Local tax reform

The Scottish government recently set up a Commission on local tax reform. The Commission’s remit is, “To identify and examine alternative systems of local taxation that would deliver a fairer system of local taxation to support the funding of services delivered by local government.” This is a welcome and timely initiative, as most people do regard the council tax as unfair. Unfortunately, no-one as yet has come up with a workable alternative. I wish the Commission every success in their endeavours.

However, I do feel that you cannot have a meaningful discussion of local finance without first determining what local government should do and what size of local governments we want. Local government has probably always been a balance between local and national government, in terms of provision, priorities and funding. Increasingly this balance has tilted quite massively towards the national level.

This trend is perhaps most clearly illustrated by education, in particular, school education. The public provision of schools started as a local provision, first with parishes and then through local authorities. Post war developments however have seen nearly all the key decisions affecting schools taken at the national level.

Though Scotland may not have a formal national curriculum, it has always had one in practice. With a sole exam board, schools necessarily had to tailor their curriculum to meet the requirements of this board. Since the 1960’s at the latest, the Scottish Education Department has taken an ever increasing role in developing the curriculum, culminating in the Curriculum for Excellence. It is worth noting that this curriculum was an initiative of the last Labour/LibDem coalition and was supported by all parties at Holyrood. While teachers have an increased responsibility for its implementation, there is not doubt that this is in essence a national curriculum for all schools.

Staffing is another aspect of education that is determined at the national level. Qualifications, conditions of service and salaries for staff are all determined and negotiated at the national level. The standards for school buildings is also a national standard. While there is some local flexibility around holidays, the number of hours that pupils must spend in school is set nationally.

This is not altogether surprising and is almost certainly the norm in other countries. Education in the sense of public schools is now essentially a national service that is delivered locally. In this it has much in common with the NHS. The public provision of health services only began in the late 1940’s and was from the go, set up as a national service, with no direct involvement by local authorities. I wonder if the public provision of schools had only started at the same time would it too have been set up as a national service, outwith local control?

This leaves two crucial aspects of education that remain in a kind of limbo – accountability and funding. Though, as the recent questions around levels of literacy and numeracy show, accountability for educational performance is increasing seen as a national issue. Questions are asked in parliament to the relevant minister and not primarily to the 32 local authorities, who actually run the schools.

Funding is of course one of the most crucial elements in any service. Here too, most of the funding for schools comes from central government in the form of grants. However local authorities still have to raise a significant part of their overall budget, mainly from the council tax. My question is why? If education is seen primarily as a national service, why not provide all the funding for it out of general taxation? This is what we do with the health service. I am not sure there would be much support among the public for part of the funding for the health service to come from local taxes, whether this is the council tax or its replacement.

I must point out that I am referring to the funding for education. The delivery and the management of schools can remain a local authority task. There would have to be a formal compact or agreement between the Scottish government and local authorities to cover this, but that is what happens to a large extent at the moment. Taking funding out of local taxation would I contend lead to greater transparency and ultimately greater accountability for how much is spent on education.

I have concentrated on education as it is one of the largest elements in the budgets of local authorities. Much of what I have written above will probably apply to many parts of the Social Work budget as well.

My central point is that before we can debate alternatives to the council tax we need to look beyond the current balance between local and national funding. If the funding for what are essentially national services comes out of general taxation, this would change the whole debate over local taxation.

The Commission has now issued a call for evidence from members of the public, both individuals and groups. You can find out more about the work of the Commission and how to respond here.



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