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.

Monday, January 07, 2013

What kind of year has it been?

A quick glance back at last year's predictions saw four out of five hit the mark. There was no general election in the UK, the coalition has stumbled on, we slipped back into recession and Obama won a second term quite convincingly in the end. I missed the mark over the mayoral elections in Birmingham, which were quite resoundingly rejected by the electorate, although we did get a Labour Police and Crime Commissioner, despite an embarrassingly low turnout which demonstrated the public apathy over this flagship government policy.

Personally, it has been a mixed year. The exhilaration of winning Acocks Green for Labour in May was tempered by redundancy from the Energy Saving Trust and it has proved difficult to get back into work since. That said, I'm not complaining - the job of a councillor is challenging and sometimes as frustrating as it is rewarding. Sometimes you can feel powerless to help deserving housing allocation cases who simply don't have enough points under the scheme. On the other hand, getting a tenant back into their home after a water leak had taken out their power or helping a resident find help that wins a benefit tribunal hands down makes for a very good day. I love doing it and am painfully grateful to the electorate for placing their trust in me.

Looking ahead to 2013, I still see no end to this government or the coalition, but this will be a big year for them. A number of their key policies come to fruition in April - the NHS changes kick off and Ian Duncan Smith's Universal Credit starts to roll out. When combined with other changes to the benefits system, this will be a brutal year for many - and they aren't aware of it. While the government have run a maliciously effective campaign designed to set the poorer economic groups against each other, the job of the Labour Party must be to hold a mirror up to the electorate and explain that when the government talk of scroungers, they actually mean people like you - not the faceless neighbours with their curtains drawn as you leave for work.
I'm also prepared to forecast that the Universal Credit scheme will be an ongoing train crash with dodgy IT over-reliant on internet access from a group for whom it is not necessarily a priority.

I suspect the economy will continue to bounce up and down around the point of stagnation. We may well avoid a technical recession this year, but things are so fragile at the moment that two quarters of negative growth are quite credible, depending on external events - there is no resilience in the economy. However, I think that the underlying trend will continue to be around the flatline.

In Birmingham, we are blessed with a fallow year in the electoral cycle, with the next council elections not until May 2014 (or more likely in June, to coincide with the 2014 European elections). That will not herald a year of peace and goodwill, however, as Sir Albert has promised that the summer will bring detailed consultation on what services are to be decommissioned over the next couple of years. 2013-14 will be the last year of trimming and salami-slicing budgets. From 2014's budget, Birmingham will be extracting itself from some functions and services that the council currently provides. Even before that, we will have discussions over the final budget for 2013, which is still guaranteed to be controversial. I have promised never to use the phrase 'This is not what I came into politics for' - although it certainly isn't.

The polls remain positive for Labour, with double digit leads now normal, but I'm not convinced that this is actually all that solid a lead. I do think that Ed Miliband has secured his place as leader - he made some shrewd political calls in 2012 and has got Labour on the right side of the argument a few times, wrong-footing Cameron once or twice in the process. The decision to oppose the 1% limit on benefit increases is both the right decision and a brave one. It is right, because we should be the party in defence of those in need of help and it is brave because of the campaign waged by the government and the press to paint claimants as scroungers, living high on the state. This campaign has proved effective in setting people against faceless claimants, although the reality for many is that if they want to see a claimant, they shouldn't look up at a curtained window when they leave for work in the morning, but in the mirror instead. When IDS lies about people on benefit, chances are he means to punish you. The caution I would urge is that we do not join in the Tory aim of dividing the poor into the deserving and undeserving - do not play into their rhetoric. If you want to cut the benefit bill, get people into jobs that pay a decent wage, not subsistence pay that demands a top-up from the government.

This will also be the year that the coalition moves closer to stage three of their relationship. To start with, they were inseparable, hanging off each other's words like any new couple. Now, they need to find their own space - we see a number of Tories and LibDems querying coalition policies as they manoeuvre for a post-coalition phase. Stage three will be when they each want to see other people - mainly the electorate, although the Lib Dems may find that the dating market is rather tougher for them than for the Tories, who have a chance of doing better out of the next election. In particular, expect to see certain LibDems - Simon Hughes and Tim Farron in particular - become increasingly publicly questioning of government policy and direction. This, they believe, will be of advantage to their party in the run up to the election, so they can point to their differences from the Tories. It will also be of help in the run up to the 2014 LibDem leadership election as Clegg makes way for somebody that the electorate might not loathe on sight.

I see no reason to change my view that the 2015 election will be a bloody one for the Liberal Democrats - I suspect that their parliamentary numbers could easily be halved overnight. This does not necessarily mean good news for Labour, as a number of those seats can be expected to fall to the Tories if Labour tactical voters cannot stomach casting their vote accordingly. Similarly, I still maintain that 2015 will have the economy at its centre and also that the Tories will benefit from any turn round in the situation. However, I'm also convinced that for them to have a hope, that this is the year that the green shoots must really start to show and I struggle to see from where they will come. As I have said before, I still firmly believe that if Labour want an election-winning policy for 2015, then a commitment to build social housing would be it.

We continue to pay a high price for Tory/LibDem economic incompetence and that price is the wholesale dismantling of the post-war Attlee legacy to the nation. Perhaps this will be the year that the people wake up to the destruction being wrought on our public services and our safety net for the poor.