Strained relations over council funding deal

It would be astounding if any council actually rejected the Scottish government's funding offer.

Councils are heavily dependent on the Scottish government for their money - to say no at this stage, with no prospect of a significantly better offer, would plunge them into crisis.

But this year's budget offer has strained relations badly between non-SNP councils and the Scottish government.

The immediate concern is straightforward. Many councils argue they will receive less than they had anticipated so are now contemplating bigger cuts and savings than they had forecast.

The government offer, as ever, includes money to compensate councils for not putting up the council tax.

The government points to research which demonstrates that, if anything, councils have been over-compensated for freezing the council tax which last went up in 2007.

However, this is only one portion of a complex equation. What really matters to councils is the overall amount they get from the government and how much control they have over their finances.

Councils say they will get less in absolute terms in the coming year - Cosla talks of £350m of cuts - and many say the reduction is worse than anticipated.

One council, Moray, proposed an 18% rise in council tax. It said the rise needed to be that big to balance out the loss of the government money to compensate them for the council tax freeze and balance out the impact of other cuts.

A few other councils, including Highland and Fife, seriously explored the possibility of raising council tax.

In 2011 the SNP promised to freeze the council tax until this year - they argue the freeze has been a popular policy and believe it has been a real help to family budgets.

Sceptics have always noted that the biggest savings - in absolute terms - were made by people who live in large houses who may not make much use personally of council services. The government's own poverty adviser recently acknowledged this debate.

Faced with the realistic possibility of a few increases, the government toughened up its carrot and stick approach - a rise would have left councils losing some other government money too. Moray took its proposed rise off the table.

A number of councils will decide how they actually spend their money a little later than usual this year, to give themselves more time to find possible options for cuts and savings.

As ever, one question is over how many of these options will mean cuts which are immediately obvious to the public. Or, will there be more so-called stealth cuts which may only be felt by staff and anyone immediately affected?

There are, of course, also genuine arguments over potential efficiency savings and some may even wonder whether there are services currently provided by some councils which could actually be better left to the private sector.

However, these are long term, underlying issues - the need to balance budgets is an immediate one.

In the coming Scottish election, local services and how councils are funded is likely to become a major issue.

Labour has proposed raising income tax to balance out the cuts councils are now facing.

Local democracy

The underlying question though is about how much control of their finances councils should have and whether the council tax should be reformed or replaced.

Proposals from all the main parties are expected in the coming weeks.

Some in local government would be very disappointed if the proposals only looked at whether the small portion of their finances which comes from the council tax could be raised in a different way and if the parties did not address the question of whether councils should also have more financial freedom.

A report produced for Cosla in 2014 argued that to strengthen local democracy, communities had to be in a position to determine what kind of services they wanted and how much they were prepared to pay for them.

While the council tax freeze will almost certainly continue this year, the Scottish government's critics will argue it has been at a high cost - both to council services and the relationship between some councils and the Scottish government.

The Scottish government will argue it has tried to do its best for councils in difficult circumstances and protected them from the worst of what it calls Westminster cuts.