andrew mcfAndrew McFadyen urges Scottish Labour to look beyond Council Tax and be bold in empowering local authorities to raise new revenues to fund vital services.

 

Cautious. Careful. Conservative.

These are all words that could be used to describe the SNP’s budget. The SNP’s rhetoric has always been far more left-wing than their actual record.

Faced with real terms cuts in the block grant from Westminster, Finance Minister John Swinney had a choice to accept austerity or offer an alternative based on more adventurous use of tax powers.

His budget does provide cash for some progressive policies, such as a reversal of the “bedroom tax” on social housing. Flagship achievements such as free university tuition, free prescriptions and free bus travel for pensioners also stay untouched.

Instead, the hardest cuts are being passed onto local government. COSLA calculates that Scotland’s 32 local councils will lose out on £350 million, which could result in 15,000 job losses.

COSLA President David O’Neill warned that the impact would be “catastrophic”. He said:

“This is a budget that hits the council workforce in terms of job losses, it hits the child in care, it hits the elderly struggling with dementia and the vulnerable adults, all of whom solely rely on the support that only a council can provide.”

It isn’t enough to criticise. Labour needs to explain what it would do differently.

Writing in Labour Hame, Fife councillor Gavin Yates made a strong argument for an end to the Council Tax freeze, which has been in place for almost a decade.

“The hollowing-out effect of the Council Tax freeze, unwisely backed by Labour late on in the run up to the 2011 election, has diminished local government to the point where it is emerging as nothing more than a cuts quango for the SNP.”

The council tax freeze has disproportionately benefitted those who are already well-off. According to Unison, the average annual saving for people in the most expensive Band H homes has reached £441, while those in the cheapest homes saved £147.

It would be far more progressive, and much less expensive, to fund councils and housing associations to freeze rents.

But why stop at that? If MSPs use their imaginations there are any number of ways in which local authorities can be empowered to raise more revenue.

Edinburgh is the most popular destination in the UK for international visitors after London. 1.3 million people visited Scotland’s capital in 2013. If each of them paid a £10 surcharge on their hotel booking it would raise over £10 million a year to help fund services in Edinburgh.

A ‘bed tax’ on foreign visitors obviously has more potential for tourist hot-spots like Edinburgh and St Andrews than, say, a former steel town like Motherwell, but surely it should be part of the mix?

And how about a social responsibility levy on alcohol sales? Scotland has the eighth highest alcohol consumption level in the world and one of the fastest growing rates of liver disease.

The Scottish Government estimates that alcohol misuse in Scotland costs the nation £2.25 billion every year in extra services and lost productivity. A ‘social responsibility levy’ on all retailers who sell alcohol, with the rate based on sales, could help recoup some of that cost.

At current rates of consumption, a levy of 3p per unit on alcohol would put 9p on the price of a pint and less than £1 on a bottle of wine, but it would raise £150 million a year.

The Scottish Parliament has legislative responsibility for local taxation, so provided that the proceeds go to local authorities, a levy on alcohol sales would be perfectly legal.

If the principle is extended to other unhealthy products, a sugar or fast food tax could help pay for children to have free access to swimming pools, 5-a-side pitches and tennis courts.

It would be a bold move for any political party to go into May’s election calling for tax rises, but if Scottish Labour wants to get a hearing it needs to win back its reputation as the party that stands up for working people, and it needs to be a bit adventurous.

There is more than one way of funding local services.

 

Follow Andrew McFadyen on Twitter: @apmcfadyen