Edinburgh, I’d like a council tax cut please

Casting my beady eye over the council budgets the other week, I was a little perplexed by Edinburgh’s.  I commented on it in the round-up post at the time, but it was definitely worth a second look.

For the uninitiated, local authorities get most of their funding by way of a big dod of grant from the Scottish Government.  That covers most of their expenditure.  This year, Edinburgh got £770.7 million by way of general revenue funding and non-domestic rate allocation.  They also got another £48 million in ring-fenced funding which yes, still exists but is largely for police and fire expenditure.

(If you really want to, you can read the whole budget in all its detail here.  You want the first report in the list.)

Beforehand, the council had worked out how much money it needed to fund everything it wanted/needed to spend on services.  This came to £1.032 billion, including the £48 million worth of expenditure covered by the ring-fenced grant.

Still with me?  Good.

So, a shortfall of £213.5 million, which it either resolves by making cuts or through income collected by way of council tax or a bit of both.

Even with the 5th year of council tax freeze – which, if you recall, had COSLA and local authorities (and other parties) squealing like stuck pigs for a while – the projected revenue from council tax collection in Edinburgh is £228.6 million.

That’s right, a standstill council tax would actually raise £15 million more than the council needs in 2012-13 to fund all its needs.

Did it propose to cut the council tax rate?  Nope.

Bizarrely, the local authority – led by a Lib Dem/SNP coalition – then proceeded to apply the near £5 million of cuts it had previously worked out in its budget deliberations.  Adding these savings to the council tax surplus gave it a wee election war chest of nearly £20 million.

So it now had another £20 million to invest in new or expanded stuff.  A scurry around services whipped up a wish list of £25.9 million.  Did it scale back its ambitions, given that it now had a shortfall to find in the region of £6 million?  Dinna be daft.  It raided the reserves to plug that gap.

And hey bingo, a budget!

Now, a few concerns and queries.

What was the point of taking £5 million out of services, only to put £26 million back in?  Clearly local authorities have a responsibility to constantly hunt down inefficiency and waste but can it hand on heart say that all the service cuts came under these headings?

I just don’t get the point of taking away with one hand then putting back with the other.  It is pretty much sleight of hand and nonsense budgeting.  It enables the council to meet the Cabinet Secretary for Finance’s requirements to make a certain percentage of efficiency savings without doing anything of the kind.

Worse, is the coming up with new projects and investment proposals that cost more than the pot of money available to spend.  That goes against the grain of the fiscal discipline and rigour expected of local authorities these days.  And serves no purpose.

Moreover, if the council had £15 million in reserves – which it did – why any cuts at all?  Indeed, the raid on reserves of £6 million is for such detailed expenditure as £2.9 million for a “contingency fund for corporate items”, £992k for a “council priorities fund”, £699k for “energy efficiency” (funny, I thought that was supposed to realise savings not additional expenditure), £350k for “budget flexibility”, £150k for “minor funds” and £65k for “other capital fund”.

I haven’t a clue what any of this actually means but cannot escape the suspicion that it is for slush.  Or pork barrel, as it is also known.  Because it is only when you factor in that this is an election year for the council and its councillors, that some of these odd budgeting decisions start to make sense.

The Lib Dem/SNP administration had no need to take £6 million out of reserves for this kind of non-specific, somewhat spurious expenditure.  So, it could have cut its wish list down to £19 million which would have almost balanced.

Moreover, there was no need to take £5 million away from services, only to put it back in, in some form or another, through the additional expenditure proposed for the £19 million.  It could have saved these jobs, services, activities and still have had £14 million extra to spend on shiny, new things.

And maybe it could have asked the citizens of Edinburgh what they wanted.  The local authority did, after all, have a pretty extensive consultation exercise over this budget setting period.  During that process, if the numbers had been set out accurately to people, the income surplus would have been evident and at that stage, people’s preference could have been sought.

For the fact is that even with a 5th year in a row freeze, Edinburgh is raking in more council tax than it needs currently to plug the gap between expenditure needs and central government grant.  Had the council wanted to, rather than trying to impress folk with additional spending, it could have offered a council tax cut.  If not for everyone, then certainly for some groups, or those in the lowest band housing, which is often where people on the lowest incomes live.  Such a move would have gone some way to even out some of the inequalities inherent in a universal freeze.

And the Lib Dem/SNP administration could have put that budget option before the people.  I, for one, would have opted for a council tax cut, especially if it could have been targeted at those who need it most.

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About burdzeyeview

A Scottish burd casting a beady eye over political, topical, economic and social issues that ruffle my feathers.

Posted on February 23, 2012, in All things policy related and tagged , , , , , . Bookmark the permalink. 7 Comments.

  1. It never ceases to amaze me that people are so quick to ask for a tax cut. Only to find out it would be worth no more than a packet of peanuts to the great number of people on lower incomes. No, the monies should have been set aside for unplanned expenditures where the majority would most likley benefit.

  2. Doug – asking for efficiency savings isn’t a good idea, since councillors will look after their own pet projects first, while trying to convince us mere mortals (patronisingly) that it is for the benefit of us all. At least that’s what happens in South Lanarkshire………

    I’ve seen first hand on several occasions where efficiency savings have produced a worse service, resulting in the savings being reversed as it is realised that the very jobs cut were essential.

  3. Very true. The impression you do get is that if every council and governmental body doesn’t spend its budget completely, they fear the “punishment” of having their following year’s grants reduced. Hardly a blueprint for savings or efficiency. Except that they always find a way to spend a surplus anyway. It’s been anything from essential roadworks, to OTT nightclub raids with riot police that yield about two prosecutions (e.g. Wilkie House in 2001), and putting tarmac on new cycle paths, down the years.
    They could possibly have made small council tax cuts, or saved it in case next winter is particularly harsh and they need emergency spending for road grit (remember that?) or emergency plumbing.
    But they’d rather have a few slush funds set up – “council priorities”, “minor funds”, “other capital fund”, and “contingency fund for corporate items” (“here, Mr Important-Business, have a cigar and a sauna”!).

  4. And you just know that if the Government wasn’t enforcing a council tax freeze, they’d have been raising the council tax anyway, don’t you?

    Something I would like to happen in an independent Scotland is for local and national government to be constantly on the lookout for efficiency savings. It’s not good enough to wait until there’s a shortfall in funding to say “oh wait, we could actually do this a bit cheaper”. In software development, a good developer is always checking whether their code could be “refactored” to make it more streamlined and basically run better. The same idea should be adopted for public spending, always checking whether there is a better and cheaper way of delivering services. You get the impression this doesn’t happen, though.

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