AFTER a lacklustre start to his leadership, Humza Yousaf knew he needed to produce a rabbit from his hat at SNP conference; to come up with a headline-grabbing policy that would stamp his identity on the party. Well, he certainly did that. His surprise announcement of yet another freeze on council taxes achieved three things, none of them positive.
It undermined his claim to be in favour of tackling poverty through progressive taxation; it trashed the newly-signed Verity House Agreement, further undermining relations with local authorities, and it drew attention to one of the greatest disappointments of the SNP era: its failure to deliver on its pledge to replace the council tax with something more equitable.
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That Yousaf’s decision came hot on the heels of a plan to raise the relative tax rates applied to properties in Bands E to H by between 7.5% and 22.5% (something the Institute of Fiscal Studies said would have reduced the tax’s regressivity) further exposed the populism of a move designed to win short-term approval at the expense of long-term credibility.
The First Minister might have hoped the clapping would last longer than the time it took him to leave the podium; but even within his own party, there were those who immediately understood the emptiness of the gesture.
Yousaf framed the policy – on which COSLA, civil servants and his own cabinet members were not consulted – as an antidote to the cost of living crisis. Insisting it would be fully funded (about which, more later) he presented it as an example of the Scottish Government’s compassion/largesse.
“We know people are filled with dread when the bills are going up,” he said. Whether or not he knows the dread people feel when vital services are cut is a moot point. But he cannot fail to be aware that those who will most benefit from a freeze are those with money, and those who will suffer most from the axing of services are those without. And that – whether or not the freeze is fully-funded – councils are already suffering the effects of an erosion of their grants (around 2% lower in real terms than in 2009–10, according to the IFS).
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The way Yousaf has handled the announcement is an open goal for Scottish Labour, which is now echoing the outrage of the local authorities (though given Keir Starmer has already backed a council tax freeze in England, its longer-term position remains to be seen).
Its smugness is unwarranted. Indeed, it is discombobulating to hear leading Labour figures slam the freeze as “populist” when it was a direct response to its Rutherglen and Hamilton West by-election candidate Michael Shanks stoking fears about the SNP’s original “tax hike” in a (successful) attempt to win votes.
Of course, the SNP’s response to Labour’s electioneering was some electioneering of its own. That’s how politics functions nowadays: no ideas born of inspiration or moral conviction; no policy follow-through. Just a chain of knee-jerk overreactions to what your rivals say or do, with one eye on focus groups and another on the polls.
Thus, when the Tories held Uxbridge as a result of a backlash to the expansion of London’s Ultra Low Emission Zone, it dumped its existing climate change policies and declared itself “on the side of the motorist”. And now, when Scottish Labour scores a by-election victory, a tiny part of which could be attributed to the SNP’s proposed E-H tax rises, Yousaf takes the ad hoc – and apparently uncosted – decision not merely to scrap the original plan, but to effectively declare himself on the side of the beleaguered taxpayer by freezing them.
This move allows the party the illusion of having lanced the boil of the by-election defeat without any of the hard work that would be required to properly analyse and absorb wider public disaffection; but that’s another story.
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Back to the council tax freeze. As I said, most objections to it are being met with the claim that it will be fully-funded; but what does this mean? During past freezes, the Scottish Government covered rises of up to 3% – that’s the percentage on which the much-bandied-about figure of £100m is based. However councils have not yet set their budgets for 2024-25. Some are now claiming they were considering rises of up to 10%. Ten per cent might seem excessive – and would certainly hit householders hard – but last week economist David Phillips of the IFS agreed substantial increases were necessary if councils were to go on providing services.
“Even with a 5% council tax rise, we thought that councils could need to make cuts to quite a range of services next year, given rising pressures for social care services,” he said. “Even if the Scottish Government fully funded a 5% equivalent, next year would still be very tough for Scottish councils. Of course, if they only fund 2% or 3%, that makes it really challenging.”
To fully fund the shortfall for a year could cost upwards of £400m. That’s a lot of money for the Scottish Government to find in its back pocket. And even if it does, what happens the following year, once the bail-out comes to an end? Do local authorities have to introduce two years’ rises at once in order to keep pace with inflation?
Crucially, aren’t there better and more targeted ways for a government which has pledged to tackle poverty to spend such enormous resources? It was interesting, for example, to note that the SNP’s programme for government did not include the rise in the Scottish child payment which anti-poverty groups had asked for, nor any commitment to fully mitigate against the UK government’s two child benefit cap. That Yousaf should choose a council tax freeze over these initiatives is an indication that he is intent on wooing middle-class voters and playing into the whole “strivers” v “skivers” rhetoric.
It is also an indication that his overtures towards a better relationship with councils, through the Verity House Agreement, were meaningless. While it is true that council tax represents less than a fifth of local authorities’ income, it is the only part of their income over which they can exercise any control; removing that control further emasculates them. That’s before you come to the sheer discourtesy of not consulting or even notifying them of a fundamental change to the financial context in which they will be expected to operate.
The Scottish government’s original plan to raise the relative tax bands was badly timed given household bills and mortgages are spiralling, and it would have been of limited worth without a revaluation of properties (which hasn’t been done since the council tax was introduced in 1991) . But what everyone knows, and the SNP has consistently acknowledged, is that neither upper-band hikes nor freezes will fix a levy that is inherently regressive.
Scrapping the council tax has been SNP policy since it came into power in 2007; and though Scottish Labour did block reform in that first parliament, there has been plenty of time for the party to act since.
It would have been braver for Yousaf to use his conference speech to properly recommit to the SNP’s original pledge (complete with a concrete plan and a timescale). Instead, he took the line of least resistance. Policy on the hoof. Instant gratification.
But the problem with instant gratification is that the high is short-lived. Any relief felt now is likely to be replaced by anger when swimming pools and libraries close and bins go unemptied. Moreover, with no sign of COSLA’s anger abating, Yousaf may yet have to back down. Any retreat would underline his weakness and undermine his leadership.
That’s a huge price to pay for a ripple of applause.
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