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Council Tax Support – An anatomy of a Pickles’ localisation triumph

Council Tax Support – An anatomy of a Pickles’ localisation triumph

🕔08.Apr 2015

Shortly before the dissolution of Parliament, Communities Secretary Eric Pickles issued a self-penned eulogy of his ministerial record – entitled, in characteristic, cod Churchillian, style: Local Government: Delivering for Englandwrites Chris Game. 

It comprised a listing of 60+ bullet-pointed triumphs and achievements, towards the end of which – shortly before

supporting the Royal Wedding, Diamond Jubilee and VE Day by cutting Whitehall and municipal red tape on holding street parties, and introducing new laws to cut ‘elf and safety’ red tape on community events

was

localising Council Tax Support (CTS), so councils are rewarded for getting people off the dole and welfare dependency and back into work, £1 billion has been cut from previous Council Tax Benefit (CTB) funding, and councils themselves bear the responsibility of increasing the living costs of some of their poorest residents.

OK, I’d better come clean. The ‘elf and safety’ bit is totally genuine – straight from the Pickles jar, as it were – but I’m afraid the last couple of clauses, after ‘back into work’, are mine, though, I would claim, entirely accurate and in a way slightly admiring.

For the CTB changes were Pickles’ localisation at its most skilful – a devolution of an important responsibility, impossible for councils to refuse, yet accompanied by conditions and constraints that meant any flak would go to them and any credit to the Conservative part of the Coalition.

The publication of the New Policy Institute’s third annual CTS monitoring report in the middle of the election campaign provides a timely opportunity to assess the impact of one of the Coalition’s key and most controversial social policies, with particular reference to West Midlands authorities.

The essence of the 2012 Welfare Reform Act was to replace, from April 2013, the means-tested Council Tax Benefit, paid for by the Department for Work and Pensions but administered to nearly 6 million recipients by local authorities, by Council Tax Support schemes individually determined and operated by the authorities themselves, and funded through business rates retention.

It sounded, as I suggested at the time in these columns, like a laudable transfer of responsibilities from Whitehall to town hall – until you came to the attached strings.

First, with the professed aim of strengthening councils’ incentives to get people back into work, the amount the Government would pay local authorities for their new schemes would be 10% less than for CTB – creating for Birmingham a funding gap of nearly £11 million.

Second, it ruled that pensioners receiving CTB must, and other particularly vulnerable groups should, be protected against any reduction in support – meaning in Birmingham that 54,000 pensioners were protected, while 83,000 (currently 88,000) working-age recipients were left shouldering potentially the whole savings burden.

It was only here, then, that the localisation bit actually kicked in, with councils having the discretion, within a very tight deadline, to devise their own schemes to achieve these savings – and collect the taxes from their tens of thousands of new and aggrieved taxpayers.

In practice, this discretion amounted 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.

Birmingham’s proposed scheme adopted essentially the first approach – sharing the pain out equally – modified by a few added exemptions and savings. Almost all working-age people could expect to pay at least 24% of their council tax – a sum that was eventually reduced to 20%, representing an average annual payment of £147 or just under an extra £3 per week.

CTB_Game Blog graph

 

 

 

It would have been odd, had a policy wholly designed to produce local variation not in fact done so, and there was indeed variation, in the metropolitan West Midlands as across the country.

At that first time of asking in 2013, nearly 18% of the 326 English councils decided to continue with the same CTB-level rebate and somehow find the money, including four of the WM seven.

70% of councils nationally and Birmingham and Wolverhampton locally – the two with the largest affected caseloads – introduced ‘minimum payment’ schemes, requiring everyone to pay at least some council tax, regardless of income.

The remainder rejected ‘minimum payment’ but introduced other changes, Sandwell’s having included changing the income taper – the amount by which support is withdrawn as income increases; lowering the maximum savings limit over which one is no longer eligible for benefit; and reducing the second adult rebate – the benefit homeowners not on a low income receive if they share their home with someone (non-partner) on low income.

In the two years since, three of the WM authorities have cut their council tax support, either introducing or increasing their minimum payment schemes, and across the country the number still retaining all features of CTB has fallen by nearly a third.

Nationally, 2.3 million low income families will pay on average £167 more in council tax in 2015/16 than they did under CTB, the respective figures for the West Midlands region being 253,000 and £173. 11% of that national 2.3 million have also been affected by the ‘Bedroom Tax’ or ‘removal of the spare room subsidy’.

As for local councils, as is usually the case, they’ve generally coped – possibly too effectively for their own good. Some council tax collection rates have fallen fractionally, but nowhere (to my knowledge) as drastically as was predicted by some at the time.

New council schemes to reduce worklessness are springing up all the time, but it’s difficult to identify which, if any, of these is incentivised by the CTB changes.

Something, though, is quantifiable. Roughly £1 billion has been transferred from central government’s welfare bill to the shoulders of local government – and is being borne variously by increased bills for council tax support claimants, reductions in the claimant count, increased council tax bills for all, and reductions in other council budgets. But then that’s Pickles’ localisation for you.

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