OIC Council Tax Freeze Dependent on Scottish Government Coming Good on Funding Offer

Orkney Islands Council has today (27 February) said it will freeze Council Tax in 2024/25 – as long as the Scottish Government in return can come good on an additional funding offer.

The offer – an expected additional £1.1m for Orkney – is dependent on the UK Government passing additional Barnett funding to the Scottish Government at their budget setting on 6 March.

The potential additional funding was laid out to the Council in a letter from Shona Robison, Deputy First Minister and Finance Secretary.  

A 10% Council Tax increase would have provided an additional £1.2m for vital Council services.  

Should the situation remain as is - and the offer from the Scottish Government covers what a 5% Council tax increase would have brought in – the funding offer would be £565,000 

This new offer proposed in the letter could see the Council receive £240,990 from the potential UK Government Barnett allocation – alongside £900,000 from an Islands Cost of Living Allocation – but only if the Council agrees to freeze Council Tax, in line with the announcements made by the Scottish Government in October. 

Should this money not come through from either Government, the Council will meet again on March 11 as the Full Council, with the intention being that they will raise local Council Tax by 10%, bringing the rate for a Band D property to £1,506.13 - a position that would be in line with the Council’s agreed Medium Term Financial Strategy.  

Initially the Council was due to meet on March 5, but this has been delayed to allow the most up to date position to be known.  

The same meeting saw the Council agree to take up to £20M from the Strategic Reserve Fund.  

Stark warnings were issued that the continuing draw of reserves needs to become ‘the last resort’ and that, in order to maintain a balanced budget, in the years to come difficult decisions must be taken on service delivery – including potential service cuts, with a savings target set of £9m over the next three years. 

Orkney Islands Council’s Leader, Heather Woodbridge, commenting on the decision, said: 

“The view of the Chamber today was that we should give the people of Orkney the benefit of a council tax freeze if it is fully funded by the Scottish Government, however this is entirely dependent on that money being guaranteed to Orkney.” 

Councillor Woodbridge said: “In the past we have carefully used our strategic reserves to benefit the people of Orkney to supplement investment in stimulating our economy, and delivering preventative and strategic investment in addition to our statutory obligations.” 
 
“The financial situation today is unsustainable, with our reserves now being used to prop up our revenue budget. Very much like a household budget under pressure, we are also significantly dipping into our savings to keep the lights on and the bills paid.” 

”There are two levers to balance a budget, whether that’s a household budget or a Council one – to increase the money coming in and to decrease the money going out. Ideally, we need to look at both, and this is where the difficult decisions for elected members come in. Our communities must be aware of the challenges ahead, not just this year but also for the years ahead.”