Daily Telegraph: Scotland freezes council tax - with English subsidy

By Robert Winnett, Deputy Political Editor

Scottish householders are to have council tax bills frozen for the next three years, a move that will effectively be subsidised by English taxpayers.

The measure formed the centrepiece of Alex Salmond's first Scottish budget, announced yesterday.

In contrast, English home owners face a five per cent rise in their council tax next year, despite bills having already doubled over the past decade. The average English council tax bill is pounds 172 higher than for a similarly-valued property in Scotland.

The council tax plan by Mr Salmond, Scotland's First Minister, is the latest generous handout for Scottish residents which is not available in the rest of the UK. Yesterday, plans for free prescriptions, a cut in class sizes for primary schools and a reduction in business taxes were also announced.

The proposals are likely to reignite debate over the disparity between the Whitehall subsidies paid to Scotland and England. Under the Barnett formula - the complex calculation which allocates Treasury funding to Britain's regions - Scotland receives pounds 1,500 more of Government funding per head than England each year. This has helped the Scottish government finance its tax freeze.

Council tax is already a hot issue in Westminster and the Prime Minister has abandoned plans to overhaul the levy until after the next election.

Earlier this week, David Cameron, the Conservative leader, unveiled plans to allow local residents the power to veto above-inflation rises.

Yesterday, it also emerged that the Treasury has agreed an "unprecedented'' one-off payment of almost pounds 900 million to the Scottish government. The payout represents money which was allocated to Scotland over the past few years but has not been spent and has remained in central government bank accounts.

The Scottish National Party also announced proposals to push ahead with scrapping student loans and reintroducing student grants. Scottish students already pay far lower tuition fees.

Scottish children in the first three years of school will also be taught in classes of no more than 18. Business rates for small firms will also be cut and in some cases scrapped.

Mr Salmond also predicted that Scotland would be independent within a decade.

Matthew Elliott, the chief executive of the TaxPayers' Alliance, said: "Whether or not Scotland becomes politically independent, English taxpayers would undoubtedly like to see her become financially independent. Hopefully ending the reliance on subsidies from English taxpayers will be a priority in the near-future.''