Council tax will not go up in Aberdeen next month – putting leading councillors at odds with their most senior financial advisers.
Marischal College accountants have urged the city council to reject the offer of cash from the Scottish Government, equivalent to a 5% rise.
Chief finance officer Jonathan Belford instead suggested an 8% increase on the household bill, which is the single biggest earner within the local authority’s control.
He has warned that the city will be millions worse off in coming years if the council opts to introduce the council tax freeze.
But in Aberdeen, the SNP-dominated administration has ruled out going against their Scottish Government’s offer of a council tax freeze.
City finance convener Alex McLellan told The P&J: “The SNP and Liberal Democrat partnership will not be proposing any increase to council tax in Aberdeen.
“While officers’ recommendations could potentially raise a further £4 million we need to be clear that would be coming from the pockets of citizens – which is simply unacceptable during the ongoing cost-of-living crisis.”
Together, the political groups are in majority in the council chamber.
Next Wednesday, Mr McLellan will put forward their plans to cut £25.3m from next year’s spending.
The case for a council tax freeze in Aberdeen
Not freezing council tax would cost Aberdeen the £6.98m sum, worth the 5% rise, offered by the Scottish Government.
But there’s another £2m on the line too, after last week’s last-minute intervention from Deputy First Minister Shona Robison.
After some councils had already agreed their budgets – and on the same day Aberdeenshire councillors met to approve theirs – she promised another £62.7m to be divvied up by local authorities, if they agreed to the freeze.
For Aberdeen, that’s worth another £2m.
There are conditions on this extra cash, namely that the Chancellor doesn’t cut Scottish Government funding in his Spring Budget.
Jeremy Hunt will reveal his UK spending plans on the same day as Aberdeen’s budget vote.
It will mean a blind vote of faith in the hope of the combined council tax freeze package, worth just short of £9m.
However, Mr Belford’s recommended rise would eclipse that, meaning less cuts elsewhere – and keep decision-making at a local level.
Increasing council tax by his suggested 8% would be worth £11m to council coffers.
Bills for homes in Band D would go up from £1,489.55 to £1,609.
Why turn down free money?
Mr Belford had been banking on an 8% rise as he worked to balance the city’s books throughout the year.
Last year, he had vouched for a 10% hike. But ultimately it rose by 5%.
When First Minister Humza Yousaf announced the council tax freeze in Aberdeen in October, it was not clear at what level it would be funded.
Aberdeen Labour fought for the council to go to war on the issue.
They claimed, when the promise of a 5% rise did come, that it should be upped to Mr Belford’s 8%.
In a report making his case to reject the Holyrood cash, the finance officer said: “[An 8% increase] reflects the lower than inflation increase approved for 2023-24 and the stubborn nature of inflation during this year.”
Council tax freeze could leave Aberdeen £4m out of pocket every year
Another reason is the knock-on impact freezing council tax now will have on future years.
The deputy first minister has vowed that the cash to cover the council tax freeze will be rolled on to future years’ funding for the local authorities which enact it.
But Mr Belford is not counting on the extra £2m, which is as yet unconfirmed by Jeremy Hunt’s Spring Budget.
And, in any case, it would still mean the starting point for Aberdeen is lower next year than it otherwise would be.
Mr Belford said in his report: “By accepting a grant instead of raising council tax, the council limits the value of income that can be generated in 2024-25 and, as it does not increase the council tax base, the future level of income that could be generated will be lower.
“[An 8% increase] will increase income by circa £4m in 2024-25, recurring, over and above the value of the grant on offer to freeze council tax.”
Mr Belford is also recommending Aberdeen City Council takes advantage of new rules around council tax on second homes.
Council tax could be doubled, if his 100% premium is added to bills as suggested.
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