There was talk over the weekend about the rise in council tax that’s inevitably coming when the current freeze – announced last year by Humza Yousaf – comes to an end. One SNP MSP was quoted as saying “councils will be able to let council tax rip”. Brace yourselves.

The question is whether ending the freeze and allowing councils to increase the tax again is the right way to go. The Scottish Government’s rationale when they announced the freeze was that people were struggling with their bills during a cost of living crisis, which they were and are, and that council tax was one of the bills the government could control to make people’s lives a little easier. Don’t dig too deep – in fact, don’t dig at all – and this is a perfectly reasonable argument.

The problem with it is that freezing council tax actually punishes, twice over, the people it’s trying to help. First of all, it’s the middle classes and above who benefit most from a freeze because they pay more of the tax and people in poverty see virtually none of the savings. Secondly, a freeze means councils have less income (even with the government’s extra budget to compensate) and start to make cuts or charge for services and, again, it’s people in poverty who rely on those services most and therefore suffer the most.

I would have thought all of this is fairly obvious because everyone everywhere has been saying it for years. Poverty campaigners say the tax is regressive because it doesn’t properly take account of people’s incomes. Experts on local government point out the banding system is bonkers, with houses in the highest band paying only around three times those in the lowest ones. And even the SNP used to say council tax was rubbish and had to go, most recently (with a brass neck you’ve got to admire in a way) in the speech by Humza Yousaf announcing the freeze. Mr Yousaf said the government was committed to fundamentally reforming local taxation, presumably in the same way that I am committed to being 12 stone again while eating lots of doughnuts.

So, we’re agreed, I hope, that the freeze was a terrible idea and had to end. But I hope we’re also agreed that “letting council tax rip”, as that MSP told The Times at the weekend, is also a terrible idea. Mr Yousaf was certainly right in saying that people struggling with their bills should be helped, he was just wrong in thinking a freeze was the right way to do it. Equally, allowing councils to let rip would also make things worse, even for people in the lowest bands who are paying the least council tax.

Much more important is changing council tax, so that you can raise it in the right places. Some people talk about ending the single-person discount because so many people live on their own now, but I think most people can see the overall fairness of the policy. Some councils are also targeting second homes and charging double council tax, but the problem with that one is much of the motivation, I think, is to discourage people from having second homes even though such people tend to be richer anyway and a bit more council tax is unlikely to put them off.

Read more

Alastair Campbell on Rory Stewart and the SNP loss

Move to the centre of Glasgow? Is that really a good idea?

A much better idea would be to look at the inequalities at the heart of how councils work and the way they’re paid for and deal with those. I was in East Renfrewshire and Inverness the other week comparing the experiences people have with their councils and on the whole people in East Renfrewshire said their council was good and people in Inverness said their council was terrible and part of the explanation is that one council has lots of well-off communities who do not generally put a strain on public services and the other has a smaller, spread-out population with a lot of hidden poverty. It makes the case for looking again at where the council boundaries are and trying to achieve a much better mix of better-off and less-well-off, especially in Greater Glasgow.

My hope would be that, one day, a government will take that task on, as well as other ways to improve council finance, such as banning the practice of ring-fencing budgets around central government priorities. Local councils should be free to spend their money as they see fit because they’re more likely than central government to know what’s best on the ground. In fact, why don’t we just do what Germany does and introduce an outright ban on central government interfering in the fiscal affairs of local councils?

In the meantime though, we could do what the SNP said they would do in 2007 – Seventeen. Years. Ago. – and reform council tax. Gordon Brown’s thinktank Our Scottish Future has done some good work on this and makes the point that councils are often relegated to a delivery agent for the centre and are the least fiscally empowered in Europe. But the most important point they make is that council tax should be replaced by another form of taxation that’s better and more progressive. I agree with Mr Brown.

There are various alternatives we might consider, including a property tax with a greater number of bands that are more realistic about the gap between the poorest and the richest. One benefit of that would be that you’re building on a tax that people are familiar with (however unfair it may be). Another benefit would be that houses and flats are right there on the streets where we can see them – in other words, avoiding the tax is difficult.

(Image: Shona Robison)

However, my personal preference would be to go for some kind of hybrid model combining an assessment of where you live with an assessment of how much you earn. This would deal with the “granny problem” i.e. the single woman with a small income who pays a lot of council tax because she lives in the old family home. And it would also raise more money from a relatively well-off person who lives in a one-bedroom apartment. Another way of putting it is: it would be fairer.

For some reason I can’t fathom, the Scottish Government seems to be reluctant to do any of this. Despite the finance secretary Shona Robison announcing a public sector recruitment freeze, and the SNP scrapping universal winter fuel payments, I’m also not convinced they have the stomach for looking at the alternative to a council tax rise, which is to look at where savings could be made. Compulsory sharing of council facilities for example. Or even better, merging some councils entirely.

Should they refuse to take any of the first two options – reforming council tax or looking again at spending – then that does, probably, leave us with the reality that the MSP was talking about: councils letting rip with the rises and it’s an unsettling prospect isn’t it? Before the freeze was imposed, some councils were talking about rises of 10%, except it may well be a lot higher than that this time and the only way to stop it is to change the system and impose any increases more fairly. It’s something the SNP said they would do in 2007 remember. Still waiting.