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Real change, not loose change

Scottish councils need proper funding in order to be able to serve their communities, says GORDON MUNRO

“COUNCILS are showing signs of increasing financial stress. They are finding it increasingly difficult to identify and deliver savings.” Local Government in Scotland Financial overview 2016/17, Audit Scotland, November 2017.

The Convention of Scottish Local Authorities (Cosla) in its submission to the Scottish government for its draft budget deliberations for 2019/20 pointed out that, over the past five years, councils in Scotland had made cuts of £1.7 billion and reduced the workforce by over 15,000 workers.

This is what John Stevenson of Unison writing in this paper called the “silent slaughter.” He’s right, but now it’s moved out into the open as the “financial stress” Audit Scotland referred to in 2016/17 is ramped up further. 

Cosla pointed out that to stand still councils needed £549 million. They didn’t get it. 

The Finance Secretary proclaimed a cash increase to councils of 2 per cent, £210.5m, in real terms but this figure took into account ringfenced funding for government priorities. 

However in reality if this was omitted then in cash terms for non-ringfenced funding for delivering services council funding fell by 1.7 per cent, -£157.2m and in real terms of -3.4 per cent, -£319.1m, between 2018/19 and 2019/20. 

In other words, more cuts to services and more jobs lost. This cannot continue.

The block grant is the main source of funding for Scottish councils comprising approximately 55 per cent of funds. 

This is funded from the block grant that Holyrood receives from Westminster. Holyrood’s block grant has declined by 0.4 per cent while in turn Holyrood has reduced councils’ block grant by 4 per cent. 

A choice has been made. Despite that choice other options could be taken. Increased powers have not been used such as revenue-raising via tax powers to help councils as they face “financial stress.”

Audit Scotland in its review of council finances suggested that consideration should be give to the funding formula for councils. 

This is worth consideration given the disparity in funding. The range in difference in Scotland’s four main cities is quite stark and shows the need for a review.

This disparity does not account for major changes such as the fact that Edinburgh has a pull effect which sees 70 per cent of all council lets and 41 per cent of registered social landlord lets go to those who are homeless compared with a Scottish average of 43 per cent and 26 per cent respectively in 2017/18. 

These figures are not just a reflection of Scotland’s housing crisis but also the “pull” effect of the capital and are a sharp illustration of the point made by Audit Scotland. The block grant allocation and the method of allocation can be changed by Holyrood.

Elected on a promise to “end the unfair council tax” in 2007 the Scottish government has still to do so, despite issuing – jointly with Cosla – the Just Change report in December 2015, raising expectations that legislation would be forthcoming in this parliament. 

This is still to happen and there are no signs that it will. However it is what is needed for Scottish councils. For example, in Edinburgh the council tax base starts at properties valued at under £27,000, of which Edinburgh has 23,676. 

Within the top band H — properties valued at over £210,000 — it has 3,992 properties in a city where the average property is valued at over £246,000. 

Values are set at values from the last century — April 1 1991, to be exact — and this needs to change. A change that can be made by Holyrood.

The last two years saw the council tax freeze — a policy introduced by Thatcher to curb councils — partially lifted but limited to 3 per cent. 

Twenty-four councils took advantage of this power, with 21 raising it by the full 3 per cent in 2018.

This indicated that councils would like this restriction on their ability to raise funds lifted. The accountability for any increase would lie with each council and with a declining block grant and increased costs is a lever which should be made available to councils if they wish to use it. 

Holyrood has the power to do this but has no shown no inclination to go any further than its timid response. 

A further factor giving Scotland’s councils a financial headache is the imposition of government policies without any funding. 

Cosla estimates that a burden of £325m is imposed in this manner, taking funding away from core services. 

It makes the point that this should be funded in full and not made as part of conditions for the core grant which it maintains should be protected and fully funded. 

Holyrood has a budget of over £33 billion along with increased powers that can be used to meet this request.

Another financial pressure on Scotland’s councils is the fact that the Integrated Joint Boards — a quango created by Holyrood — are, in the words of Audit Scotland, a point of stress as they “have underlying financial stability issues.” 

Eleven out of 30 incurred deficits and a further eight would have incurred deficits if they had not been deficit funded from partners. 

This has placed burdens on both councils and health boards and shows that there is an underlying structural problem here, not dissimilar to Police Scotland in some respects, that needs political maturity to resolve. 

This is a Scotland-wide problem and again is one that only Holyrood can resolve. 

Horse-trading last year at Holyrood over the budget saw councils receive some of the previous year’s underspend given to councils prior to March 31 but for use in the following year and in some cases after budgets had been set. 

This shows the esteem in which Holyrood holds local government, giving them no time to plan, discuss and agree how to use this “loose change.” 

Some folk even had the nerve to talk about “extra money” when in reality it meant less of a cut, but a cut nonetheless — a situation that is likely to arise again this year with the trumpeted “record underspend” announced last year by the Finance Secretary of £453m, money that is needed now, and £235m of this allocated for 2019/20 but with no budget line allocated. 

It is this amount that some say will be offered in this year’s horse-trading over the budget, although Scottish Green co-convener Patrick Harvie seems less willing to “do a Chamberlain” — waving a piece of white paper in his hand proclaiming a solution — after being quoted in the press earlier this year saying that Thatcher was more benign to councils than the SNP is in Scotland. 

While extra money is urgently needed for Scottish councils, problems such as unfunded policies and the structural problems of IJB need to be addressed. The real resolution is real change that reflects the real world of the 21st century so that councils are fully and properly funded. 

Holyrood was created to make a real difference and fully funding local government is the chance for Holyrood to make real change. 

Scotland’s councillors want to serve their communities not consult them over cuts to their services. Let’s make this year’s budget discussions about real change not just loose change to enable councillors to serve their communities.

Gordon Munro is a councillor for City of Edinburgh Council, Leith ward, Labour.

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