Finance Secretary Robison: No Need for Significant Council Tax Increases

Finance Secretary Shona Robison has asserted that council tax increments should be restricted to a “minimum” in the upcoming year. Her administration intends to lift a freeze on local authority levies starting in April. Robison indicated that a proposed £1bn increase in funding for councils is expected to preclude them from implementing any “large” tax raises. Prior to the Budget announcement, Cosla, a body representing councils, cautioned that increases might be necessary to safeguard “vital services.” The organization has not yet provided a comprehensive reaction to the government’s spending proposals, with council leaders scheduled to convene on Friday. Council tax is determined, managed, and utilized by local authorities. The government has previously provided financial encouragement for adherence to a cap or freeze. In an interview with BBC Radio’s Good Morning Scotland programme, Robison stated: “The settlement that we are giving to local governments, I think, will mean that they don’t have to put large increases to council tax.” She further added: “I don’t think there’s any administration of any political colour that will want to look at citizens in the eye, given this settlement, and increase the council tax beyond what is required. “And I’m sure there’ll be a sensible outcome in those discussions.” Under the government’s Budget plan, funding for local authorities is projected to surpass £15bn for the first time. Robison specified that this encompasses £289m of non-ring fenced discretionary funding within the general revenue grant. This record settlement nonetheless remains below the £15.4bn that Cosla had requested before the Budget. A recent survey conducted by the Local Government Information Unit revealed approximately 20% of councils were contemplating tax rises of at least 10% next year. Councillors in Perth and Kinross have already approved proposals envisioning tax increases of 10% in 2025 and 2026, and 6% in 2027. This plan will require final approval when the local authority ratifies its budget in February. Since 2007, council tax has typically been either frozen or had its increases limited by Holyrood. According to figures from 2021-22, council tax revenue constituted approximately 20% of local authority funding. The levy was frozen in 2024-25, with the government compensating councils with over £200m to cover the associated cost. While the freeze was positively received by property owners, it provoked discontent among financially strained councils. The measure has also drawn criticism for being an ineffective method of assisting the most disadvantaged, given that rates are based on property values from 1991. Following the Budget, Cosla stated its intention to “spend the coming days analysing the implications for local authorities.” Scotland’s 32 councils will be undertaking calculations in the coming days to ascertain the precise impact of the Budget on them. Some of these funds will be ring-fenced or allocated for specific objectives or initiatives. Councils are legally mandated to set balanced budgets. The council tax constitutes a comparatively minor portion of each council’s overall budget, yet it holds significant importance due to its payment by every household. However, would substantial increases be acceptable to local voters? Would they express dissatisfaction with rising bills? Or would they be content to pay more if they perceived local services were being safeguarded? In 2023, amidst high inflation, councils were permitted to raise council tax by as much as they deemed appropriate. Numerous councils opted for 5% increases, while a minority implemented higher percentages. Individual councils will determine local council tax increases in approximately two months’ time. The Scottish Conservatives asserted that the government ought to have utilized the Budget to revoke “damaging tax increases.” Instead, Robison proposed adjustments to lower income tax thresholds, which she stated would offer “certainty and stability” for taxpayers. According to the Chartered Institute of Taxation, this action is projected to save individuals earning less than £30,300 up to £28.27 per year, in contrast to residents in other parts of the UK. Robison affirmed that the income tax measures outlined in this Budget are anticipated to generate an additional £1.7bn for the Scottish government, compared to the implementation of the UK system. A further significant announcement involved an additional £2bn in cash terms for the health and social care budget, relative to 2024-25. However, David Phillips, associate director at the IFS, noted that figures published alongside Robison’s speech indicate the true increase will approximate £1bn. A proposition to effectively abolish the two-child cap on benefits in Scotland was described as the “rabbit out of the hat” in the SNP Budget. This UK government policy prevents parents from claiming universal credit or child tax credit for a third child, with certain exemptions. Robison stated her intention to furnish funding to the families of the 15,000 affected children in Scotland by April 2026 – however, she did not specify the government’s method for achieving this. The government projects the cost to be between £110m and £150m in 2026-27. Independent economists suggest these costs could escalate to up to £300m in future years. SNP ministers indicate Social Security Scotland is allocated £3m over the next two financial years to construct the necessary system to mitigate the cap, but emphasize the necessity for the UK government to provide data on individuals missing out on benefits due to the policy. Robison remarked: “I would be astonished if the UK Labour government didn’t ensure that the Department of Work and Pensions was approaching this in a sensible, productive way.” Social Justice Secretary Shirley-Anne Somerville has officially communicated with the UK government, requesting eligibility data access and collaborative efforts to guarantee any extra benefit payments are not clawed back. A UK government spokesperson affirmed it would engage constructively with the Scottish government “where necessary.” The two-child cap originated under the Conservative UK government in 2017 but has been maintained by Sir Keir Starmer’s Labour administration. At First Minister’s Questions, John Swinney expressed his government’s desire to abolish the “heinous” two-child limit “because the UK Labour government has to date failed to do so.” Following a speech detailing his six principal objectives, Sir Keir stated he did not concur that abolishing the cap would serve as a “silver bullet” to