This article first appeared on LocalGov on 22 September 2023
Devolution was never supposed to stop at Holyrood, but while there have been continued calls, both from within and from without parliament, for greater decentralisation of fiscal powers and reform of council tax in Scotland, nothing has changed.
Indeed, arguably more powers have been centralised through policies such as caps on council tax and police centralisation.
Reform Scotland believes that it is past time for a major rethink, and for the genuine empowerment of Scotland’s councils. Scotland needs a new and better balance of powers between Holyrood and local government. While proposals to devolve responsibilities over measures such as workplace parking or tourism levies are to be welcomed, we need to shift away from the slow drip of powers to a more permissible and empowering system, and that needs to begin with local taxes.
The Scottish government’s recent consultation on reforming council tax was a disappointing missed opportunity. While the consultation document acknowledges that the current system is regressive, unfair, and out of date, it offers no alternative beyond a small tinkering of the bands.
The number of dwellings classed as Band E-H, which will be impacted by the change, varies significantly across the country, but this issue has also been ignored.
Instead, we had the latest in a long line of examples of much-needed reform being avoided.
For example, in 2002, the Local Government Committee said the system of local government finance needed renewal and that there should be a shift in the balance of local/central revenue raising:
‘The Committee does not believe that the existing local government finance system is sufficiently robust – and believes that part of the problem lies in the balance between the central and local funding of councils’ General Fund revenue budgets.
‘The Committee recommends that councils should retain the responsibility for a wide range of services – including major services such as Education and Social Work Services – but that the central/local funding balance should change from the existing 80:20 split to 50:50, or as close to 50:50 as is possible, as soon as is practicable.
‘The Committee recommends the Scottish Executive to introduce legislation to return the non-domestic rate to local control at the earliest opportunity.’
But nothing changed.
A 2014 Local Government Committee inquiry into flexibility and autonomy in local government again recommended greater local fiscal autonomy. Critically, it recognised that empowerment didn’t create postcode lotteries – rather, it was a matter of local accountability and decision making:
‘We consider there should be a range of taxes or charges from which they should be free to choose to levy to meet local circumstances and needs. The cross-party commission should consider whether there should be a range of taxes or charges from which local authorities should be free to choose to levy to meet local circumstances and needs.
‘We recognise this power will lead to variations across the country which we see as a desirable adjunct of the exercise of democracy. It would then be for locally elected politicians to be held to account by their electorate.’
But again, nothing changed.
Changing any tax regime will always create ‘winners and losers’, but leadership requires the willingness to make difficult decisions.
Reform Scotland believes that we need radical reform of the council tax. We don’t want to see one centrally controlled local tax replaced with another centrally controlled tax, rather we believe that local authorities should have complete control over their local tax – including the rates, bands and indeed form of the tax. This would allow individual councils to take their differing needs and priorities into account and devise the best system for their area. It would be a true local tax, accountable to local politicians.
If you would like to contribute to Reform Scotland’s Devolving Scotland forum, please email [email protected]