Doomed SNP council tax pledge

SNP ministers knew their 2007 promise to scrap council tax was doomed to fail but refused to back down from it, according to official government records made public this week.

The SNP pledged in its manifesto to abolish council tax and replace it with a local income tax, which it said would save money for two-thirds of households.

But the Scottish Government refused to ditch the policy after the election even though behind the scenes it was being acknowledged that it was fraught with problems.

The widely criticised policy was not dropped until 18 months after ministers had been told of the legal and practical barriers to its implementation. Details have only now been revealed after National Records of Scotland released the content of Cabinet discussions from 2007 under a Scottish Government commitment to make the records available to the public after 15 years.

The records show that John Swinney, finance secretary at the time, had admitted to the Cabinet that UK legislation was needed for the ‘lion’s share’ of the switch to a local income tax to go ahead.

In a memorandum sent in autumn 2007, Mr Swinney admitted the Lord Advocate, Elish Angiolini, had ‘concluded that our proposals are outwith legislative competence’. She had warned of a legal challenge if the policy was passed by Holyrood.

Her conclusion stated: ‘A decision that the tax was unlawful could, at its worst, prevent any further collection of the tax and require the repayment of all funds which had been collected.

‘The consequences for local government finance and expenditure could be dramatic.’

Mr Swinney’s memorandum, which was seen by his Cabinet colleagues in October 2007, also conceded that the proposed 3 per cent rate of local income tax would create a ‘revenue shortfall’ of around £1billion a year.

He wrote: ‘The loss of the wide range of council tax exemptions and discounts will lead to a situation where many who could be seen as not particularly wealthy are worse off, for example some students and adults with certain types of mental disabilities.’

The policy was not dropped until February 2009.