
“We have identified that taxes on property, land and income are the three potential tax mechanisms that have the revenue raising capacity to match the present system. Broadening the local tax base could include environmental, resource, sales or tourist taxes, as appropriate to local circumstances and local authority decisions. We see no reason in principle why such options should not be identified, developed, and, if found to be workable, made available to Local Government. These options would not be anticipated as forming the main basis for local taxation, but could, in addition to the aforementioned options, make a contribution to local revenues.”
Well, this could have been enacted by the Scottish Parliament at any time since May 1999. Local government finance is totally devolved – but all four post-devolution governments failed to act.
It simply cannot be sustainable that Scottish Local Authorities have control over only 18% of their revenue-raising, whilst most other similar levels of local government in western Europe or northern America have control of circa 40%.
Frankly, devolution from Westminster to Holyrood is all well and good, but we urgently now need further fiscal devolution from Holyrood to Scotland’s 32 Local Authorities. The Scottish Government needs to let go. After all, isn’t that, put simply, what they want Westminster to do?
The status quo is just no longer acceptable. An 18th year of stasis on this issue will start damaging local services irreversibly. The system of local government funding in Scotland is broken. It needs to be reformed and that reform now needs to happen urgently.