Fairer Council Tax: consultation analysis

Analysis - Question 7: Please tell us how you think changes to Council Tax rates for properties in Bands E, F, G and H would affect your local area, or Scotland as a whole (please consider social, economic, environment, community, cultural, enterprise impacts that you think are relevant).

Qualitative analysis

There were 13,683 responses to this question. As with Question 4, around 20% of respondents did not directly answer the specific consultation question and instead discussed their general opinion about the proposed increases, including the unfairness of the proposed change and proposed revisions to or replacement of the Council Tax system. An in-depth discussion of these views can be found in the analysis to Question 1.

Impact on provision of council services

Respondents mentioning the impact of the proposed increase on the provision of council services could be classified into two groups. First, some respondents stated their opinions on current operations of council services (most of these respondents expressed a dissatisfaction with levels of service provision or quality of services). These examples were used to illustrate these respondents’ belief that the tax levied currently was not being put to good use as things stood now.

“Councils need to demonstrate that they use funds more effectively for the benefit of the citizens paying council tax. At the moment there is a lot of dissatisfaction with councils' use of money. They are using our money but not on the things we feel to be important, even essential, [and] far more is being spent on vanity projects and simple wastage of money. Roads and streets are badly maintained, street drains [are] blocked and fewer cleaned, with flooding ensuing. Public transport does not meet the needs of their working and business population who are the main groups paying council tax.” (Individual, City of Edinburgh, Band D)

“I do not believe the increases will provide any benefit at all to our area. I have seen no investment by the council in our area for years - I am not in easy walking distance of a doctor surgery, pharmacy, secondary school, post office, convenience store, library, or park with benches and play/exercise area, for example. The rate of new build houses is high in our area, yet we see none of these basic services being put in place despite the significant increase in residents.” (Individual, North Ayrshire, Band G)

Second, respondents commented on the potential impact of a Council Tax increase on future provision of council services. These respondents felt that the increase would not raise sufficient funds to make a meaningful impact on their local councils and the services they provided for four reasons. First, respondents thought that if the increase would be unaffordable for many households, it could lead to greater reliance on public funds, such as the Council Tax Reduction Scheme, to mitigate the impacts of an increase.

“We are concerned that this will have a negative impact on Local Authority services or may result in greater reliance on public resources as we believe that there is a risk that households may have more need to access public funds such as the Scottish Welfare Fund to alleviate the financial hardship that this increase in Council Tax will result in.” (Organisation)

“The cumulative effect of price increases of which council tax would be one will likely impact all aspects of society. This may drive an increase in areas such as crime, substance misuse and health inequalities requiring more public sector / council resources to deal with the effects and perpetuating a vicious cycle.” (Individual, Fife, Band E)

Second, respondents thought that increased Council Tax debt by individuals and rising collection expenses meant that councils might not receive the full additional revenue from the proposed increase.

“[…] this could lead to further burdens on courts and local authorities through increased arrears and associated collection action, never mind the residents taken to court for money they may simply not have.” (Organisation based in North Ayrshire)

“There may also be increased levels of debt as more people are unable to pay their council tax. Councils therefore [will] not collect the cash due, so then [they] cannot afford the services they provide. In this situation, councils cannot expect to collect the full additional revenue brought about by the change.” (Individual, Fife, Band F)

Third, respondents thought that the additional revenue from the proposed increase would only be used to address deficits in existing funding (instead of increasing provision of services).

“I feel that a rise in council tax would not improve anything, as there is a huge deficit in funds at the moment and as a result, the extra money would only go a small way to filling an ever-increasing black hole.” (Individual, North Lanarkshire, Band E)

“I don’t think it will bring in enough to touch the deficit local authorities are facing, more of a sticking plaster to fill a gaping hole.” (Individual, West Dunbartonshire, Band G).

