The leader of Inverclyde Council has raised concerns about a proposed Council Tax freeze next year with Scotland’s first minister.

Councillor Stephen McCabe has written to Humza Yousaf questioning the logic of the idea, especially when local government finances are under pressure.

Mr McCabe has also called on the first minister to ensure any Council Tax freeze is fully funded by the Scottish Government and expressed concerns that the proposal was announced without consultation with councils and that it ‘flew in the face’ of the Verity House Agreement signed with local government organisation COSLA earlier this year, which was designed to forge stronger partnership working between local and national government.

Cllr McCabe said: “I appreciate that in the intervening period there has been engagement between yourself and the Deputy First Minister with political group leaders through COSLA, who sought clarification on a range of matters, however, the elected members of Inverclyde Council wish me to raise our own significant concerns around both the announcement and the implications it has for the Council’s budget and the residents of Inverclyde.

“Like COSLA Group Leaders, and many others across local government and civic Scotland, we believe your announcement flew in the face of this ethos and brings into question your Government’s commitment to the rest of the agreement.”

Mr McCabe said a Council Tax freeze could result in more cuts to services and made the case for councils to be able to set their own rates.

Cllr McCabe said: “We believe that locally elected Councillors should have the freedom to balance local tax raising decisions and levels of local service delivery.

“As you are aware, Council Tax is the main income raising tool available to Councils and, in the case of Inverclyde Council, it raises approximately 10 times more income than all the fees and charges combined.

“Therefore, by removing our ability to raise Council Tax the only option for the Council to balance its budget in a sustainable manner is further cuts to Council services.”

The full text of the letter is as follows:

Dear First Minister

Impact of the Council Tax Freeze Announcement

As Council Leader, I am writing on behalf of Inverclyde Council to raise several concerns regarding the unexpected announcement of a Council Tax freeze for 2024/25, which you made at the SNP Conference on 17 October 2023.

I appreciate that in the intervening period there has been engagement between yourself and the Deputy First Minister with political group leaders through COSLA, who sought clarification on a range of matters, however, the elected members of Inverclyde Council wish me to raise our own significant concerns around both the announcement and the implications it has for the Council’s budget and the residents of Inverclyde.

Following the signing of the Verity House agreement by the Scottish Government and COSLA on 30 June, it had been anticipated that unilateral announcements such as the one you made on 17 October were a thing of the past and that, as indicated in the Verity House Agreement, matters would be done in the spirit of partnership with a “local by default, national by agreement” ethos.  Like COSLA Group Leaders, and many others across local government and civic Scotland, we believe your announcement flew in the face of this ethos and brings into question your Government’s commitment to the rest of the agreement.

It is noted that both yourself and the Deputy First Minister have subsequently given a clear commitment that the Council Tax freeze announcement will not impinge on making real and rapid progress in implementing the key aspects of the Verity House agreement, including giving local government more flexibility over its finances with less central direction and Councils having the freedom to manage our own finances in a manner that best serves our communities.  We expect to see real tangible progress on these matters over the coming weeks. 

With regards the Council Tax freeze itself, this Council has intimated its opposition to centrally imposed Council Tax freezes since the very first year of the freeze in 2008/09.  We believe that locally elected Councillors should have the freedom to balance local tax raising decisions and levels of local service delivery.  As you are aware, Council Tax is the main income raising tool available to Councils and, in the case of Inverclyde Council, it raises approximately 10 times more income than all the fees and charges combined.  Therefore, by removing our ability to raise Council Tax the only option for the Council to balance its budget in a sustainable manner is further cuts to Council services.

Over and above our concerns about the local democratic deficit that a centrally imposed Council Tax freeze results in, there is the issue which has been highlighted for many years, that a Council Tax freeze actually benefits most those in higher banded properties and by default those who generally have more disposable income than those in lower banded properties, many of whom receive no direct financial benefit from the Council Tax freeze due to being in receipt of Council Tax Reduction support.  Within Inverclyde approximately 25% of Council Taxpayers will, therefore, not benefit from the Council Tax freeze and of these an estimated 97% live in band A to D properties.

From a local tax perspective, a Council Tax freeze simply tinkers with a flawed system whereas the action that is required is to either fundamentally reform Council Tax or replace it with a less regressive form of local taxation.

Finally, the Council notes your commitment to “fully fund” the Council Tax freeze, although it is still unclear what this means in practice.  Our view is that in return for agreeing to freeze Council Tax, so you can honour the political promise you made on 17 October, at a minimum there should be an uplift in our grant settlement that removes the need to cut services and provides sufficient funding for a fair pay increase for our workforce, including progress towards a Scottish Local Government Living Wage of £15 an hour by 2026.

I would welcome an early response.

Yours sincerely

Councillor Stephen McCabe

Leader of the Council