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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At Labour conference, activists and politicians can't avoid each other – but try their best to "unsee"

My week, from havoc in the Labour family to a sublime act of real-life trolling – via a shopping centre.

I like to take a favourite novel with me to party conference for when it all gets too much, and this year I took China Miéville’s The City & the City. It takes place in the fictional cities of Besžel and Ul Qoma, two metropolises that exist in the same geographic space but must dutifully “unsee” one another or risk the sanction of Breach, the secret police force. It turned out to be a better allegory for what was going on outside my hotel than I had expected.

Labour, as I don’t need to tell you, is badly split on almost everything. Now that the acrid leadership race has reached its inevitable conclusion, activists and politicians on both sides are operating as if they had a standing duty to “unsee” each other. The atmosphere feels a bit like a family dinner after a blazing row: everyone is aware that things have been said that will take years to be forgiven, if they ever will be, so the conversation is largely banal and superficial.

The exception is the conference floor, the only place where Corbynites and Corbynsceptics cannot unsee each other, which was therefore the scene of several acrimonious confrontations after tricky votes. It’s difficult to predict where Labour goes from here. The Parliamentary Labour Party (PLP) is largely against a split, but its members surely can’t spend the next four years dutifully pretending not to see one another,or their activists?

 

Chaos and confusion

Would it have been better for Jeremy Corbyn if his defeated challenger, Owen Smith, had done a little bit better against him – not just in the final vote but throughout the contest? All summer, Smith distinguished himself only through his frequent gaffes, to the point where it felt more appropriate to describe him as a participant in the leadership race rather than a combatant.

The difficulty for both Corbyn and his critics is that his opponents in the PLP have no clear leader. As a result, their dissatisfaction is amorphous, rather than being productively channelled into a set of specific demands or criticisms, which Corbyn could then reject or accept. The overwhelming feeling about his leadership among the PLP is that “something must be done”. So whenever an MP embarks on a freelance assault – Margaret Hodge’s no-confidence motion, say, or Clive Betts’s attempt to bring back elections to the shadow cabinet – the majority leaps on the scheme. Corbyn’s critics reason that at least it’s something.

Although fractious Labour MPs might not see it that way, the decision not to restore shadow cabinet elections helps their cause. Taking away the leader’s ability to choose his ministerial team was a recipe for chaos – chaos that would, rightly, have been blamed on them.

 

Custody rights

If the Labour family would be, as I suspect, better off seeking a divorce, there is an irony that one of the things that they all agree on is the fate of the kids. The party is entirely united behind its leader in his opposition to grammar schools – as is almost every serious thinker on education policy, from Policy Exchange on the right through to Melissa Benn on the left.

Still, Labour will encounter a visceral type of resistance to its stance from the alumni of grammars, who, regardless of what the studies show, attribute their success to their attendance at selective schools. I can understand that. Although I went to a comprehensive, the emotional pull of one’s upbringing is hard to escape. I can, for example, read all the studies that show that children in single-parent families do worse – but I find it hard to experience it as anything other than an awful attack on my mother, to whom I owe everything.

Winning the argument over schooling will require a sensitive ear to those for whom the argument against the schools seems like an attack on their parents.

 

Pudding and pie

One of the nice things about being from a single-parent family is that I don’t have to admit to flaws – merely to unresolved kinks that would have been ironed out had my absent father stuck around. One such kink is my capacity for procrastination, which
results in my making decisions too often at the last minute.

This always comes back to bite me at party conference. At dinner events, I frequently put off picking my meal options to the point that I have to eat whatever the kitchen has left. At one meal this year, I was lucky enough to have three courses of pudding, but at another, my hastily cobbled-together starter seemed to consist entirely of pesto, taramasalata and rocket.

 

Too late

The best thing about party conference is sharing a panel with a politician you don’t know very much about who turns out to be highly impressive. It’s particularly cheering now, when my optimism about politics is at a low ebb. I try to meet them properly for coffee afterwards, although because of my capacity for putting things off, that doesn’t always happen.

Last year, I was chairing a particularly testy fringe on the Israel-Palestine conflict. The then shadow foreign secretary, Hilary Benn, was running late and an MP from the 2015 intake had to field all the questions on her own. She did this with immense poise and knowledge, while clearly having a sense of how unhelpful some of the louder, angrier voices were – during one lengthy monologue from the floor, she turned and rolled her eyes at me. Her name was Jo Cox.

I kept meaning to get to know her, but I never got around to ringing her office, and now I never will.

 

Banter and bargains

A colleague alerts me to a sublime act of real-life trolling. When Everton opened a second branch of its team store in Liverpool’s shopping centre, it picked an innocuous name: Everton Two. Innocuous, that is, until you realise that the shopping centre is called Liverpool One. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics. 

This article first appeared in the 29 September 2016 issue of the New Statesman, May’s new Tories