Report calls for PFI/PPP contracts to be used to boost council revenues



PFI contracts should be taken over by the Treasury as part of radical changes to local government funding, according to a new report.

A joint paper from Unison Scotland and the Jimmy Reid Foundation has called for a “fundamental review” of local government funding to examine new and alternative sources of revenue.

Launched at the STUC 122nd Annual Congress in Dundee yesterday, Additional Revenue streams sources of funding for the delivery of local government services argues that unions and others should explore how local authority debts and PFI/PPP contracts can be taken over by the Treasury, saving local government many billions in interest charges each year and so releasing tax revenues for investment in local economies and communities.

The report also recommends:

  • Recruitment of additional council, government and agency staff to ensure that registration, regulation and collection of revenues is undertaken in order to identify where loopholes, avoidance and coverage has allowed some to escape making their fair contribution.
  • Committees of the Scottish Parliament should examine whether the Small Business Bonus Scheme, and other reliefs from Non-Domestic Rates, are fit for purpose and determine what alternatives could support private and social enterprises and other bodies more effectively.
  • Unions should remind the Government and Parliament of how the Fair Work Framework should underpin both these reviews and implementation of tax changes. Making reliefs and subsidies and tenders for public procurement dependent on good practices at the local level should raise revenues indirectly for council budgets.
  • Parliament, councils, unions and communities should explore how new taxes and levies can be introduced to support inclusive growth and the foundational economy. Attention should be paid to the opportunity for such initiatives to change behaviours and overcome negative externalities and market failures.
  • Unions should consider how municipalisation of buses, energy, and other public services could be appropriately pursued. This may require powers to be devolved from Westminster.
  • UNISON should consider establishing improved research and policy facilities through collaborations with academics and others in the STUC research network to assist in the above.

Mike Kirby, Scottish secretary of Unison said:  “Over the years, the balance of funding for public services through local government has shifted from approximately 50% coming from national government to 50% being raised directly by local authorities, to 85% of funding coming from central government and 15% being raised directly by local authorities.

“Together with an overall reduction in funding, during a period of austerity, this has resulted, in severe financial pressures and impacted upon, the quality and delivery of vital public services. Politicians in all spheres must create the time and space for a fundamental review of funding local government. This report is a contribution, to that essential debate.”

Professor Mike Danson, the lead author of the report, added: “Within the constraints of the fiscal powers devolved under successive Scotland Acts, there are still some opportunities to generate greater funding for public services locally. Some changes will require time to explore, plan and introduce but it is economically efficient and effective to shift the tax burden onto property and land owners and away from council taxpayers, making the tax system more progressive and more based on ability to pay.”



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