Humza Yousaf is facing a long and costly battle to freeze council tax next year after local authorities warned they expect a record sum of money to cancel planned rises.
In previous years, the SNP government was able to freeze the tax by offering Scotland’s 32 councils a total of around £90m to offset a 3% rise.
However leaked papers from the council umbrella body Cosla reveal most authorities are planning rises of 5 to 8% next spring, with some “credibly planning rises of 9-10%”.
Last year, the average rise was 5.4%, reflecting high levels of inflation.
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To offset a similar rise next year would cost the Scottish Government £148m, Cosla calculates, while offsetting an 8% rise would cost £229m.
In addition, councils had been expected to collect extra tax as a result of a structural change proposed by ministers to raise the bills for Band E to H homes by between 7.5 and 22.5%.
That was due to raise £183m across Scotland, but Mr Yousaf scrapped the change when he announced the freeze at the SNP conference in Aberdeen last month.
The First Minister said the move would help people with the cost of living, but failed to warn councils in advance or nail down a price tag for the “fully funded” plan.
The mvoe was widely seen as a reaction to the SNP's bruising defeat in the Rutherglen & Hamilton West by-election, where the proposed structural rise in council tax was highlighted by Labour.
Council leaders have agreed to put off a decision on a freeze until after Chancellor Jeremy Hunt’s autumn statement on 22 November “provides a level of certainty around the financial fortunes of Scottish Government, and some indication of likely impact on local government”.
Cosla is also seeking assurances in writing from the Scottish Government that the freeze will be for a single year, 2024/25, and there will be no financial penalty if any authorities choose not to freeze the annual property levy.
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The SNP froze the council tax from 2008/09 to 2016/17 after their plans for a local income tax proved unworkable, then froze it again in 2021/22 during the Covid pandemic.
Although it cooperated with past freezes, Cosla opposes the idea on principle, as it limits the choices of local authorities and costs them money in the long-term.
One leaked Cosla paper, which was reported by the Daily Record and also obtained by The Herald, said: “A quick survey of Directors of Finance has shown that for 2024/25, most are intending to put Council Tax up by between 5% and 8%.
“Seventy-five per cent of returns so far are above 5%. Several councils were credibly planning rises of 9-10% and have been implementing savings plans based on this.
“Some councils had indicated that the size of the budget gap may even require them to consider rises far in excess of this.
“Most councils have made plans based on rises around these levels over multiple years.”
The Scottish Government is already facing a £1bn shortfall in its 2024/25 budget.
Liberal Democrat MSP Willie Rennie said: “The First Minister’s council tax announcement was so off the cuff that even his own cabinet and coalition partners were taken by surprise.
“Many councils were planning significant rises to raise revenue. If a freeze is being imposed, councils will need to be compensated in full, otherwise the First Minister will be forcing them to axe vital services.
"When it comes to tax, no one knows whether Humza Yousaf will raise it or cut it next. That’s making it impossible for businesses, households and local authorities to plan their finances.”
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Labour MSP Mark Griffin also told the Record: "This freeze will be a relief to the thousands of Scots struggling with the cost of living crisis. There is still no clear plan for how it will be funded and Scottish Labour has been clear that any shortfall this causes to councils must be made up by the Scottish Government."
"The SNP cannot do policy stunts on the cheap and expect communities to pay for it.”
A Scottish Government spokesperson said: “The council tax freeze next year will benefit every council tax-payer in Scotland at a time when rising prices are putting significant strain on household finances.
“The total funding will be discussed and agreed in partnership with Local Government, and will form part of broader funding decisions made in the 2024-25 Scottish Budget.”
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