The ever growing bill for Humza Yousaf's council tax freeze

The festive season has come early to Bute House. 

Earlier this month, the council umbrella body Cosla sent Humza Yousaf a Christmas tree.

Not a real tree, you understand, a metaphorical one. 

A letter festooned with demands that local authority leaders want delivered in return for agreeing to a council tax freeze next year.

The First Minister may have thought this policy would be relatively straightforward when he announced it at the SNP conference as a voter-pleasing headline grabber. 

He was badly mistaken. 

He misjudged the mood of local authority leaders with their own elected mandates who are sick of central government clipping their wings and telling them what to do.

In the early days of the SNP government, councils went along with what was meant to be a three-year council tax freeze to let ministers replace the levy with a local income tax.

That was done by paying councils roughly £70m a year to offset a 3% rise in tax they would have otherwise made to help fund services.

The SNP’s local income tax plan proved an unworkable mess, but after seeing how popular the freeze was, ministers kept it going regardless. It lasted nine years, until 2017.

By then councils had woken up to the fact that it was costing them money and were itching to get their hands back on the controls. 

They accepted a one-off freeze in 2021/22 in return for £90m to help keep bills down during the Covid pandemic, but that was supposed to be an end to it.  

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Last year they raised the tax an average of 5%, but many hiked it by 7%, and one by 10%. 

In light of the UK’s worst inflation for three decades, councils were expecting to raise it by at least as much again next spring, raising an additional £150m. 

They were also banking on structural changes to the bills for Band E to H houses proposed by the Scottish Government which would have raised another £180m each year.

Mr Yousaf’s conference speech put paid to both those calculations – he scrapped the structural changes and announced a freeze. It was the first council leaders knew about it.

Understandably livid, especially after inking a “no surprises” deal with the government called the Verity House Agreement (VHA) in June, they are getting their own back.

After years of coming as supplicants to Edinburgh, council leaders find themselves with some rare and exquisitely enjoyable leverage, and boy are they using it.

The First Minister's speech at SNP conference scrapped structural changes to council tax and announced a freeze, much to council leaders' chagrin (Image: Newsquest)
The letter to Mr Yousaf made clear they are looking for the freeze to be “fully funded”, ie at the top end of their arithmetic.

“Compensating at 3%, as was the case the last time a freeze was implemented, is not what we could even begin to consider full funding,” Cosla’s SNP president Shona Morrison wrote.

The money also has to be “truly additional” and not moved from another council pot, be for one year only, and no penalty should apply to any council ignoring the freeze.

Moreover, any deal appears tied to the government agreeing to an assortment of other local government funding in 2024/25.

This broad-ranging package “should allow councils to deliver all Scottish Government commitments made during 2023/24, protect current local service levels and provide funding to cover the costs of inflation and a fair pay rise for local government workers”. 

To make up for Mr Yousaf botching the announcement, councils also want him to show "commitment" to the VHA by coughing up more money on the National Care Service, allowing them to cut “arbitrary teacher numbers” and rejig the school week, ditch a review of council capital spending, and give them more cash for a host of other policies. Bauble after bauble on the sagging Christmas tree.

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Twisting the knife, Ms Morrison made sure the FM knew this was all his doing – and his burden. 

“The freeze is a policy choice that you have made, and it will undoubtedly lead to difficult decisions for you and your Cabinet, as you seek to find money that could otherwise have been raised locally.”

This is painful stuff for the government, which is already skint.

Deputy FM Shona Robison today set out £680m of “exceptionally difficult” savings in the current financial year. Next year looks tougher still.

But the price for keeping that promise on the council tax freeze keeps going up. 

She is due to meet Ms Morrison tomorrow. It will be an interesting discussion. But not a happy one.