Scotland’s independent think tank
Scotland’s independent think tank

Local government finance & the need to respect devolution – Paul McLennan

Scottish Politics at the best time of times can be tribalistic. The recent appearance of Alex Salmond at the  Holyrood Parliament Harassment inquiry has seen that reach fever pitch. The short term effects may be a factor in the Scottish Parliament Elections in May this year.

It’s the longer term effects that trouble me also.

The media scramble around the Inquiry has predictably seen the Conservative supporting press state that this demonstrates that the cause of independence itself has been damaged beyond repair and Scotland as a country isn’t fit to govern itself.

Rising support for independence in the past 9 months has been tempered by a slow decrease in the past few months.

But this increase for support for Independence has seen a new “Union Unit”  set up by PM Boris Johnson, and it’s not had its problems to seek, sacking its previous Head of Unit, Luke Grahame, ex Conservative MP for Ochil and South Perthshire, the only Scot in the unit .

But what should worry supporters of Independence, and indeed devolution was the recent announcement of the new UK Government Levelling Up Fund by the Tory Scottish Secretary Alastair Jack

Indeed Aberdeen Conservative Council Leader Douglas Lumsden had raised the prospect of this a few times in the past few months.

£4bn has been set aside to fund “infrastructure projects” in the UK, which would have had Barnett Consequentials of £400m for Scotland.

Projects could have included High Street regeneration, local transport and cultural and heritage projects.

Many local authorities in Scotland are in the process of setting their budgets, with Covid Recovery a major factor in their planning.

Construction led recovery could have been part of the strategic recovery plans required as we exit from the pandemic

The SNP has called the announcement of the fund as a “power grab” and demanded the monies are passed through Scottish Government as part of the Barnett Consequentials.

Neither the Scottish Government, COSLA, nor individual local authorities will have any input into the spending plans that the UK Government will bring forward.

The plethora of City Region Plans in the past few years has seen a model that has worked well collaboratively between the Scottish Government, UK Government, COSLA, and individual local authorities.

The City Regions plans also have an established structure in place through Regional Growth Frameworks’, and with local authorities working well with both Scottish and UK Government’s.

Is it surely within the realms of imagination, that even if the UK Government didn’t want to hand the monies to the Scottish Government it could have used this funding to either top up or initiate new City Growth Plans.

This led me to the ongoing debate of whether local authorities should have more powers to raise more of their own funds. Scotland, and indeed the UK, have the most centralised control of raising local finance – with 15% being raised by local authorities and 85% being funded by central government.

Turn out in local authority elections is traditionally under 50% , many will say this is because the lack of accountability of raising funds does not promote the interest in local council elections

Most European countries raise at least 50% of their local expenditure, they use a mix of Land Taxes; Local Income Taxes; and Local Sales taxes.

There have been debates in the past on this issue, indeed a recent commission on local tax reform.

This takes me back to the £400m levelling up Fund proposed by the UK Government. This is a backward step driven by politics in the ongoing constitutional debate.

However my own party the SNP have to grasp the nettle once again after next year’s local council elections and look at the issue once again, when the electoral cycle leaves another 5 years to local elections.

Whether all parties have the desire and indeed the maturity to do so time will only tell.

The future health of local democracy and local accountability rely on its success.

Paul McLennan is an SNP councillor for Dunbar and an SNP Candidate for East Lothian.