Fourth, respondents thought that Council Tax represented a small proportion of overall local government funding (with most funding coming instead through block grants from the Scottish Government). These respondents suggested that increased funding from the Scottish Government was needed to improve service provision.

“Given that council tax makes up a very small proportion of local authority spending, I would not expect to see any positive difference in the local authority services in my community, nor Scotland as a whole.” (Individual, Aberdeenshire, Band F)

“I understand that that the Council Tax accounts for only 10% of councils revenue, the balance comes in the form of a grant from Westminster via the Scottish Government so there would only be limited benefit in raising the property tax for a small proportion of higher value properties affecting only a fraction of total revenue. I live in Midlothian where properties in council tax Bands E-H as a percentage of total dwellings is less than 10% so there would be a negligible impact on service provision in my local area.” (Individual, Midlothian, Band F)

Impact of households relocating to more affordable areas (within Scotland)

Respondents thought that an increase in Council Tax for Bands E-H could lead households to relocate to more affordable areas. Some of these respondents focused on relocation within Scotland (to more affordable areas with a greater proportion of lower band properties). These respondents mentioned a number of potential impacts caused by households moving to more affordable areas.

First, respondents thought there could be increased market pressure placed on lower-band properties due to greater levels of demand, leading to an increase in prices for these properties. Some of these respondents were concerned this could lead to barriers for lower-income households or young people to get on the property ladder. Other respondents believed this could also lead to increased demand for social housing or higher levels of homelessness (due to shortages of affordable housing across local authorities).

“The proposed changes would mean that those living in or intending to move to larger houses or those within more popular areas may be unable to afford the increased bills. This would artificially affect house values and may lead to devaluation of properties and/or entire areas. This would, in turn, increase demand for smaller or less valuable properties as many owners relocate or downsize in the quest for more manageable bills. The result of this would be that those on lower incomes - exactly those whom this flawed proposal is designed to protect - would be forced down the housing ladder or off of it completely.” (Individual, South Ayrshire, Band F)

“This also limits the property pool available to lower earners who wish to purchase a property, as they cannot budget for such high council tax costs if the property is in bands E, F, G or H. Meanwhile, the pool for higher earners […] will be the same, but they will flood the market for the lower tax bands to avoid paying more council tax. Again, lower earners take the hit as they can't afford to enter the property ladder.” (Individual, City of Edinburgh, Band B)

“It may have a negative impact on house prices as more people try to downsize and look for more affordable housing which councils already struggle to meet the demand of social housing and may also increase already high levels of homelessness due to not being able to afford to keep their house.” (Individual, Fife, Band F)

Second, respondents thought that the number of households in bands E-H trying to sell their properties (to move to more affordable areas) could potentially lead to market saturation, making it more difficult to sell their property in the first place and limiting housing mobility. Respondents were also concerned that the decrease in prices for bands E-H could lead to households facing negative equity.

“With the state of mortgage rates currently, it's likely [with] this additional rise in council tax that residents of Bands E-H will feel the need to downsize their house to a lower council tax band, increasing demand for smaller housing in cheaper areas, thus putting further pressure on the shortage of housing. This would also probably result in lower demand for band E-H housing, thus residents would find it difficult to sell their house […]” (Individual, West Lothian, Band G)

“Additional tax will make homeowners consider downsizing. This is already the case due to interest rates, but a further level of tax will exasperate the situation leading to a downturn in the housing industry and potentially a recession in that sector, leaving many homeowners with negative equity. As this escalate[s], more people will be in arrears and any perceived uplift in tax revenue from increasing the rates in bands E and above will be negated and may subsequently cost more.” (Individual, Aberdeen City, Band F)

Third, respondents thought that households moving to more affordable areas could disrupt existing social networks in local communities, impacting mental health and wellbeing and leading to a loss of community identity or cohesion. Some respondents also expressed concern that this could lead to greater stratification of communities by socioeconomic status: only higher-income households would be able to afford to live in more affluent areas.

