Magazine article Public Finance

The Yes Effect on Councils

Magazine article Public Finance

The Yes Effect on Councils

Article excerpt

Scotland's municipal heads of finance believe that local authorities will need extra powers and greater autonomy if the country votes for independence in September's referendum.

They voted by an eight-to-one margin in favour of additional powers after a lively discussion at the annual Public Finance debate in Glasgow, amid warnings that the council tax freeze was eroding local democracy.

Columnist Ruth Wishart, who served on the Christie Commission on public service reform, summarised the mood when she said: T want a Scotland where local democracy isn't greeted with such consummate indifference by the electorate. What the people are saying is that local authorities are not making enough of a difference.'

Glasgow council chief executive George Black went further. 'Irrespective of whether the vote is for independence or not, everybody in local government would be looking for more powers and incentives to be devolved to local level,' he said.

The debate, sponsored by Northern Trust, also heard concerns about the future of the Barnett Formula for distributing public spending; calls for power to be devolved beyond councils to communities; predictions of continuing reform in local service delivery; and fears of political instability if Scots vote against independence.

Wishart and Black were joined on the expert panel by Scotland's Auditor General, Caroline Gardner, and Queen Margaret University Professor of Management Richard Kerley.

Delegates held a card vote on a question from Ian Lorimer, chair of the Directors of Finance Group for Scotland, as to whether councils would need further powers and greater autonomy in the event of a Yes vote. The result was 23 to three in the affirmative.

Black, stressing his view that the need to restore powers was there regardless of the referendum, predicted that a Yes vote might push along the agenda for restoring powers, while Gardner thought there were cultural barriers to innovation that councils could already be eradicating.

Kerley agreed that some councils made insufficient use of existing powers, though he supported increased autonomy regardless of the vote, while Wishart said it was an anomaly that most Scots consistently expressed a preference for 'devo max', increased devolution within the UK, but that option had not been allowed on to the ballot paper.

Black complained at a lack of reliable information on the implications of independence for council finances, especially on whether the council tax freeze would give way to repatriation of fiscal discretioa

Gardner judged it unlikely that either referendum outcome would impact greatly on the need for austerity, since the fiscal outlook was tight up to 2020, while Kerley thought it possible that a proindependence vote might give councils 'more headroom space'.

'Independence might stop the power flow from local government,' Kerley said. 'On the other hand, any change is likely to be extremely costly. We don't know what the costs will be exactly, but they will put pressure on pre-existing public services.'

Wishart argued that it was likely that the Barnett Formula would disappear, regardless of the vote. She also hoped relations between councils and Holyrood would improve in the event of a Yes vote.

T suspect that, if there were a No vote, Scotland would slip off [Westminster's] radar quite quickly. As far as local government is concerned, I suspect that national government in Scotland would be dealing with an ever-tighter budget without any increase in its borrowing capabilities,' she said. …

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