Focusing on the council tax freeze ignores the need for wider reform

Before we pick apart some of Professor Midwinter’s arguments set out in today’s Scotland on Sunday, first let’s welcome the debate.

It is rare that we have serious – or at least semi-serious – debates about policy in the public domain and this one is a biggy.  While it is framed around the need to consider the affordability of public services and provision in the current landscape of cuts to the Scottish block grant, at its heart is a more fundamental matter.  Should we strive for universal provision or target funding at those who need it most?

In truth, it is the kind of policy area that whets the whistle of Labour much more than the SNP, which has far less of a social policy tradition in its DNA.  Indeed, the party’s approach to policy formulation in this area has always been of less interest to the big brains of the party whose boat is floated by economic stuff.  The party is great at the vision thing on the kind of Scotland we want to be, advocating a distinctly left of centre, socially progressive hue.  Words like fair and common weal and social wage pepper speeches but what is lacking is the intense policymaking and dialogue within party structures to work out what that actually requires a nation to do.

Hence, the attraction of universalism or as some have dismissed it, retail politics. There’s an element of truth in this – why would a party which has successfully campaigned its way into majority government on the back of universal policies tear those up?  Whether the SNP and the Scottish Government is in fact examining the affordability of any of its so-called “free” policies and working out different ways of tailoring the offering is a moot point:  it doesn’t have to, when Labour is doing the heavy lifting for it.  Labour might just find itself advocating, for example, raising qualification for a free bus pass to 65 – as Midwinter suggests – and the SNP deciding to accept the shift reluctantly in public and with some glee in private.

But a point of placement. Let’s not forget that Labour started the craze for universal and free stuff.  Free personal care, free bus travel, free heating systems for older people – all of these were introduced by a Labour-led administration when money was no object. In fact, I recall that Labour-Lib Dem executive resisting attempts to widen energy efficiency measures to the poorest families with young children because the money was needed for rich pensioners to get new heating systems.  And indeed, at Westminster, somewhat bizarrely it was Labour and the left which led the charge against cutting off child benefit for the most wealthy on the basis that it overturned the principle of universality in one of the last benefits to offer it.

So, having welcomed the debate which Labour is having with itself and bringing to our attention, let’s get on with cutting through some of Professor Midwinter’s crap.

Firstly, the charge on the Scottish Government that it has dismantled anti-poverty spending to the tune of £1 billion. To arrive at this figure, Midwinter selects policy and spending programmes which he considers to be anti-poverty and of course, ignores others. But he is right:  the Community Regeneration, Supporting People’s and Fairer Scotland Funds were handed over to local authorities and community planning partnerships to spend. But if they decided not to spend them on tackling poverty, they are to blame for the loss, not the Scottish Government.

And this actually points at a bigger issue. Unlike Labour which ring-fenced every new pot of money for every centrally announced and planned initiative – to the tune of nearly a billion pounds by their end days – the SNP trusted local government when it said it should be freed up from central constraint to deliver “local solutions to local needs”.  If those same local authorities have over the last six years made spending decisions which mean those funds haven’t been targeted at their original purpose, then maybe we need to shine a critical light there.  And work out how to fix that.

Indeed, it would be interesting to know just what councils have spent the money on.  They should be required to justify this, rather than wrongly blaming the Scottish Government for trusting councils to do as they said they would.  And that might well lead to a much broader discourse about whether local authorities as currently structured and populated are fit for purpose.

Secondly, the criticism against free prescriptions policy is unjust – and somewhat disingenuous, given that Labour was at pains to remind the voters of Dunfermline that they supported its introduction. For every well-off person who benefits when they occasionally need a pill or lotion, there are far poorer people who are reliant on whole streams of medication to manage their conditions who used to have to pay out significant parts of largely limited incomes on doing so.

