Monday, January 14, 2013

The Pickles Poll Tax

Last Tuesday, Birmingham City Council voted on a new Council Tax Support Scheme that replaces the Council Tax Benefit currently paid. This will impose 20% council tax on some people who have previously received 100% discount under council tax benefit. It wasn't an easy decision, but I believe that it was the best we could do in the circumstances. I think that everybody is also aware that other tough decisions lie ahead when we come to the budget proposals.

The government has decided to 'localise' Council Tax Benefit - probably the most common means-tested benefit, supporting a million households across the country - and give each local authority the chance to set their own scheme. Sadly, this localism came with a price tag - 10% of the benefit grant is retained by the government, a cut of £11 million to Birmingham (£470 million nationally). They also insisted that nothing could be done to affect the 100% discount for pensioners - so any change has to fall upon people of working age, which means that any change in benefit will have to be greater than 10%. By closing various loopholes in terms of unoccupied properties and backdating claims, we've managed to fill some of the gap, but there's still a black hole there.

The government offered us £2.1 million towards the cost, but only if we created a scheme that imposed an average 8.5% council tax payment (about £95 on 2012's figures) across all groups apart from pensioners. To get to that level would take the government money AND £1.3 million from the council, which could only be found by making cuts somewhere else. Don't forget that we've still got to make cuts of £110 million in 2013 - a figure that is likely to rise as the final settlement figures are still being developed. It looks like most councils are following this route, with only a third of councils so far deciding to run a scheme that takes advantage of the government money - all have to decide by the end of this month or will be stuck with funding the current scheme.

Some local councils have decided to continue with the current scheme, but they face much smaller shortfalls that they feel they can accommodate within their budgets this year. I would be very surprised if they maintain that position for the start of the 2014 budget year, especially with the additional cuts coming. Councils with smaller numbers of claimants may find it easier to absorb the relatively smaller costs, as might councils who have not suffered the same level of cuts - remember that Birmingham is hit by cuts at twice the national average.

As with any money offered by the government, you can be sure that they will attach conditions. The additional funding is only promised for one year, meaning that in 2014, we'd either have to find the full £3.4 million or impose the same sort of scheme we're bringing in this year. Actually, it might well take more, as the government let it slip this week that there might be further cuts in the 2014/15 council tax support scheme funding - dropping another 8.5%.

Our scheme will protect more people than the government proposal. With Labour, the following groups continue to get their 100% discount - something not guaranteed by the government scheme:
  • Claimant or partner in receipt of the disability premium, severe disability premium and enhanced disability premium.
  • Claimant or partner with a child under the age of 6
  • Claimant or partner with a disabled child of any age
  • Claimant or partner in receipt of a war pension
  • Claimant or partner in receipt of the carer's premium
  • Claimant or partner in receipt of employment and support allowance, who are also in receipt of a qualifying benefit such as disability living allowance
The last two groups were added as a direct result of the consultation process and we also increased the discount level from 76% to 80% - meaning that those now required to contribute will have to pay £223 a year, based on 2012's band D rate, less than we originally proposed. The survey, which received most responses from those currently claiming Council Tax Benefit showed some support for our proposals - 45% were in favour, 35% against, with the remainder undecided.

Unsurprisingly, the opposition were up in arms at us "taxing the unemployed." Liberal Democrats are already drafting petitions, although failing to mention that their government is to blame for this mess. What we will have is the Pickles Poll Tax. Tho original worked so well in the 80s and 90s that it brought down a
government and the Tory architect of that scheme now issues a similar warning
"The poll tax was introduced with the proposition that everyone should pay something, and with the present structure of society it doesn't work. We got it wrong.... The same factor will apply here, that there will be large numbers of fairly poor households who have hitherto been protected from Council Tax, who are going to be asked to pay small sums"
Make no mistake, the blame for this sits squarely with the current government.

1 comment:

Rob Tressell said...

It's now your poll tax, John, and you voted for it. You didn't have to and the numbers you quote are tiny compared with the size of the council's budget. The government back-tracked but you failed to. Where are your priorities?