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March 20, 2019

Blame game

For anyone trying to understand the shifting sands in the relationship between local and national government, the McIntosh Report published in 1999 seems to be required reading.  The McIntosh Commission tried to explore the emerging and potential relationships between local government and the new Scottish Parliament and made a number of recommendations, many of which appear to have fallen by the wayside. Prof James Mitchell of Edinburgh University suggests that this was an opportunity lost and a significant factor in the current blame game that colours so much of this crucial relationship.

James Mitchell, The Sceptical Scot

Concern that devolution would suck up power and resources from local government was a major theme of devolution debates in the 1970s.

In the 1980/90s, home rulers promised a new era in central local relations as local authorities played a full part in the Constitutional Convention.

A Commission on relations between the Parliament and local government was set up in anticipation of the Parliament’s establishment under Sir Neil McIntosh, former chief executive of Strathclyde Regional Council.  The McIntosh Report is worth reading again twenty years after its publication.  Some of its recommendations were implemented but its essential message has been lost.  Key messages included:

             relations between local and Scottish central government should be based on mutual respect and parity of esteem, given their common democratic mandate,

             emphasised that the principle of subsidiarity, that decisions should be taken as close to communities as possible, and local governance has to be the right shape and form for the people and places it serves, ought to inform relations

             and that in the event of greater centralisation then the onus was on the Scottish Parliament to demonstrate the benefits that would accrue,

             the principle of subsidiarity went beyond local government and reached down into local communities.

Andy Wightman, Green MSP, has proposed the enactment of the Council of Europe’s Charter of Local Self-Government.  This would go some way to entrenching the position of local government and ensure that any future centralisation would require Parliamentary approval.

Off on the wrong foot

Scottish local government shared in the splurge in spending in the early years of devolution.  It must also share some responsibility for the failure to use those resources wisely.  Spend, spend, spend was the order of the day.  There was no shift to prevention, as would be recommended by the Christie Commission on delivering public services, insufficient effort to look to the future, little subsidiarity to local communities and limited collaboration across public services.  Public bodies, including local government, were all too willing to believe that boom and bust had ended.

But the years of plenty were followed by years of famine.  The good times may come back but few hold out much hope that this will happen soon.  In these circumstances, the politics of austerity become a blame game.  And difficult choices are evaded like a game of pass the parcel.

The test of central-local relations post-devolution only really began following the fiscal consequences of the ‘Great Recession’ (2008-2009). Local government has suffered the brunt of cuts as the Scottish Government has passed on the decline in its share of revenue.  Indeed, the cuts to local government have exceeded cuts in grants the Scottish Government has received from the Treasury.

In large measure this is because governments of all complexions prioritise spending on the National Health Service with public support for its insatiable appetite for public funding.  Local government is set to suffer until a serious debate takes place on the long-term future funding of the NHS.

The claim by Scottish Government that local government grants have increased is a partial reading of developments.  Partnership that only exists when and where it suits one level of government precludes parity of esteem.  Devolving penury is the opposite of subsidiarity.  Centralised decision-making that runs contrary to local government wishes is fiat without dialogue.  Demanding community empowerment while limiting local resources means cuts to services essential to meaningful empowerment.

Tax-cuts or cuts in services

There are only two ways to plug the gap in funding and neither is palatable: increasing taxes or cutting services.  Central governments tend to evade this choice by passing it on to others.  The fear in the 1970s was that a Scottish Assembly, as then envisaged during this earlier period of austerity, would cut local authority grants and force Scottish local government to increase rates, the local property taxes then existing.  This situation today differs in one crucial respect.  Scottish central government not only cuts local authority grants but prevents local authorities from raising revenue locally to the extent necessary.  It is hypocritical to complain about the lack of local financial autonomy and then to oppose any proposals for local fiscal responsibility without proposing alternatives.  This oppositionalist culture is as much part of the problem as centralisation imposed by the Scottish Government.  There have been a succession of enquiries considering the options.  What has been lacking is a consensus and the political will to act.

Enquiries since devolution that have considered local taxation

1998: Commission on Local Government and the Scottish Parliament (McIntosh)

Called for an immediate independent inquiry into local government finance (para.57)

2006: Local Government Finance Review Committee (Burt)

Proposed a flat rate percentage property tax regularly revalued based on capital values – rejected in Scotland but adopted in Northern Ireland.

2014: Commission on Strengthening Local Democracy

Full review of following propositions: local govt should be able to raise at least 50% of income locally; control whole suite of property taxes (Council Tax, Business Rates, Land and Property Transaction); general competence to set and raise new taxes.

2015: Commission on Local Tax Reform

Programme of reform introduced over time involving: multiple forms of tax (property, land and income but also reflecting local circumstances the possibility of environmental, resource, sales, tourist taxes) required including recurrent tax on property; change should be more progressive than current council tax; transitional arrangements required; review of central grants; further consideration of land value tax; longer term consideration of local income tax and possibility of local government having a share of Scottish Rate of Income Tax in interim.

Blame game

Recent debates on the Scottish budget highlighted this tawdry central-local blame game.  Local authorities may have received more in total from central government but that total includes an element that is tied to central government policy prescriptions.  The element of grant that is left for local discretion has been cut. In simple terms, this is like a parent successively cutting weekly pocket money while giving the child money to go to the shops for something that the parent wants without any consultation on whether what is to be bought is best value for the money with the added threat that failure to get exactly what is demanded will result in pocket money being reduced further.

The parent-child analogy should not be carried too far but it captures the nature of a relationship in which one partner rejects parity of esteem.  But the debate has also highlighted a child-like attitude amongst some of those who demand local autonomy but really mean the continued infantilisation of local government.  So long as local government is as highly dependent on central government for grant as it has become, then its only recourse will be to go cap in hand to the Scottish Government asking for more.  Fiscal responsibility is the flip side of fiscal autonomy.  Those who argue for more money from the Scottish Government without proposing new powers for local government to raise own revenue are also playing a blame game.

There are no easy options. The present impasse means cuts in basic services are inevitable.  If services are to be protected, then the McIntosh Report’s recommendations need to be embraced.  There has been no shortage of inquiries and recommendations on how to translate these principles into fiscal practice.  But the lack of political will and a preference for the blame game stand in the way.