Nicola Sturgeon’s objective on becoming Health Secretary in 2007 was always to introduce free prescriptions for those who need it most – the rules on who qualified had emerged in haphazard fashion so that some people with long term health conditions and disabilities got and some didn’t. But analysis suggested that expanding the qualifying criteria and the means test would actually cost more to administer than actually making all prescriptions free. Professor Midwinter ignores this context completely.

If the bill for free prescriptions is rising, then that is bound to be linked to our ageing population and sick man of Europe tag – entirely separate issues which need different policy solutions.  Keeping people healthier longer ie preventative activity, is actually a keystone for Scottish Government health policy, and more of it is required. Investing in this will bring the overall prescription bill down in the long term.

Finally, there’s the council tax freeze. There is no quibble here that given its longevity, it has meant a substantial saving for better off households and that even proportionately, those on the lowest bandings are not saving as much from the policy as others do.  But it is unhelpful only to quote the savings at the top and the bottom:  I’d imagine UK Labour, given its focus on the “squeezed middle”, would be just as interested in the savings applying for Bands C to E housing where these “hard pressed families” are likely to be living.

And even if they are still not saving as much of their income as those in these highest bandings, the wider picture of who is bearing the brunt of UK cuts and austerity measures needs to be factored in. As the Institute for Fiscal Studies has been telling us since 2010, that’s these same “hard pressed families”. Take away the council tax freeze and that would no doubt tip some of these families – with children – over the precipice. What are the wider consequences of this for other public services like housing, social work, health and education?  This kind of modelling has to be done before arriving at the conclusion that the council tax freeze is inherently unfair and now a massive problem.

Looking simply at local authorities’ needs, ‘m afraid I’m not getting how allowing them to raise council tax will add significantly to their spending power. £70 million is the total estimate for a 3% increase at Band D levels across the whole of Scotland, yet the total local government allocation last year was just over £10 billion.  We are talking pennies here in budgetary terms, yet the increasingly shrill calls from some councils to be freed to use their tax powers give the impression that we are talking serious money.  We’re not.  And say, councils are allowed to raise tax and they all choose to do so by say, 3%. It’s a universal, flat rate increase paid by folk in the wee houses as much as the big ones.  Who does such a raise hurt the most?

Moreover, what impact would any council tax rise have on council tax benefit requirements?  Would more people become eligible for benefit? How would that be paid for? Is Scottish Labour remembering that the monies for that pot are now devolved and were only kept at last year’s levels because the Scottish Government reinstated the UK Government’s 10% cut? It is to be hoped that Professor Midwinter’s analysis of the situation is rather more detailed than the simplistic statements in this article suggest.

There is no doubt that the parties are effectively dancing around the pinhead of the council tax freeze to avoid the bigger issue of local tax reform. The SNP parked its commitment on local income tax a long time ago;  no one except the Scottish Greens has investigated the plausibility of a land value tax;  and Scottish Labour appears to have shelved its 2007 manifesto commitment to add new bands to the top of the council tax structure.

Yet, working out how local authorities can be made more accountable for their spending decisions by allowing them to raise more of their own income is a key part surely of this debate.  Professor Midwinter is right – fiscal realism is necessary but we won’t get it if no party is prepared to consider how we create a more sustainable funding base for all public services, including local ones.  Targeting universal and supposedly free services to justify a shift towards means-testing might provide some short-term political answers for Scottish Labour, but it won’t provide effective policy solutions in the long-term.

20 thoughts on “Focusing on the council tax freeze ignores the need for wider reform

  1. I say potAto you say potato – out-dated, repetitive and utterly boring old song but it deflects from the real issues.

  2. According to the body representing council chief executives. “Local authorities face an ever-increasing challenge to deliver the council tax freeze, balance budgets and protect frontline services….”.

    http://www.scotsman.com/news/politics/top-stories/council-tax-freeze-challenging-say-authorities-1-3164393

    They should know, they are at the sharp end, they are the people that have to manage the budget and deliver the services. And they are not politicians or making a political point: they are saying it as they see it.

