Scotland Finance

The ‘known knowns’ of Scottish local government


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This seems like a good moment to speculate a little on the future for local government in Scotland.

I use the word ‘speculate’ here because what I write below is just that; speculation. The approach is based on the famous comment by Donald Rumsfeld – there are things we can be sure of; things we know about vaguely but can’t be sure of; and possible events coming our way which we have no idea have even been set in motion yet.

Some known knowns

So let’s start with the ‘known knowns’, the things it’s not much good lamenting but which need to be tackled – in a whole variety of different ways, depending on your perspective.

Financially, the picture short term is not going to get any easier – and may even get worse. Partly that is about the absolute constraint on budgets, partly about the relationship between councils and government.

The current arrangements in Scotland – and to be fair, elsewhere in the UK – resemble a classic Parent-Child relationship. When you are dependent on another for most of your money, you constantly ask for more. The parent will say: there is no more; you have to manage what you have; and make exasperated gestures to the rest of the world. There’s no sight yet of an Adult-Adult relationship developing, which might be better. That’s one of the reasons to hope that the current review of council tax might shift some financial accountability back to local government.

However, unless such changes are well thought through, it will appear as though council responses to the financial squeeze are just a set of ad hoc cash saving measures that are complained about on the basis that they are just that – cash saving measures.

Around the Lothians, for example, a 4.5 day school week has been in place for – oh – 25 years or so. In other councils, attempts to do this – usually at the same time as discussing the budget – never a good idea – are howled down as ‘just about saving money’… or in the words of one parent “I can’t believe that any council would even think of this”.

Health and Social Care integration is on its way, with new joint integration bodies emerging all over the country. Everybody agrees that in principle this is a good idea, but the worry must be: what happens beyond year 1? If integration partnerships are ‘corporate ‘ bodies – and to some extent, but only to some extent, they are – then Year 2 is when they start agitating for more independence and more control in order to achieve their objectives.

The health boards and councils that jointly ‘parent ‘ these health and care bodies will be torn between either trying to indirectly control them or leaving all public responsibility (and complaints) with them.

Some unknown knowns?

These are the matters that are generally currently undiscussed. They are out there. Something might happen, but nobody is clear what that might be, or even what some of the options might be.

Once health and social care integration is fully launched and underway, just what will there be for the smaller health boards to do? In effect, health boards – apart from in areas of service failure -have little direct GP service control. In some instances there are very few facilities directly controlled by health boards, just because there are very few facilities. So integration brings the idea of a something like a ‘Single Public Authority ‘much closer for the three Island Groups, and quite possibly for the Scottish Borders and Dumfries and Galloway. The smaller health boards everywhere could soon be on life support.

Various people will continue to suggest that the answer to most of our problems is ‘fewer councils’.

It may be an answer, but if so, it’s a very incomplete one and probably trying to answer the wrong question. Simply to call for ‘fewer’ avoids saying what the right number might be. I guess we can assume the Police Scotland solution – one council for all of Scotland – is not on offer. Debating between 1 and 32 leads to an endless and somewhat tedious exercise of boundary drawing and internally contradictory arguments about the supposed benefits of such a change.

We currently have a review of local domestic property taxation: an attempt to find a way to deal with the council tax that both government and opposition are unhappy with, but not sure how to change or replace. Meanwhile, the Westminster government is reviewing Non Domestic Rates at present, and governments in Scotland have always been very cautious about sticking close to the English headline figure for business rates. The Holyrood government may be caught out by a characteristic Osborne sharp move (as happened over stamp duty/Land and Property Transfer Tax) and be forced to run very fast to catch up.

And some unknown unknowns…

Here’s where the real speculation begins.

One ‘unknown unknown’ might involve the government being really bold about returning some powers to councils, of the kind that existed right up until the 1980s and 1990s – let alone those much earlier decades when councils everywhere built up many of the institutions and facilities of the welfare state.

How about returning choice and decisions on Non Domestic Rates to councils rather the (Conservative introduced) nationalisation of such decisions? It might be moderated in some fashion, and would require much closer discussion with NDR payers than we have seen before, but it is certainly doable. After all, just as there might be some councils who’d want to increase NDR levels, there could be others willing to try reducing them. Commercial rents vary widely – why not business rates as well?

You just might also imagine the possibility that central government could take the chance to experiment with enabling councils to vary local forms of taxation, as seems appropriate to their circumstances. There are at least 3 or 4 councils in Scotland that would be willing to experiment with local tourism taxes – either throughout the area (Edinburgh) or parts of the area (Fife and Highland councils). The Scottish government appears to have set their hearts against this – for reasons that have never been evidenced in any serious way.

Is a 1% overnight tax on Edinburgh hotel rates, routinely quadrupled in price during the Festivals, likely to decide many people to stay in Manchester or sleep in Falkirk? Seems unlikely to me but some evidence either way would be helpful.

Whatever the likelihood of any of this, life for Scottish councils remains interesting…