Welfare cuts mean a dramatic rise in council tax for the poorest

The decision to reduce the budget for council tax support by 10 per cent means low-income households face a tax increase of up to £600.

Accustomed to the inflated claims of successive governments, readers might be forgiven for rolling their eyes at the phrase "radical welfare reform". Yet for once the bold rhetoric might match reality. Council Tax Benefit, the most widely claimed benefit in the UK, which provides 5.9 million low-income families with help paying their council tax will soon be abolished. From 1 April, responsibility for council tax support will transfer from Whitehall to each of England’s 326 local authorities (and the Scottish and Welsh governments). Few have yet grasped the full implications.

To the reform’s cheerleaders, the change is ‘localism in action,’ and technically they’re right. But it’s localism of the most meagre and restricting kind. Councils must now provide council tax support but from a budget cut by 10 per cent cut. And they must also contend with centrally-set rules that mean that the amount of help pensioners receive is protected. This leaves them with a stark choice: either substantially increase the council tax bills of low income working families or find savings elsewhere to cover the funding shortfall.

Faced with these constraints and unable to make the required extra savings at a time of unprecedented financial challenge, three-quarters of English councils are set to introduce less generous systems of council tax support in just over two months’ time. Over a third are set to introduce schemes that severely reduce support. Only around a quarter of councils – along with both the Scottish and Welsh governments – feel they are able to absorb the funding shortfall and maintain current levels of support.

What does this mean for low income households? The answer is set out in a report released this morning from the Resolution Foundation. It shows that while the government talks up its decision to "freeze" council tax, millions of households – both in and out of work –in fact face swingeing increases.

Both the scale of the hit and the number of people likely to be affected are dramatic. Many of the 2.5 million out-of-work claimants who currently pay no council tax at all will now, often for the first time, face council tax bills of between £96 and £255 a year. Meanwhile, around 670,000 low-paid working families will see their council tax rise by anywhere up to 333 per cent – an increase of £577 for single working parents who look set to be the worst affected. Little wonder that the handful of prescient commentators alive to the possible implications of Council Tax Benefit reform have drawn parallels with the Community Charge, more commonly known as the poll tax.

It remains to be seen whether we see the emergence of the twenty-first century equivalent of anti-poll tax unions but councils are certainly braced for widespread non-payment. Many are setting aside large sums of money to compensate for unpaid bills while also preparing for more extensive use of bailiff powers and the courts.

Reform did not need to look like this. There was no intrinsic rationale to cutting funding at the same time as localising council tax support and experts have long warned of the dangers that a complex patchwork of local schemes poses to the government’s Universal Credit system. For savings of £410m it all seems unduly hazardous.

But the hazards for government are nothing compared to the very real suffering the changes will mean for many low income families. Already struggling to cope with stagnant wages, rising living costs, a series of cuts to the tax credits and – now – three years of below-inflation rises in support, a swingeing increase in council tax may mean the difference between staying afloat and going under.

As yet, there is no sign that ministers recognise the pain the reform is set to cause. Eric Pickles appears more concerned with the prospect of councils "cheating" their residents by planning across-the-board council tax rises of 1.99 per cent than with those soon to face increases of up to 333 per cent. Perhaps they expect a public inured to cuts to meekly accept the change. Yet there is all the difference in the world between stealth reductions in support over time and a large bill landing on your doormat. Revolt or not, the poor are unlikely to take this lying down. 

The Resolution Foundation's new report, No Clear Benefit, is published today

Communities Secretary Eric Pickles speaks at the Conservative conference in Birmingham last year. Photograph: Getty Images.

Matthew Pennycook is MP for Greenwich and Woolwich, and member of the Energy and Climate Change Committee. He is PPS to John Healey. 

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The real question about George Osborne and the Evening Standard? Why he'd even want the job

The week in the media, from Osborne’s irrelevant editorship to the unrepentant McGuinness and Vera Lynn’s stirring ballads.

The big puzzle about George Osborne’s appointment as the editor of the London Evening Standard is why he wanted the job. The Standard is now just a local freesheet, a pale shadow of its old self. In Tube carriages, discarded copies far exceed those being read. Its columnists are lightweight [Ed: as an occasional columnist myself, thanks, Peter] and its news stale, mostly written the previous day. Critics of Osborne’s appointment describe the Standard as “a major newspaper”. It is no such thing. The idea that the editorship will allow the former chancellor to propel himself towards the London mayoralty is laughable. In last year’s election for mayor, the Standard, according to University of London research, ran twice as many positive headlines about the Tories’ Zac Goldsmith as it did about Labour’s Sadiq Khan. The latter won comfortably. The paper was so supportive of Khan’s predecessor, Boris Johnson, that it became known as “the Daily Boris”. But Johnson, with a high profile from television, hardly needed its backing to beat a tired and largely discredited Ken Livingstone.

