Council tax could be hiked 6% after freeze this year, Cosla warns MSPs

Scots could face council tax hikes of 6% in 2022 after Finance Secretary Kate Forbes offered authorities £90 million to freeze the charge in the forthcoming financial year, MSPs have been warned.

Gail Macgregor, resources spokeswoman for local government body Cosla, also said staffing cuts may have to be made if councils do not get more cash to fund a pay increase for workers.

In her draft Scottish Budget unveiled at Holyrood last week, Ms Forbes promised councils would receive an overall funding package of £11.6 billion for 2021-22.

She said freezing council tax this year will help provide “financial reassurance to families who are struggling”.

Ms Macgregor told Holyrood’s Finance Committee that authorities are clear that council tax should be determined locally – adding leaders would most likely have “applied fair prudence” in determining any rises.

But she said it will now be “very difficult” for them not to take the cash from the Scottish Government to freeze the charge.

She stressed: “This is very much a local tax, it should have been left to leaders to make that decision. Leaders understand their communities and the pressures on households at the moment, and would probably have applied fair prudence anyway.”

She questioned whether £90 million will be enough to fully fund the council tax freeze, and added: “If it is not sufficient we will need to go back to Government and ask for more.

“Is it baselined into the budget? Because obviously if we don’t put council tax up this year it artificially keeps the base low, which means we need to double it to 6% next year, which would have an impact on households.”

She also warned the committee that without a further increase in council funding, cuts could be needed to either pay or services, as she said the money being provided to authorities will not be enough to allow them to match the Scottish Government’s public sector pay policy.

That allows for a 3% rise in wages for those earning up to £25,000 a year, while higher earnings will get a 1% increase, with this capped at a maximum of £800

She told MSPs the Budget allocation only provides an additional £95 million for councils, saying it “clearly falls very short of Cosla’s asks”.

Ms Macgregor said: “The £95 million will only go less than half way towards paying for an uplift in pay, the pay policy that was announced last week, if we were to just match, that would cost £205 million.

“The £95 million wouldn’t cover even the most modest of pay increases.”

She warned there would now be an “an enormous pressure on council budgets going forward”, telling the committee: “We cannot undervalue our local government staff.

“I am about to enter some quite sensitive pay negotiations at a time when the workforce is feeling a bit wearied and a bit underappreciated, and that is going to make things incredibly challenging when we only have 0.9% uplift in our own budget.

“For every 1% award that we give, it will cost in the region of £90 million, and the Scottish Government pay policy alone will cost £205 million.

“For us to reach a reasonable settlement with the unions we will need to see an increase in our core budget to be able to do that.”

Without extra cash to give council staff a “decent” pay award, she said this could have “impacts on other areas”.

She added: “The last thing we want to see is job losses, but the reality is if we don’t get sufficient funding to cover a reasonable pay award, we will be looking at either cuts in services or cutbacks in staff, which would be a shame.”