SNP to let council tax rip as spending freeze bites

Council tax bills are expected to surge next year as SNP ministers abandon Humza Yousaf’s policy of freezing rates due to a government cash crisis.
The emergency spending freeze put in place by Shona Robison, the finance secretary, is also likely to bring cuts to charity funding and a clampdown on ministerial travel.
Every cabinet secretary will be expected to implement significant cost-saving reforms within their departments as part of the next Holyrood budget, which will be proposed this winter.
On the other side of the ledger, fresh income streams are being sought, particularly as John Swinney, the first minister, and Kate Forbes, his deputy and the economy minister, are sceptical about introducing further income tax increases.
• Scottish government faces tough choices on spending
Sources believe revenue will be generated by allowing local authorities to raise council tax, which will provide a saving for the SNP central government that allocates council budgets.
Almost £210 million extra was handed to town halls to “fully fund” this year’s council tax freeze — a last-minute announcement by Yousaf, the former first minister, in his keynote speech to SNP conference as the party reeled from a heavy defeat in last year’s Rutherglen byelection.
Critics, including many within the SNP, believe it was fiscally incoherent to freeze council tax rates before raising income tax on higher earners.
“Watch for the reverse of last year,” said a senior SNP MSP. “There is no appetite for income tax increases, but councils will be able to let council tax rip.”
A public sector recruitment ban brought in by ministers is expected to make rapid savings for the government to offset above-inflation pay deals. Public bodies will be under scrutiny to justify new hires that must be deemed “essential”.
However, it is unlikely that the Scottish government’s no compulsory redundancy policy, which it adopted in 2007, will be abandoned.
In a strategy document on public sector pay last year, ministers were warned that an “unintended consequence” of this commitment means that employers are retaining unnecessary staff some of whom are stuck in unsatisfying and potentially redundant roles.
Colin Borland, the director of devolved nations at the Federation of Small Businesses, said the headcount of civil servants has “grown significantly over the years”.
“Perhaps it is time for the Scottish government to look again at its workforce planning, including considering whether its ‘no compulsory redundancy’ policy remains tenable,” he said.
Ministers are also looking at which backroom services and buildings public bodies could share — an undertaking being led by Ivan McKee, the public finance minister.
The first year of sharing buildings led to £36 million in savings with another £18 million expected across this year, primarily from changes made in Edinburgh and Dundee. However, there is a recognition that much more is required and reviews are ongoing in Aberdeen, Ayr and Perth as leases expire over the coming months.
James Mitchell, professor of public policy at the University of Edinburgh, said the SNP had failed to engage in “long-term strategic thinking in spending decisions”.
He said that there should be “a proper audit of spending with a view to prioritisation, long-term planning focused on improving outcomes” with strong leadership to make tough decisions.
“The problem … is that bad decisions are most likely to follow in the wake of a crisis, cutting what is politically more acceptable in the short-term rather than what is best in public policy terms,” he said.
João Sousa, deputy director of the Fraser of Allander economic institute, said that paying public servants more while reducing their number “might be worth it if you have people who are in better working conditions, they might be more productive”.
He said: “You can see if you look at what’s been happening in the last few years, that the growth in employment in the NHS in Scotland has been much slower than in the rest of the UK as a whole.
“So that points to the fact that, you know, the same thing that is now being announced by the cabinet secretary is very similar to what’s been happening in the real world already, which is like, you have not necessarily have had a recruitment freeze, but you certainly have slower recruitment than elsewhere.”