Public services warning as Dundee faces £17 million black hole in toughest Scottish budget yet

Dundee’s stretched finances still face a £17 million gap after SNP finance chief Shona Robison set out plans to fund her party’s council tax freeze.

The deputy first minister, also a Dundee MSP, revealed the Scottish Government will spend just over £140 million to help local authorities – half the figure experts say is needed.

The spending pledge aims to cover increases of up to 5% on average council tax bills.

But Dundee SNP council chief John Alexander warned the cash from Holyrood will hardly even begin to plug a £20 million gap in the city’s finances.

He claimed Tuesday’s budget was “the toughest we have known” and warned: “I don’t want to understate the scale of the challenge facing every single council.”

Humza Yousaf’s announced plans to freeze council tax in October. Image: Darrell Benns/DC Thomson.

First Minister Humza Yousaf, who lives in Dundee, unveiled plans to freeze council tax at the SNP’s conference in October.

The move sparked anger among senior councillors who warned they will need substantial support to avoid a dramatic rates increase.

Economists at the Fraser of Allander Institute said the government needs to spend £300 million to found the tax freeze in full, much more than Ms Robison committed.

In September, Dundee councillors had backed earlier SNP proposals to increase higher-band tax rates for people living in more expensive properties.

Under the proposed changes, residents in the most expensive properties would have paid up to 22.5% more each month.

Mr Alexander favoured the idea at the time.

In July, it was estimated more than 95,000 households across Tayside and Fife would end up spending more if the changes had gone ahead.

Two months later, Fife Council – led by Labour – opposed the plans and warned they would cost residents in the Kingdom £8 million per year.

Meanwhile, Perth and Kinross Council leader Grant Laing welcomed the funding announcement from Ms Robison.

Perth and Kinross Council Leader Grant Laing welcomed the funding. Image: Steve MacDougall/DC Thomson.

The SNP councillor said extra cash would cover a planned 3.9% rise in local tax rates before the freeze was announced by Mr Yousaf.

COSLA, the national body for Scotland’s local authorities, said it would be holding crunch talks with council leaders on Thursday.

A spokesperson said: “COSLA officers are currently working through the detail of the figures, in order that a briefing can be prepared for leaders, who will give it full consideration on Thursday morning at a special meeting.”

During her budget, Ms Robison also unveiled plans to introduce a new income tax band which will target higher earners.

Shona Robison increased taxes for higher earners. Image: PA.

The bracket will apply to those earning below £75,000 and £125,000, just below the highest threshold.

Taxpayers affected by the increase will now pay 45p for every pound above the threshold, a 3p rise compared to what they previously paid.

People earning more than £125,000 will be taxed at 48p in the pound, a 1% rise from last year’s budget.

Ms Robison said the tax rises and wider cuts to public services were necessary due to decisions made by UK Chancellor Jeremy Hunt in his autumn statement.

But Dundee Labour MSP Michael Marra, who is his party’s finance spokesperson, warned tax was being used as a “substitute for economic growth”.

He claimed it had been a “chaotic budget from an incompetent government”.

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