15/11/2011
By Eddie Barnes
Political Editor
SNP ministers have dumped a costly legal bid to block publication of an internal Scottish Government memo that set out the multi-million-pound cost of replacing the council tax with a local income tax.
Finance secretary John Swinney announced last night that the challenge - which has cost the taxpayer more than £100,000 - would no longer be pursued, on the grounds that information from the memo had already been leaked.
It emerged in April that the 2009 paper, compiled by the Scottish Government's economic advisers, had concluded there would be a funding gap of between £366 million and £396m if ministers decided to introduce a new local income tax (LIT) of 3p - larger than previous official estimates. This would rely on UK ministers handing the Scottish Government proceeds from council tax benefit paid out in Scotland.
Within weeks of the memo being sent, the tax reform pledge was dropped.
Mr Swinney's decision to wind up the Scottish Government's challenge brings to a close a lengthy legal process that began when a daily newspaper asked for the memo detailing the costs of LIT to be published, under Freedom of Information legislation.
That prompted Mr Salmond's government to go twice to the Court of Session to stop the memo being published, after Scotland's Information Commissioner, Kevin Dunion, ruled the paper should be given access to the memo. The second legal bid was launched in March, just before Mr Dunion's deadline for releasing the document, and with the Scottish Parliament elections imminent.
• Analysis: Cover-up put SNP under a cloud - but tax blow had a silver lining
Opposition parties last night demanded the SNP repay the cost of the legal challenge out of their own party funds.
Scottish Labour leader Iain Gray said: "Alex Salmond should not only apologise to for misleading the Scottish public about his plans to hike up tax bills, but he should make sure the SNP pay back every penny of public money spent on this cynical cover-up campaign."
Emma Boon, spokeswoman for the Taxpayers' Alliance, said: "It is unforgiveable that they should try to stop information from being made public which is in the public interest and use taxpayer funds to try to do so."
In his statement, Mr Swinney's insisted ministers remained of the view the memo was private, but that there was no point carrying on a legal case when the figures from it were in the public domain.
He said: "Ministers legitimately pursued this appeal against the Scottish Information Commissioner's decision, and continue to argue the case that ministers and civil servants need private space to encourage free and frank discussion on the development of policies. This issue was always about that principle - not the specifics of the policy." The full document released yesterday confirms the figures published during the election campaign and shows how Mr Swinney was informed in January 2009 about the costs.
In the memo to him, civil servant Roddy Macdonald notes that the previous 2008 figure on the central government funding required was £281m.
He went on: "OCEA (the Office of the Chief Economic Adviser] have now produced updated projections which take into account information from the PBR (Pre-Budget Report] and latest assumptions on council tax collection and council tax benefit. Based on these, the forecast revenue difference between council tax and local income tax is now £380m."
The OCEA report, also published in full yesterday, shows how estimates of the gap that government would be required to fill to meet the cost of replacing the council tax with LIT rose over 2008 and 2009, from £281m in March 2008, to £290m in a cabinet briefing paper in September 2008, £385m in an October briefing note, and finally to between £366m and £396m in its own paper in January 2009. This was due to falling estimates in the amount of income tax revenues deemed likely.
In his note to Mr Swinney, Mr Macdonald suggested ministers and officials discuss how to publish the revised projections to parliament. However, less than a month after the memo was sent, the government dumped the policy, blaming it on the fact there was "no consensus" in the parliament for change.
Scottish Government sources said the cost of the original legal action had been £35,000, while the cost of the appeal against Mr Dunion's ruling had been £7,500. It is understood Mr Dunion's costs, also met from the taxpayer, were more than £60,000.
The Scottish Government said that by stopping the case now, "significant further costs" had been avoided.
