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Council / Council tax and housing rent to be frozen

Lerwick Town Hall.

COUNCIL tax and housing rent charges in Shetland will be frozen for the next financial year, elected members have decided.

It came after three votes at a meeting of the full council on Wednesday, with Shetland Central member Ian Scott successfully proposing the freezes amid concern over cost of living increases on those in need.

But warnings were made in the chamber over the long-term financial impact freezes could have on future council budgets for day to day services and housing maintenance.

Shetland Central councillor Ian Scott. Photo: Chris Cope/Shetland News

Officers had suggested a three per cent council tax rise and a 2.5 per cent increase in council house rent amid a hike in inflation.

The freezes, however, mean the council will lose out on £310,000 of additional tax income in 2022/23, and £170,000 of extra housing rent.

Figures showed that freezing both council tax and housing rent would result in a combined cumulative loss of income of more than £3 million by 2027/28.

Scott’s proposal to freeze both charges for at least a year overcame three separate votes. Increasing both rates by the suggested amount and increasing one and freezing the other – and vice versa – were all outvoted.

Some of those in favour of the freezes said the time was right to help those struggling with the cost of living as energy prices and inflation rises.

As Lerwick member John Fraser put it, “unprecedented times call for unprecedented measures”.

North Isles councillor Ryan Thomson also said some constituents were facing a choice to “heat or eat”.

But the argument was made that the council is not immune to inflation either – and that freezing council house rent would mean less money available for much-needed maintenance and upgrades, and a possible significant hike in the future.

On the day it was reported that the UK’s cost of living reached a 30-year high last month, Scott said he felt the reduction in income for the council could be absorbed by the local authority’s reserves – which at the end of December stood at nearly £446 million in value.

The council’s budget for 2022/23 already included an “unsustainable” draw on reserves of around £5.1 million.

Scott called for the chamber to put any differences aside to unite to give a little extra cash in people’s pockets in what is a pinch point for many.

“We are in a position to do something about it,” Scott said.

“There’s a lot of people in real dire straits [who are] wondering where next month’s rent is coming from,” Scott said.

He also described the local authority’s medium term financial plan – which forecasts spend and expenditure over the coming years – as an “albatross around our necks”.

But he also stressed his opinion that the Scottish Government – which is offering local authorities the ability to fix its own council tax rate – was being constrained by Westminster.

Scott was seconded by Shetland North’s Andrea Manson, who said increased income from Shetland Gas Plant resulting from high gas prices could cover the reduced income.

But SIC leader Steven Coutts said this extra income was not a “windfall” and that it was factored into the budget.

Coutts proposed raising council tax and housing rent as recommended, warning of the cumulative impact freezes could have.

He also welcomed the recently announced Scottish Government’s £150 council tax rebate for the majority of households in the country to help with the cost of living.

In comparison the proposed three per cent council tax increase would have resulted in a band D household paying an extra £36.19 a year.

When it came to a vote Scott’s proposal secured 13 votes against Coutts’ seven, with two abstaining.

Development committee chairman Alastair Cooper then proposed freezing council tax and raising housing rent – reiterating his point that income is needed for vital maintenance.

The housing revenue account is also accounted separately from the day to day services.

Cooper said he felt the council was doing tenants a “disservice” by reducing the income which could go towards maintenance.

Housing manager Anita Jamieson told the meeting earlier that a national drive to increase energy efficiency of social housing by 2032 presents a real challenge.

But again Scott’s motion won – this time by 11 votes to nine.

Shetland South member George Smith – who said he had been in a “quandary” in a “heart versus head” matter – then proposed raising council tax and freezing housing rent. He believed “short term-ism and populism isn’t necessarily always the best way to go”.

He believed council was not “morally obliged” to raise rent at a time when there remains around 700 outstanding repair jobs in a backlog caused by the Covid pandemic.

But Scott’s motion gained 14 votes to Smith’s six, overcoming its final hurdle and getting set in stone.

Those who sided with Scott in the final vote were Duncan Anderson, John Fraser, Amanda Hawick, Catherine Hughson, Stephen Leask, Moraig Lyall, Andrea Manson, Robbie McGregor, Alec Priest, Davie Sandison, Cecil Smith, Theo Smith and Ryan Thomson, with Peter Campbell and Alastair Cooper abstaining.