Council Tax Support is one headache councils could do without, says Chris Game.
Whatever your views about local councils generally, you must occasionally catch yourself feeling a tad of sympathy for them. No? Well, maybe it’s me getting soft, but I reckon the latest episode of the Government’s council tax benefit changes was one of those once-in-a-blue-moon moments.
These benefit changes are a pivotal and controversial Coalition policy, revealing what critics claim is the true nature of its welfare philosophy, its commitment to genuine localisation, and its sheer managerial incompetence. Details are on Birmingham City Council’s website under ‘Council Tax Support’, so what follows is a brief summary for the late arrivals at the Taxpayers’ Ball. From next April, the Government is abolishing Council Tax Benefit (CTB), a means-tested benefit currently paid by the Department for Work and Pensions (DWP), but administered by local government – in Birmingham’s case, £100 million to approximately 137,000 council tax payers. Replacing it will be Council Tax Support – financial support schemes determined and operated by local authorities themselves.
This ‘localisation’ of welfare sounds a commendable transfer of responsibilities from Whitehall to town hall – until you examine the attached strings. First, the policy forms a key part of the Coalitiion’s deficit reduction programme, aimed at reducing the current CTB bill by 10 per cent by strengthening councils’ incentives to get people into work, and cutting fraud and error.
And councils must achieve all this immediately, apparently, as the Government would pay them 10 per cent less for their new schemes than for CTB, creating for Birmingham a funding gap of £10.9 million.
Second, the Government decreed that pensioners receiving CTB must be protected against any reduction in support. In Birmingham this means 54,000 pensioners are protected, while 83,000 working-age recipients shoulder potentially the whole savings burden.
It’s only here that the localist part begins, with councils able to devise their own schemes to achieve these savings, provided they do so by January.
This discretion amounts to three unenviable choices: spreading the funding cut equally across virtually all CTB recipients apart from pensioners; giving the rebate to certain groups only; or continuing with the full rebate, and filling the gap either through raising council tax or finding savings elsewhere.
The council’s selected option was revealed in two documents – one setting out its proposed tax support scheme, the other asking for our views. This is the consultation document, already discussed at five public meetings, but to which we have, according to the CTB page of the website, ‘from December 10 until December 2’ to respond – proofreaders evidently having been victims of redundancy.
Essentially, however, the council’s proposed scheme adopts the spread-the-pain-equally model.
Almost all working-age people could expect to pay at least 24 per cent of their council tax – which this year would be £178 or £3.43 a week on a Band A property. Main exceptions would be those with a child under six, and those receiving a disability or disabled child premium or war-related pension. A modest contribution to the scheme’s cost should come through removing council tax discounts on second homes.
Now here’s where I thought the sympathy might come in – for the contemptuous treatment councils regularly receive.
First, there’s the constitutional arrogance of requiring councils to prepare and consult on detailed schemes before the authorising legislation is even passed.
Then there’s the Government’s brand of centralist localism which involves both setting all the main rules, then changing them in what ministers must know is the middle of councils’ consultations.
In late October, weeks after most councils had formulated their support schemes, Department for Communities and Local Government ministers announced that they’d had a quick whip-round and found an extra £100 million for councils whose schemes were ‘well-designed’.
As they say in professional cycling, if it sounds too good to be true, then it probably is. Ministers’ idea of ‘well-designed’ turns out mainly to mean that those currently receiving full council tax support should pay no more than 8.5 per cent of their council tax liability, or barely a third of Birmingham’s proposed 24 per cent.
So, back to the drawing board – or perhaps not.
An unpredictable share of the £100 million would represent a fraction of councils’ 10 per cent funding cut and complicate budget-making. Besides which, collecting costs will cancel out much of the arbitrary 8.5 per cent tax payments: £1.21 per week on a Birmingham Band A property. The smart money is on most councils sticking with their intended schemes.
Clearly, though, ministers have been spooked by the savage impact on the poorest households of their own funding restrictions – of which they were repeatedly warned, and which might have been largely avoided, had they allowed councils not just to remove tax discounts from empty properties, but to reduce even slightly the 25 per cent single person’s discount.
But no, that was another ministerial rule: “the Government has no intention of introducing a ‘stealth tax’ on eight million people” – a benefit cut on even more, even poorer people being apparently something other than a stealth tax, or anyway one for which councils would take the blame.
Now, no doubt, they’ll get additionally blamed, whether they change their proposed schemes or not. So go on, admit it, aren’t you even a tiny bit sympathetic?
* Chris Game is from the Institute of Local Government Studies at the University of Birmingham