If Osborne believes that the Standard offers him a significant political platform, it is just further proof that he belongs to an ignorant elite.

 

Violent legacy

More than anyone else, Martin McGuinness, who has died aged 66, represented how the IRA-Sinn Fein combined uncompromising violence with negotiating charm to achieve its aims. Unlike Gerry Adams, McGuinness admitted openly and proudly that he was a senior IRA commander. In Londonderry on Bloody Sunday in 1972 he carried a sub-machine gun, but apparently without using it. Later that year, he was among a delegation that held secret talks with British ministers and officials. The following year, he was arrested near a car containing prodigious quantities of explosives and ammunition.

Like many who recall the IRA’s campaign in mainland Britain – three huge bombs detonated less than half a mile from me – I could never quite accept McGuinness as a government minister and man of peace. Whatever he said, he did not renounce ­violence. He just had no further use for it, a decision that was reversible.

 

A peace of sorts

When I hear politicians saying they could never contemplate talks with al-Qaeda, I smile. They said the same about the IRA. The idea of negotiation, John Major said, “turns my stomach”. A month later, news leaked of secret talks that would lead to a ceasefire. You can call it hypocrisy but politicians have no practical alternative. Significant terrorist campaigns rarely end without deals of some sort. Even then, dishonesty is necessary. The parties to the Good Friday Agreement with Sinn Fein in 1998 never admitted the true terms, perhaps even to themselves. In return for a role in government, the IRA ceased attacks on the British mainland, army, governing classes and commercial interests. It remained in control of working-class Catholic enclaves in Northern Ireland, where it continued to murder, inflict punishment beatings and run protection rackets. Not a pretty bargain, but it brought peace of a sort.

 

Real war anthems

“We’ll Meet Again” and “The White Cliffs of Dover”, sung by Dame Vera Lynn, who has just celebrated her 100th birthday, are the songs most closely associated with the Second World War. This, when you think about it, is peculiar. Most wars are associated with stirring, patriotic anthems, not sentimental ballads. Even the First World War’s “Keep the Home Fires Burning”, before it mentions hearts yearning for home, stresses the noble, manly instincts that drove soldiers to fight: “They were summoned from the hillside/They were called in from the glen,/And the country found them ready/At the stirring call for men.” Lynn’s songs had only the wistful sadnesses of parting and reassurances that nothing would change.

Their “slushy” tone troubled the BBC. It feared they would weaken the troops’ fighting spirit. Despite Lynn’s high ratings among listeners at home and service personnel overseas, her radio series was dropped in favour of more virile programmes featuring marching songs. Unable to sing to her forces fans over the airwaves, Lynn bravely travelled to the army camps in Burma. A BBC centenary tribute showed veterans of the war against Japan weeping as her songs were played back.

The wartime role of this unassuming plumber’s daughter makes me – and, I suspect, millions of others – feel prouder to be British than any military anthem could.

 

Ham-fisted attempt

After his failed attempt to increase National Insurance contributions for the self-employed, Philip Hammond, it is said, will have a £2bn hole in his budget. It will be more than that. Thanks to the publicity, tens of thousands more workers in regular employment will be aware of the tax advantages of self-employed status and hasten to rearrange their affairs. Likewise, newspaper accountants of old, after circulating memos imploring journalists to reduce lavish claims for “subsistence” while covering stories away from the office, would find a sharp rise in claims from hacks previously unaware that such a perk existed.

 

Battle of Hastings

My fellow journalist Max Hastings, attending a West End play, was once dragged on stage by the comedian James Corden, told to help move a heavy trunk and slapped on the bottom. Ever since, I have approached plays starring comedians warily. I dropped my guard, however, when I bought tickets for a contemporary adaptation of Molière’s The Miser starring Griff Rhys Jones, and found myself drenched when Jones spilled (deliberately) what purported to be fine wine. It was of course only water and, unlike
Hastings, I shall not demand a refund.

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

This article first appeared in the 23 March 2017 issue of the New Statesman, Trump's permanent revolution