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Wednesday, 17 December 2014

Council Tax Lessons from Scotland

I note one of the counter-arguments to a Council Tax rise in Brent is that the government gives a grant not to raise Council Tax which offsets most of the loss.  This is true, but to look at why it is not as simple as it seems it is worth looking north of the Border.

Scotland, under the SNP, pioneered the idea of a Council Tax freeze, and suggested it to the Tories to the South.  This was introduced in 2007-8.  As the grant has been extended for freezing each year, the cost to Holyrood has gone up with each year.  For 2015-16, it stands at £560 million, and the cumulative cost 20 £2,520 million.  In my judgement, Holyrood is likely to decide at some point that the burden is no longer affordable.  At that point, Holyrood can simply not renew the grant and leave Councils to make up the gap.  Since Councils are effectively limited to a 2% Council Tax rise by the referendum threat, that effectively means that they could only make up the gap with a further round of spending cuts equivalent to several years worth of potential Council Tax rises.

That is what I mean by Brent Council digging its own grave. 

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