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		Briefings Home | Responses | PFI Index | Policy Guide Local Government Finance Briefing No 12   INTRODUCTION This briefing sets out UNISON's policy on the reform of Scottish local government finance. It details the current position held by the Scottish Executive and Scottish Parliament and UNISON's policy stance in relation to: the case for reform, the council tax and non-domestic rates, additional ways of raising revenue, hypothecation, and the Private Finance Initiative. BACKGROUND INFORMATION The Scottish Parliament's Local Government Committee is undertaking an inquiry into local government finance. The move follows a decision by the Scottish Executive not to set up an independent review. The terms of reference for the Scottish Parliament inquiry are as follows: to examine the current system of local government finance, including systems of local taxation; to identify strengths and weaknesses of the current system to make recommendations on improving the system. A report from the Committee to the Parliament is expected by January 2002. UNISON POLICY UNISON has submitted detailed evidence to the Scottish Parliament Local Government Committee on a range of issues: The Case for Reform UNISON believes that the system of local government finance in Scotland is long overdue for reform. For too long local government has suffered from the effects of year on year cuts in funding coupled with restraints on freedom of action. The effects of persistent neglect can be seen in declining local services and under investment in staffing and infrastructure. UNISON believes that the aims of Scottish local government finance reform should be to: Strengthen local accountability Provide adequate resources to meet councils' revenue and investment needs Ensure fairness between authorities taking account of different population needs and revenue raising capacity Enable forward planning Protect against sharp cash reductions The Council Tax and the Non-Domestic Rate At present Scottish local government currently raises too small a proportion of its total expenditure, approximately one fifth. UNISON believes this figure should be around 50%. This could be achieved by returning the business rate to local authority control. UNISON supports the retention of the council tax. The tax is both well understood and progressive. To make it even fairer we advocate adding new bands at both the top and bottom and undertaking regular revaluations. UNISON is disappointed that the Scottish Executive is continuing to maintain reserve capping powers. While we welcome the abolition of 'crude and universal' capping we believe this is insufficient. Councils should ultimately be accountable to their local electorates rather than to central government. Additions to the Council Tax UNISON believes that local government should also have the freedom to raise revenue in a range of other ways in addition to the Council Tax. We believe the principle of flexibility is key. What may be appropriate for one local authority might not be appropriate in another. UNISON supports further consideration of a hotel bed tax as an option. Large amounts of public finance are often invested in events and projects designed to attract tourists. The beneficiaries of this investment have been hotels, restaurants and shops, which contribute nothing directly to these activities. (eg Edinburgh Hogmanay) UNISON believes that a local sales tax has some merit and notes that such a tax is used extensively elsewhere outside the UK. We recognise, however, that a sales tax could have practical difficulties, particularly regarding its collection and that it is also largely regressive. UNISON strongly believes that second homes should be treated exactly the same as the main residence and owners should be required to pay the full Council Tax on these properties. Discounts on second homes are unfair and often lead to abuses of the system. Hypothecation and Challenge Funding UNISON is strongly opposed to both hypothecation and challenge funding. Although this has resulted in welcome increases in expenditure in certain areas it has been resulted in disproportionate cuts in other equally important areas, skewing and distorting local government budgets. Openness and Accountability UNISON believes that local authorities can do much more to explain the system of local government finance to local council tax payers – through websites, exhibitions and council magazines. UNISON would like to see far greater scope for councils to involve the community in the budget making process secure in the knowledge that this will not then be subject to later central government interference. Private Finance Initiative / Public Private Partnerships UNISON is strongly opposed to the use of PFI/PPP in Scottish local government for the following reasons: this is a more expensive way of procuring capital projects priorities in local government expenditure are being skewed it is having a detrimental impact on local government workers jobs, pay and conditions of service it is resulting in the privatisation of Scotland's local government services the system of PFI/PPP is clouded in secrecy Despite our reservations, if PFI is to continue, however, we would argue that services should be excluded. At the very least, this scales down the size of the projects and allows services to be retained under the direct control of public authorities and staff to remain as public employees. Keeping all local government services under a single, public sector employer gives a flexibility that can meet the anticipated and unforeseen needs of the coming years. BRANCH ACTION Branches should make themselves aware of UNISON policy and as part of our 'Positively Public' campaign seek to lobby local councils and MSPs in favour of our position. Those members active in the APF and Labour party should seek to influence the views of their local Constituency Labour Parties in Policy Forums. For Further Information Full copies of UNISON's submission are available from from UNISON House, 14 West Campbell Street, Glasgow, G2 6RX. 0141 332 0006 l.strachan@unison.co.uk