Council tax looks doomed as Labour rivals join push for an alternative

SCOTLAND looks destined to lose the council tax after all three candidates for the Scottish Labour leadership said last night they favoured a different form of property tax to replace it.

With the SNP and the Liberal Democrats already committed to ending the council tax, there is now a consensus among three of the four main parties in Scotland to introduce a different form of local government taxation.

With the Scottish Government considering responses to its consultation paper on a local income tax, the issue of domestic taxation has now become a defining issue in the race to succeed Wendy Alexander as Labour's leader in Scotland.

Andy Kerr, the former health minister, said in a newspaper interview yesterday that he wanted to see the council tax scrapped.

"I would immediately signal a long-term desire to replace the council tax," he said. "While people are paying so much of their monthly income in council tax in comparison to their mortgage or income tax, they feel as though the system is not working for them. That's largely a product of the way the tax has developed over the years, the way that revaluations have not taken place."

Mr Kerr said he wanted to reform the council tax first – abolishing water charges for pensioners and using the money the SNP has earmarked to introduce the local income tax to reduce bills further – before scrapping the tax altogether.

Iain Gray, the former enterprise minister, is committed to "replacing or reforming the council tax", but aides said he favoured a new property tax to replace the council tax, if that could be achieved.

Mr Gray said: "I believe in a property tax, but we should be open to other ideas including elements of land value tax too, if they are found to be workable."

But he added that something more immediate needed to be done in the short term, certainly including water charge abolition for pensioners and possible further cuts for council tax bills, too. "These are difficult and complex issues and we must spend the time as a party to get this right," he said.

A spokesman for Cathy Jamieson, the formerjustice minister and the other candidate for the Scottish Labour leadership, said: "She believes there needs to be a property-based tax, but there is still a lot of work needing to be done."

The spokesman said that Ms Jamieson wanted to move away from the council tax, but only if the Scottish Government could keep the £400 million in annual council tax benefit which comes from London. He said there would be no point moving to something different without making sure the council tax benefit money came, too. Ms Jamieson has drafted a bill to scrap water and sewerage charges for pensioners, and the spokesman said this could be done now, without waiting for any of the alternatives to the council tax to be introduced.

The decision of all three Labour leadership contenders to back a property-based replacement for the council tax is a distinct shift of position since the party tabled its submission to the Burt review into local government finance in 2005. At that time, Labour backed the council tax, with more bands at the top and bottom to make it fairer.

In his report, Sir Peter Burt, who chaired the review, recommended a property tax based on 1 per cent of each property's value, but that was flatly rejected by Labour.

With all three leadership candidates now backing a property tax – but not the council tax – the 1 per cent flat-tax recommended by Sir Peter may be back on the table again.

McLeish calls for more autonomy for next leader of Scottish Labour

FORMER first minister Henry McLeish reignited the debate over the Scottish Labour Party's ties to London yesterday when he called for the Scottish party to have much more autonomy.

Henry McLeish said it made "sense" for the Scottish Labour party to have more freedom. He spoke out a week after former finance minister Tom McCabe called for the new Scottish Labour leader to be handed "complete control" of the party.

Three candidates – former health minister Andy Kerr, ex-enterprise minister Iain Gray and former justice minister Cathy Jamieson – are currently bidding to become Labour's new Holyrood leader following Wendy Alexander's resignation.

The position they are fighting for is the leader of Labour in the Scottish Parliament. But yesterday Mr McLeish said it was essential for the new leader to be "more than a 'group leader' at Holyrood".

And he added: "The time has come for a partnership of equals between party and government north and south of the border. A more autonomous Scottish Labour Party with real political freedom, within a radically reformed Union, with a new relationship to UK Labour, makes sense in 2008."

He argued this could help to "counter the Scottish Nationalist threat" as well as allow the party north of the border to "develop new constitutional futures for Scotland without having to defer to Westminster".

Mr McLeish stated: "An autonomous Labour Party in Scotland, or something approaching that, could be better placed to offer an alternative to independence as a vision for the future, as well as providing effective opposition and advocacy on the policy front."

And he added: "The relationship between Scottish Labour and the UK/Westminster party needs to be reviewed and rewritten to reflect the new realities."

Mr Kerr, one of the three leadership contenders, has already said the position should be more influential and stronger.

Nicola Sturgeon, the SNP depute leader and Deputy First Minister said yesterday: "Labour are fighting like ferrets in a sack on whether or not the party in Scotland should be autonomous, and whether or not they support a referendum on Scottish independence."