By stewartb:

As a regular reader of the output of the Fraser of Allander Institute (FAI), I’m becoming increasingly disappointed in how it’s opting to express and emphasise what are ‘value judgements’ over analysis-based conclusions. Does it intend to become a quasi-political organisation?

On January 15 this headline appeared above an FAI article: ‘Budget – day 3 reaction – Council tax & the Spending Review. Incoherent reforms to council tax: could have been worse, but not good enough.’

Within the piece we read (with my emphasis): ‘Scotland will follow the UK Government’s example and introduce higher taxes on higher value properties. Whereas at the UK Government level this is being done as a new surcharge flowing to central government, in Scotland it will be through two new council tax bands, with revenues staying with local government’ and ‘These will be based on ‘up-to-date’ valuations, but only for properties worth over £1m. The rest of us have to keep paying tax on the 1991 values of our property, and all the errors and inconsistencies that go with that.’

Have you spotted ‘incoherence’ yet?

(The UK Government press statement on November 26, 2025 explained: ‘The government has announced the introduction of a new High Value Council Tax Surcharge. The below factsheet outlines the details of this new surcharge. From April 2028, owners of properties identified as being valued at over £2 million will be liable for a recurring annual charge which will be additional to existing Council Tax liability. This measure is estimated to raise £0.4 billion in 2029-30. Local authorities will collect this revenue on behalf of central government and will be fully compensated for the additional costs of administering this new tax. Revenue will be used to support funding for local services, with further consideration through the next Spending Review.’ My understanding is that no re-evaluation will take place for the impacted properties in England.)

The FAI adds: ’As the Scottish Government point out in the budget documents, a process of engagement, including a public consultation, is currently underway to look at reforms to the whole system, recognising “the importance of consensus, stability and fairness and is intended to inform decisions in the next parliament”. ‘Incoherence‘ spotted yet?

The FAI then finally explains: ’ … this particular change also introduces a degree of incoherence. Maintaining a stated position that reform cannot proceed without consensus, while simultaneously implementing changes to one part of the system in the absence of such consensus, is impossible to reconcile.’

Ah so that’s it! But in the same article the FAI tells us ‘the reform announced yesterday will only affect 1% of properties’. So a policy shift impacting just 1% of properties – which will first be revalued – in order to provide funding for local government taken from those with greatest property-based wealth justifies the claim of ‘incoherence’? A 1% ‘degree of incoherence’ is it?

Or is it sensible and pragmatic? Elsewhere in the FAI article we read: ‘The local government settlement looks very difficult over the 3 year period, particularly as this includes social care where the Scottish Government have assumed, again, that there will be growing demands.’

“Perfect is the enemy of good”?

The present Council Tax system may be far from the optimal, fairest, most progressive mechanism. However, getting cross-party agreement on radical reform may still be a long way off in a parliament elected by proportional representation – and therefore without robust government majorities – and which candidly, can often be toxically oppositional. And in any case, the response to a previous reform in Scotland – the Poll Tax – shows what can result when something as fundamental as tax to finance local government is radically reformed without consensus. Any sensible government will avoid a repeat!