“Some residents in higher banded properties might consider moving to lower banded properties leading to demographic changes within areas. Residents of the same neighbourhood often form strong social networks that contribute to a sense of belonging and mutual support. The proposed changes could disrupt these networks if residents are forced to relocate […]” (Organisation)

“This would also contribute, very significantly, to further economic segregation and fewer 'mixed communities' as those who cannot afford the area will simply not live there. At the moment more affluent areas with the higher banded properties can be lived in by those of lesser means; someone could have bought their property earlier before the area was regenerated or became more affluent, they could have used retirement money to purchase property, inherited or simply be middle class professionals with family who are scrapping by in the current circumstances - this will simply price all of these people out of the area and only those who can afford the cost of living in these housing schemes, villages or islands will live there.” (Organisation based in North Ayrshire)

“[…] People might have to move out the area they have lived in their whole [lives] away from their family and friends. It could lead to a very different lifestyle altogether for people and the end of social friendships. Starting all over again in a new community is not easy for anyone and it should never come to this […]” (Individual, Glasgow City, Band G)

“[…] They might have to move from homes they have lived in for many years. This will have a huge impact on them, losing familiar surroundings [and] neighbours that they know who often look out for them, and the effect this will have on mental health is terrifying to even think about.” (Individual, Fife, Band E)

Impact on specific groups, including pensioners and families

Respondents also discussed the potential impact of the proposed increase on specific population subgroups, including more vulnerable households. Many respondents who discussed the adverse impact on specific groups held the view that Council Tax did not reflect individuals’ ability to pay. The most common subgroup was families, with respondents stating that families often required larger homes and also faced higher food and childcare costs.

“Families are already struggling with huge increases to mortgages and rents, and energy costs are still high, as are food and childcare costs. Another increase to bill which they can't reduce will push many families into poverty”. (Individual, Argyll and Bute, Band F)

“[…] Many families living in higher band houses have children, have large mortgage costs, large energy and food bills plus the costs associated with growing children. Many already find it difficult to make ends meet and these additional costs will drive middle earners toward poverty.” (Individual, Aberdeenshire, Band G)

The second most common subgroup mentioned was pensioners and the elderly, with respondents believing that pensioners’ fixed income might not be not sufficient to keep up with the increased cost, driving them out of properties which they previously had been able to afford.

“The most direct social impact would likely be financial strain on households in the higher bands. These could disproportionately affect elderly homeowners and those on fixed incomes who may struggle to meet the increased financial burden. This could lead to social inequality, with some people potentially having to move out of their homes if they can no longer afford the tax.” (Individual, Falkirk, Band F)

“We live in an area (with the odd exception) where our neighbours are in the older age group (60+) and have lived in their properties for years. When talking to them, they are worried about the cost of living crisis because of what it means to them and their loved ones. Another increase will cause a lot of worry and anxiety which will no doubt lead to an increase of ill health, particularly their mental health.” (Individual, West Lothian, Band E)

Broader impacts of potential decrease in disposable income

Respondents commented on how a decrease in disposable income could potentially change household spending decisions. Most respondents who discussing impacts on disposable income believed that individuals would be less likely to support local businesses (in particular businesses in the hospitality sector) and instead opt for cheaper alternatives when making purchases. Respondents believed that downsizing or closure of local businesses could have spillover effects on the broader local economy.

“The rise in Council Tax will undoubtedly lead to further reduced spending in small businesses within the city. These local businesses are the backbone of our community, providing employment opportunities and contributing to the vibrancy of our neighbourhoods. A decrease in consumer spending due to tighter budgets will inevitably result in reduced revenue for these businesses, potentially leading to layoffs and even further closures. The resulting ripple effect could irreversibly alter the social fabric of our city.” (Individual, Glasgow City, Band E)

“[…] Many businesses are struggling to stay afloat, especially in the hospitality sector, because of the cost of living crisis […] This would leave many households in these bands with very little spare cash after all essential living expenses were met, meaning less money would be available for discretionary spending, hitting business even more in these tough times. This would have a knock-on effect in the wider economy and businesses which are just scraping by or those that are treading water would likely cease trading.” (Individual, Fife, Band G)

Respondents also held the view that a decrease in disposable income could potentially dissuade individuals from completing necessary home improvements, including energy efficient improvements such as replacing insulation or gas boilers as well as general property maintenance.

