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Council tax benefits – did councillors miss or ignore that open goal?

Council tax benefits – did councillors miss or ignore that open goal?

🕔19.Oct 2012

There were so many points raised by ‘the most boring council meeting ever’, as recounted on Marc Reeves and Paul Dale’s podcast, that it’s hard to know where to begin. So how about the seemingly gaping open goal missed by Conservative and Lib Dem councillors?

We’re talking council tax benefit changes, and the Report Stage of the Local Government Finance Bill in the House of Lords, taking place at the very same time as Tuesday’s council meeting – and specifically, the Labour leadership’s decision to whip its peers into opposing the one measure that might have ameliorated councils’ immediate problems in implementing the changes and the even bigger pressures on their overall finances.

These benefit changes are a hugely important and controversial Coalition policy, revealing what its critics would claim is the true nature of both its welfare philosophy and its interpretation of ‘localisation’. The story has been unfolding fast, too fast, over the summer, and one might have thought that in the first council meeting for three months there would have been dozens of questions that councillors would wish to put to Sir Albert Bore and his cabinet colleagues – whether genuinely for information relevant to their constituents or for simple political devilment. It seemed not.

Details of where we’ve got to are on the Council’s website under ‘Council Tax Support’, so what follows is extremely summarised. From next April, the Government is abolishing Council Tax Benefit (CTB), a means-tested benefit currently paid for by the Department for Work and Pensions, but administered by local councils – in Birmingham’s case, £100 million to approximately 137,000 council tax payers. It will be replaced by Council Tax Support – financial support schemes determined and operated by local authorities themselves.

It sounds like a commendable transfer of responsibilities from Whitehall to town hall – until you come to the attached strings. First, the Government’s aim is to reduce the current CTB bill by 10% by strengthening councils’ incentives to get people back into work. The amount it pays local authorities for their new schemes, therefore, will be 10% less than for CTB, creating for Birmingham a funding gap of £10.9 million.

Second, the Government has decreed that pensioners receiving CTB must, and other particularly vulnerable groups should, be protected against any reduction in support. In Birmingham this means 54,000 pensioners are protected, while 83,000 working-age recipients are left shouldering potentially the whole savings burden.

Only here does the localisation bit actually start, with councils having the discretion to devise their own schemes to achieve these savings, so long as they do so by January 2013. In practice, this discretion amounts to three unenviable choices: spreading the cut in funding 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, on top of the savings already being demanded by the Government.

Selecting, rejecting and balancing these choices was one of the more important tasks the Council undertook over the summer, and about which cabinet members might have been but weren’t quizzed at Tuesday’s council meeting. Fortunately, the results are in the public domain.

They were revealed in September in two documents – one setting out the Council’s proposed tax support scheme, the other explaining its approach and principles, and asking for our views. This is the consultation document, discussed at five public meetings – the last of which is or was this Thursday – and to which we are asked to respond by 2 December.

It’s not the reader-friendliest of publications, and you search in vain for any helpful exemplifications of the actual sums that those losing a proportion of their CTB could be asked to find. However, the gist is that the Council’s proposed scheme adopts essentially the first of the three approaches listed above – sharing the pain out equally – modified by a few added exemptions and savings.

Almost all working-age people, except those in greatest need of support, can expect to pay at least 24% of their council tax – which this year would be £178 or £3.43 a week on a Band A property, and £208 for Band B. Main exceptions would be those with a dependent child under six, and those receiving a disability or disabled child premium or war-related pension.

It’s proposed that a modest contribution to the cost of the support scheme should come through the removal of council tax discounts on certain empty properties and second homes, as will be permitted when the Finance Bill eventually completes its stately progress through Parliament.

At this point, let me suggest that, whatever your general views of local councils, you can surely dredge up a little sympathy for the really contemptuous way in which they’re regularly treated even by DCLG ministers who are supposed to be vaguely on their side.

I don’t mean simply the arrogance of requiring councils to prepare complex schemes and undertake extensive consultations before the authorising legislation has even left the House of Lords. Yes, it’s equally contemptuous of the Queen’s Royal Assent, but it seems almost standard procedure nowadays.

No, I’ve a couple of more specific things in mind. First, the Government’s brand of centralist localism – ‘muscular localism’ as Secretary of State Eric Pickles terms it – which involves not only setting the main rules and deadlines, but then changing the rules in what Ministers must know is the middle of councils’ consultations, but that to them presumably is merely a game.

This Tuesday, weeks after most councils would have formulated their support schemes – based in Birmingham’s case on at least 24% tax payments for all – DCLG ministers announced that they’d had a quick whip-round and found an additional £100 million for councils whose schemes were ‘well-designed’ and maintained positive incentives to work.

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 to mean, among other things, that those currently receiving 100% of council tax support should pay no more than 8.5% of their council tax liability, or barely a third of Birmingham’s proposed figure. So back, to use another cliché, to the drawing board – or perhaps not – who knows?

Clearly Ministers have been spooked by the savage consequences of their own inflexible funding restrictions – that could have been largely avoided, had councils been allowed not just to remove tax discounts from empty properties, but, as the Local Government Association (LGA) proposed, to reduce even slightly the 25% single person’s discount, to perhaps 20%.

But no – that was another rule set by Ministers early in the year: “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 local councils would take the blame.

Even so, there was always a chance that the Lords would be less partisan and more supportive of local government. So at Tuesday’s Report Stage of the Finance Bill the Lib Dem peer, Lord Tope, put forward an LGA amendment to give councils limited discretion to vary the single person’s discount.

It was opposed, of course, by Conservative peers. But, more significantly, despite its being an LGA amendment with cross-party support across local government, and with Labour councils being generally hardest hit by the benefit changes, Labour peers too were placed on a three-line whip to join them. The amendment had to be withdrawn and Labour’s own ritualistic amendment, calling for full Government funding, was predictably defeated.

Now, returning to Tuesday’s council meeting taking place at the same time as these events were unfolding, what are we to make of the fact that, as I understand it, they and the council tax benefit changes generally went unquestioned and undebated?

Were Labour members too embarrassed by what was happening in the Lords to attack the Government’s policy? Were Conservative and Lib Dem members too ashamed of the Coalition’s welfare record to take the chance to embarrass Sir Albert? Or did they simply not see the open goal there in front of them? Either way, it’s all a bit sad, as Marc and Paul would doubtless agree.

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