  3. Focusing on the council tax freeze ignores the need for wider reform – well of course it does. That is exactly why Prof Midwinter and Lamont and all of the better together camp are happy to focus on the freeze! Labour’s survival strategy in Scotland is to play up unionism and the role of local government and to emphasise how the SNP (which includes everyone in favour of indy) are holding LAs back by any means available for their own selfish nationalistic purposes, etc…. They will just keep on repeating the same stuff – there will be no debate from this report. Any meaningful discussion on reform will have to wait till after the referendum.

  4. “Focusing on the council tax freeze ignores the need for wider reform”

    Actually, the Council Tax – or more accurately its replacement by something else – is at the heart of any wider reform. No effective reform of local government is possible without first considering how to get out of the mess the CTF has created.

    You say “Professor Midwinter is right – fiscal realism is necessary but we won’t get it if no party is prepared to consider how we create a more sustainable funding base for all public services, including local ones”.

    Correct, but that is letting the SNP off the hook. They dived into the CTF without considering the long term effects. And they have kept it going, not because it’s the best way to order local government finances, but because they discovered it was popular.

    The SNP is the sponsor of the CTF, the SNP is in government, therefore SNP should be willing to take the lead in any discussion of how we clear up their mess. Of course that would man that they first have to accept and admit it is a mess, and that’s not likely before the referendum, is it? (actually it’s not likely at all).

    It’s depressingly familiar: the Nats do and say anything to buy votes from anywhere (in this case Tory votes) and Labour has to be the realistic adult, pointing out that endless partying has to be paid for and sometimes we have to tidy the living room.

    BTW, it’s not just Prof Midwinter who says “fiscal realism is necessary”. That’s what the much misquoted speech by Johann Lamont was about, and for which she gets lambasted and lied about by the cybernattery – and not just them…..

  5. Revaluation time – Commercial and Domestic. Widen the lower residential bands a bit and narrow the higher ones, probably with a new one or two on top.

    Bury the “concordat” and introduce a “collar” on LA spending (i.e. x-y% of budget spent on a handful of key service areas).

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  7. The Council Tax freeze favours the better off because the less well off are eligible for up to 100% rebate. It follows if you don’t pay or pay less, you don’t benefit or benefit less from a freeze.

    That’s why it buys Tory votes and why it was originally a Tory policy.

    • but there are actually very few who qualify for 100% ctb and the taper is pretty steep. Also, the Scottish budget now funds ctb so it would be a circular monetary transfer.

      of more interest is the potential to save on administration – across councils, administering CTB and HB costs around 80 million annually. Make it national and how much might be saved to put back into frontline services?

      • I think it favours the better off. It transfers public funds from the poor to the rich, and that’s not a good thing.

        You think it’s ok if the worst off are hit harder because there’s not a lot of them and the taper is steep, as long as the “squeezed middle” are looked after.

        The difference between me and you is a disagreement of how regressive it is and if that is acceptable or not.

        But the SNP keep pretending that the CT freeze is somehow left wing and progressive. when it clearly is not

        .

  8. Prof David bell and Stirling Uni team have modelled impact of CT freeze and declared that it does benefit. Links in my Flag in the Wind blogpost.

  9. “We are talking pennies here in budgetary terms, ”

    Depends what you call pennies.

    In my own Council area a sensible annual increase between 2007-2012 would have given the council an extra £7- £12m (v conservative estimate) in it’s 12-13 budget. Enough to make a local difference to the SNP’s cuts.

    • What counts as a sensible annual increase? Your figures suggest more than 3% which in the current climate is far from sensible, given pay freezes, other costs rising and pressures on family budgets. To see how inconsiderate councils can be at factoring in people’s needs and budgets, check out some of the council house rent increases in the last two years. A few froze rents, most increased them by more than inflation, hitting the “squeezed middle” hardest, particularly with the bedroom tax coming in.

      • So it’s not a matter of principle then?

        BTW has it ever occurred to you that a non-voluntary CTF is effectively a ring fencing of the entire Council budget, not just parts of it (which you seem to dislike).

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