Council Tax reform: Attack on the poor or cleaning up the welfare culture?
Date posted: 20-08-2012
Council Tax Benefit reforms – a crackdown on Labour’s welfare culture or a Conservative attack on the poorest in society?
By Ed Woods
As part of the Local Government Finance Bill on the 31st March 2013 the national scheme of Council Tax Benefit is being scrapped and replaced on the 1st April 2013 by Localised Council Tax Support Schemes.
Spending on Council Tax Benefit has doubled under the previous Labour Government from £2 billion in 1997 to £4.3 billion in 2010.
The Coalition Government state the reforms will help save £470 million thus helping to tackle Labours’ deficit and they claim the benefits of a localised Council Tax Support Scheme will give councils a stake in the welfare system will assist local job creation, promote enterprise and reduce welfare dependency.
At the moment local authorities administer the Council Tax Benefit scheme using rules and regulations set by Central Government and local authorities are fully reimbursed for the benefit they pay out. This is going to change.
Instead of fully reimbursing local authorities the Government spending on Council Tax Benefit is to be cut by 10 per cent across Britain. In Thurrock it has been estimated the cut will be nearer 16 per cent leaving a £1.1 million funding shortfall.
The national rules and regulations used to calculate Council Tax Benefit are being scrapped. Outside England the devolved administrations will be responsible for deciding how to deliver these savings. In England it is the responsibility of each individual local authority to design and implement its own brand new benefit scheme.
Thurrock Council could decide to increase everyone’s Council Tax by to plug the £1.1 million gap; or cut other services or make savings elsewhere; or raid the reserves; or cut discounts and exemptions on second homes or unoccupied, uninhabitable or repossessed properties; or cut the amount of Council Tax supports it gives to those households that claim benefit. Thurrock Council has opted for the latter.
There are 14,000 households in Thurrock whose income is so low that they receive some amount of Council Tax Benefit to help reduce the burden of their Council Tax Bill. Under the reforms the Government has instructed local authorities in England that pensioners must be protected so 5,700 pensioner household in Thurrock will be protected from the cuts.
They have also instructed local authorities that ‘vulnerable’ households should be protected but have failed to give a definition on who exactly should be considered as vulnerable and protected.
This leaves 8,300 households in Thurrock who could have their Council Tax bills increased next year.
If the current proposals being consulted on by the Labour led Council are agreed by a majority of Thurrock’s 49 Councillors later this year then many of the 8,300 non pensioner households who currently claim Council Tax Benefit in Thurrock could see their benefit cut and their Council Tax bills increase, and for many, despite the ongoing consultation and wide spread publicity, the first they will know of the increase is when the bills are posted through their doors next year.
The Conservatives proudly state these reforms will help end Labour’s “something for nothing culture”. However not all Conservative Councillors are happy with what the Government is forcing on them. In Essex the Conservative Leader of Southend-on-Sea Borough Council has described the Council Tax cuts as “horrendous” and castigated the Coalition Government for failing to fully fund the new Council Tax scheme, while in Yorkshire eight Conservative led town-halls have joined forces to campaign against the cuts.
Nationally Labour has said the proposals have echoes of the poll tax and in Thurrock it could force the registered unemployed to pay at least 25% of their Council Tax – about £290 per year for the average band C property.
The Government has effectively washed its hands and handed on the responsibility, or burden, to your local councillors to decide where the cuts are falling and what householders will end up paying more.
The Conservative briefing papers on these reforms say it isn’t in councils’ financial interest to be imposing small Council Tax bills on the unemployed which cost more to collect than they raise or for councils’ to lock the working poor into poverty and low aspirations and that it will be up to local authorities to design a new benefit scheme which takes into account local priorities and circumstances.
Because 5,700 pensioner household are protected the burden of the £1.1 million cuts won’t be spread evenly across all claimants and instead can only fall disproportionately on the working poor and unemployed households of the Borough claiming Council Tax Benefit.
I doubt if any Councillors ever expected when they were elected that one day they would have to create a brand new benefit scheme and be forced to vote to make some of the poorest residents in Thurrock even poorer by cutting their benefits and increasing their debts. If Councillors sit on their hands and fail to vote on a scheme then the Government will impose a scheme on Thurrock Council so Councillors are damned if they vote for it and damned if they don’t.
Councillors also have the difficult choice on deciding exactly which working age residents they consider ‘vulnerable’ and are able to save from having their Council Tax Benefit cut. The downside is the more people they class as ‘vulnerable’ the bigger the benefit cuts for the remaining working age benefit claimants.
Thurrock Council has started consultation on its proposed local scheme on the 13th August and it ends on the 30th September 2012. The Labour run Council’s current proposals could increase the Council Tax bills for all working age claimants in the Borough, some 8,300 households, so it is important to take part in the consultation and let Thurrock Council know exactly what your views are.
Next year there is more bad news for those working age residents who claim Housing Benefit towards their rent and are living in overlarge Council homes or Housing Association properties as changes in Housing Benefit rules means the help they get towards their rent will be cut, but that’s another story.
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