Scotland's first minister has shown no sympathy to local authorities debating ditching the council tax freeze. Nicola Sturgeon told MSPs it would be "unfair" to give government cash to those which comply with the freeze, but also give money to those which do not. She had been challenged by Lib Dem leader Willie Rennie who asked if she intended to hit Moray Council with a "£1m penalty" if it dropped the policy. The north east council will decide next month on whether to raise bills by 18%. It said it needed to cut spending by £11.9m in 2016/17 and an increase would protect frontline services. If Moray - which is run by a group of independent councillors with support from the Conservatives - decided to stop the freeze, it would be the first of Scotland's 32 councils to do so. Other local authorities including Highland and Fife councils are also understood to be re-examining the council tax freeze as part of their budget plans. Double whammy After forming a minority government in 2007, the SNP brought in the policy which has continued each year since. As part of the plan, the Scottish government gives additional money to councils so that they can maintain their budgets in line with inflation. Speaking at First Minister's Questions, Liberal Democrat Mr Rennie said Moray faced a financial sanction if it approved the 18% council tax rise. He went on to ask Ms Sturgeon: "Will she commit today to lift the threat of that £1m fine, it will be a double whammy - taxed by the Tories and taxed by the nationalists. Where is the fairness in that?" Mr Rennie said such a penalty would hit "schools, nurseries and council services". The first minister insisted the council tax freeze was "fully-funded". Ms Sturgeon explained that every year the council tax had been frozen, the Scottish government had "compensated councils for the amount that they would have raised in revenue had they increased council tax by the rate of inflation". She pointed to a recent report, produced by the Scottish Parliament Information Centre (Spice) which suggested that the freeze "may actually have been overfunded in the past few years". Ms Sturgeon added: "The reduction in local government budgets is, as a percentage of their total revenue expenditure, 2%. "I don't pretend that that is easy for any council but we live in challenging financial times, and in that context I also think it is fair to say that local government has been treated reasonably and fairly." Council tax alternatives She went on to call Mr Rennie's approach hypocritical, adding: "Willie Rennie wants us to provide money to councils who freeze the council tax, but also give money to councils that don't freeze the council tax. "That doesn't seem fair on the councils that freeze the council tax." A cross-party commission was established to examine alternatives to council tax and it published a report in December in which it said the current system must be changed.

• published: 14 Jan 2016
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