“The recent energy cost crisis together with growing climate change concerns have demonstrated the pressing need to invest in more sustainable forms of energy generation and use. This will not only require action by government but will also need individual homeowners to invest in measures for the future, such as solar electricity generation and installation of heat pumps in order to reduce reliance on hydrocarbons. With a further reduction in disposable income, the ability of homeowners to pay for the changes required will be reduced […] Larger increases in council tax are likely to have a detrimental impact on owners' ability to make these improvements.” (Individual, South Lanarkshire, Band G)

“Properties in band E upwards include those that are listed or are of historical and cultural significance. These buildings in turn require the most maintenance and upkeep and will be suffering from the current cost of living. The proposal risks owners being unable to carry out essential maintenance and repair by having to find the additional money for this tax increase along with potential mortgage increases.” (Individual, West Lothian, Band C)

A small number of respondents thought that households facing a decrease in their disposable income could be less likely to participate in or fund community events and causes (e.g., festivals, charities, celebrations). These respondents stated this could negatively impact levels of community cohesion and identity.

“Community cohesion and participation could also be affected. Higher tax rates may strain community relationships, as individuals face increased financial pressure and feel less inclined to participate in local initiatives or contribute to community activities. This could impact the sense of belonging and cooperation within our local area, potentially leading to a decline in community engagement and the overall social fabric.” (Individual, South Lanarkshire, Band F)

“[…] This means that we cannot afford to attend cultural or community performances as much as we would wish. We cannot support local clubs and societies, charities etc. to the level that we would wish and an increase in Council Tax will worsen that situation.” (Individual, East Ayrshire, Band E)

Impact on the social contract within communities

Some respondents, particularly in Bands E-H, believed that the proposed increase could lead to greater resentment or tension between middle- and low-income households. Respondents thought that low-income households could be perceived as disproportionately benefiting from the proposed increase. For example, some respondents stated that households in Band D properties were potentially receiving the same level of council services as households in Band E properties, but only the latter would be asked to shoulder a higher tax burden as a result of the proposed increase (even if they could not afford to do so).

“People in Scotland are generally happy to pay tax, and to pay progressive taxes. There is a recognition of the importance of contributing - especially for those who are fortunate in their careers - and there is a sense of social solidarity. However, the last few years are swiftly creating a situation where this sense of solidarity will disintegrate. The burden is increasingly being borne by those who are perceived to be better off, which really means the middle class […] The brutal fact is that this solidarity will only exist if the people who pay the most feel they are being treated fairly and we are in danger of creating a situation where they will not feel that way anymore.” (Individual, East Renfrewshire, Band H)

“We have been seeing a lot of assistance being provided to those on lower incomes increase since the start of the pandemic and those of us in the middle receive none, but we are increasingly aggravated as our disposable income has reduced to just cover the cost of living. […] This will have inadvertent effects in the way people feel about others getting so-called 'hand outs'.” (Individual, Moray, Band F)

“If everyone in band E and above properties is told they are rich and can afford to pay more for others while in reality [they are] struggling to put food on the table, resentment is inevitable.” (Individual, Glasgow City, Band F)

Impact on migration in and out of Scotland

Some respondents expressed concern that the proposed increase could incentivise individuals to potentially migrate out of Scotland to neighbouring countries. These respondents implied that neighbouring countries would have lower tax burdens than Scotland after the proposed increase took effect.

