Budgeting for Future; Executive and Councils Must Avoid Funding Showdown

Summary

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The Scottish Executive appears to be on a collision course with local authorities that could have dire consequences for both. Council budgets are the root cause of a problem that could also have serious implications for the public, which depends on the services pro-vided by local authorities and funded mainly by the government. Tom McCabe, the finance minister, said yesterday's financial settlement was tight but realistic for councils. The Convention of Scottish Local Authorities (Cosla), said the (pounds) 25bn package of grants covering the period 2005-8 was disappointing and would mean that tough decisions would need to be made between significantly raising council tax or cutting services to make up projected shortfalls.

They cannot both be right. Gambling on the outcome is fraught politically because the next Scottish parliamentary elections are due in 2007, just as, on Cosla's figures, the impact of the settlement will begin really to bite. Funding increases over the three years tail off in percentage terms. By 2007-8, the settlement could be worth only 1.7% - an effective cut as, on today's figures, it would be below inflation. Both the executive and councils, most of which are Labour-controlled, could pay a price at the polls if services suffer or council tax rates rise. Council elections take place in tandem with the parliamentary poll and Labour could be on the end of a double whammy as proportional representation, being introduced for the 2007 local elections, seems certain particularly to damage the party's prospects.

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Budgeting for Future; Executive and Councils Must Avoid Funding Showdown

These are problems for the party to sort out among themselves. It is the impact of the settlem...

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