Inverclyde Council leader's local authority bankruptcy fears

Stephen McCabe, whose Labour-led administration 'reluctantly' agreed not to hike council tax bills after reaching a 'compromise' with ministers, has called out the Scottish Government over its decision to pursue a national freeze on the levy.

A rise of 8.2 per cent was initially confirmed for Inverclyde taxpayers at February's budget meeting before further funding to offset the increase was secured for the district in a deal with deputy first minister, Shona Robison.

Following those 'intense negotiations', Mr McCabe has demanded no similar central intervention in local government decision making 'for the remaining life of this Scottish Parliament'.

Speaking after a meeting of the council's policy and resources committee, at which elected members passed a motion to proceed with rebates for direct debit customers, he said: "The Scottish Government have badly damaged their relationship with Cosla and local government more generally.

"They have forced councils and Integrated Joint Boards to implement significant budget cuts and they have pushed councils one step closer to effective bankruptcy.

READ MORE: Admin fees for U-turn over council tax freeze to cost Inverclyde £15k-£17k

"The First Minister should give an absolute commitment now that there will be no more freezes or caps on council tax for the remaining life of this Scottish Parliament and that he will now strictly adhere to the principles of the Verity House Agreement.”

At Tuesday's committee meeting, representatives approved a credit which will be paid into council tax accounts, in the same way as the one-off cost of living payment in 2022/23, to make up for the original charge that has already been applied.

New bills will be calculated and distributed during May to around 30,000 households by letter or online, depending on how they have opted to receive their council tax bills - in a move expected to cost the council between £15k and £17k.

Mr McCabe added: "While I would far rather the council had the freedom to spend the additional £2.9 million as we saw fit, I am pleased that after intense negotiations with the deputy first minister and government officials we have been able to reach an agreement with the Scottish Government that means this money will come to Inverclyde rather than be spent on other Scottish Government priorities.

“Last month, the council exercised its democratic right to increase council tax as part of a two-year budget to minimise cuts to jobs and services and fulfil our legal obligation to set a balanced budget.

“That was the right decision at the time and was taken in the best interests of the council and the people of Inverclyde.

Municipal Buildings (Image: NQ)

“What that meant was that we did not accept the government’s original offer to implement a council tax freeze.

“However, more money has since become available towards a council tax freeze, which would not have been offered had we and two other small councils not made a stand, and we lobbied the government for that money because it was earmarked specifically for Inverclyde and belongs to the people of Inverclyde who pay their taxes.

"I really do hope that the Scottish Government learns a lesson from this year’s budget process. They may have secured a national council tax freeze but that has come at a significant price."

A Scottish Government spokesperson said: “Scottish ministers are aware that many councils are under financial pressure, which is why the 2024-25 Scottish budget provides record funding for local government of over £14 billion.

“The Scottish Government has provided a real terms increase in revenue funding for local government in both 2022-23 and 2023-24, as confirmed by the Accounts Commission.

“Decisions on local government budget allocations for future years are subject to the outcome of negotiations with Cosla, the results of which will be confirmed in future Scottish budgets.

“Any assumptions relating to possible future budget reductions are entirely speculative at this stage.”