“The proposed council tax hikes […] will have a serious impact on the middle-class hard-working families who might decide to leave Scotland and relocate down south. This is a serious issue since it creates a low-growth, welfare-based system by squeezing and punishing hard-working middle-class families.” (Individual, Scottish Borders, Band G)

Respondents also expressed concern that individuals migrating out of Scotland could indicate a “brain drain”: a broader trend of younger individuals moving abroad to seek employment opportunities that could potentially weaken Scotland’s economy.

“People living in higher value properties with higher incomes are already paying significantly more tax in Scotland - taxing them more via a significant council tax increase is not justified and many will leave Scotland as a result. This will weaken the Scottish economy, reduce innovation and will essentially result in a ‘brain drain’. Scotland will be a poorer country as a result.” (Individual, Glasgow City, Band F)

“In a wider context, I believe these proposals will adversely affect Scotland as a country. We will see even more of a brain drain as people, who have the option to do so, are likely to choose to move to other UK nations with lower taxation.” (Individual, South Ayrshire, Band F)

Similarly, some respondents thought that the proposed increase could disincentivise individuals to move to Scotland due to the higher tax burden (compared to other countries in the UK).

“It's just another reason not to live and work in Scotland. We already have the highest property purchase tax (LBTT [Land and Buildings Transaction Tax]) in the UK and to buy a nice home in the £300,000 - £500,000 bracket it's double what it is in England. Increasing Council Tax, coupled with higher income tax rates and lower allowances, which we already have, along with higher stamp duty, simply discourages hard working people from relocating in Scotland. It's very difficult to find highly skilled people to fill vacancies in Scotland. Raising Council Tax will make it even more difficult to persuade anyone from elsewhere in the UK to come here.” (Individual, Inverclyde, Band F)

Themes raised by councils

Councils that responded to this question mentioned a broad range of different impacts, which were similar to impacts mentioned by other respondents. Several councils agreed that the increase could generate additional funds to support public services. In addition, most councils commented on housing-specific impacts, such as (i) disproportionate impacts on households residing in new build properties, (ii) increase in demand for lower-band properties, (iii) impact on higher-band property values (as buyers would factor in increased costs of ownership) and (iv) community impacts caused by demographic changes driven by households moving to lower-band properties.

“We feel that this change will have a disproportionate impact on [our local authority] as an area of high growth with a significant and growing number of new homes, given the apparent increased likelihood of newer properties being impacted by the proposed changes.” (Council)

“Some residents in higher banded properties might consider moving to lower banded properties leading to demographic changes within areas. Residents of the same neighbourhood often form strong social networks that contribute to a sense of belonging and mutual support. The proposed changes could disrupt these networks if residents are forced to relocate.” (Council)

Several other councils mentioned the potential financial strain caused by a tax increase due to ongoing cost of living challenges, or disproportionate impacts on households in higher band properties with limited wealth. One council also referenced potential impacts on pensioners (with limited incomes), households making mortgage payments and households living with additional support needs (who often needed to live in larger homes with the necessary facilities).

“This will result in more of the household income being used to pay Council Tax at a time when some of these households are already experiencing financial strain due to the cost of living challenges.” (Council)

“While Council Tax Bands can provide a partial indication of income and wealth, it is not a full measure. For example, some households choose to invest a modest amount relative to their income and wealth in their privately-owned or rented accommodation.” (Council)

One council expressed concern that the proposed increase could limit flexibility for future rate increases.

“[…] it would limit the Council’s own local decision-making on future council tax increases, as band E to H properties would pay more due to this proposed change, and potentially more again should there be Council Tax increases agreed locally.” (Council)

Finally, three councils mentioned that they did not have sufficient time to fully consider the impacts of the proposed increase, and further analysis and data would be required to understand potential implications.

“The Council has had limited time to fully assess the impacts of the proposals, and considers that before progressing the present proposals significantly a comprehensive impact assessment on potential implications is desirable at both national and local level[s].” (Council)