Poll Tax II: the coalition plans even bigger cuts to Council Tax Benefit

The fund for Council Tax Benefit will be cut by a further 8.5 per cent next year, meaning a total cut of 18.5 per cent.

The most politically hazardous of the coalition's welfare measures could yet prove that which has received the least attention: its reform of the council-tax system. As I wrote in a column in this week's NS, the coalition has cut the fund for Council Tax Benefit (which is claimed by 5.9 million families) by 10 per cent, with the result that from April many of the poorest households will pay the tax for the first time. (I'll briefly summarise the piece below for those of you who missed it.)

An analysis by the Resolution Foundation and the New Policy Institute found that, of the 86 councils that have published their plans, 57 intend to introduce a minimum payment of between 6 and 30 per cent of a full council-tax bill. As the government has stipulated that current levels of support must be maintained for pensioners, the burden will fall entirely on the working-age poor. Birmingham City Council, for instance, has announced that it will impose a 20 per cent charge on the unemployed, meaning a minimum payment of £200 a year for households affected.

If this sounds a lot like the poll tax, it's because it is. The Community Charge, as it was officially known, similarly required each household, irrespective of its income, to pay at least 20 per cent of the tax. Patrick Jenkin, the architect of the poll tax, has even accused the government of repeating the Thatcher government’s mistake. The Conservative peer told the BBC last year: "The poll tax was introduced with the proposition that everyone should pay something . . .We got it wrong. The same factor will apply here, that there will be large numbers of fairly poor households who have hitherto been protected from Council Tax, who are going to be asked to pay small sums."

But the government isn't done yet. At a meeting with council leaders yesterday, ministers from the Department of Communities and Local Government announced that the budget for Council Tax Benefit will be reduced by a further 8.5 per cent in 2014-15, meaning a total cut of 18.5 per cent (see this report in Local Government Chronicle). Sharon Taylor, the Labour leader of Stevenage Borough Council and chair of the Local Government Association's finance panel said: "That is not what we were expecting." It was also confirmed that pensioners will continue to be protected, again meaning bigger tax rises for the working poor.

I would be surprised, however, if the government isn't forced to retreat after this April. When the first council tax bills land on the doormats of the poorest homes, they will, in all probability, be torn up. Those benefit claimants who already face the unpalatable choice of either heating their home or feeding their family, will not stoically accept that they too must pay Britain's most unpopular tax. Yet ministers still seem dimly unaware of the revolt that awaits them in less than three months.

Communities Secretary Eric Pickles plans to cut the fund for Council Tax Benefit by 18.5 per cent over two years. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty Images
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Why are boundary changes bad for Labour?

New boundaries, a smaller House of Commons and the shift to individual electoral registration all tilt the electoral battlefield further towards the Conservatives. Why?

The government has confirmed it will push ahead with plans to reduce the House of Commons to 600 seats from 650.  Why is that such bad news for the Labour Party? 

The damage is twofold. The switch to individual electoral registration will hurt Labour more than its rivals. . Constituency boundaries in Britain are drawn on registered electors, not by population - the average seat has around 70,000 voters but a population of 90,000, although there are significant variations within that. On the whole, at present, Labour MPs tend to have seats with fewer voters than their Conservative counterparts. These changes were halted by the Liberal Democrats in the coalition years but are now back on course.

The new, 600-member constituencies will all but eliminate those variations on mainland Britain, although the Isle of Wight, and the Scottish island constituencies will remain special cases. The net effect will be to reduce the number of Labour seats - and to make the remaining seats more marginal. (Of the 50 seats that would have been eradicated had the 2013 review taken place, 35 were held by Labour, including deputy leader Tom Watson's seat of West Bromwich East.)

Why will Labour seats become more marginal? For the most part, as seats expand, they will take on increasing numbers of suburban and rural voters, who tend to vote Conservative. The city of Leicester is a good example: currently the city sends three Labour MPs to Westminster, each with large majorities. Under boundary changes, all three could become more marginal as they take on more wards from the surrounding county. Liz Kendall's Leicester West seat is likely to have a particularly large influx of Tory voters, turning the seat - a Labour stronghold since 1945 - into a marginal. 

The pattern is fairly consistent throughout the United Kingdom - Labour safe seats either vanishing or becoming marginal or even Tory seats. On Merseyside, three seats - Frank Field's Birkenhead, a Labour seat since 1950, and two marginal Labour held seats, Wirral South and Wirral West - will become two: a safe Labour seat, and a safe Conservative seat on the Wirral. Lillian Greenwood, the Shadow Transport Secretary, would see her Nottingham seat take more of the Nottinghamshire countryside, becoming a Conservative-held marginal. 

The traffic - at least in the 2013 review - was not entirely one-way. Jane Ellison, the Tory MP for Battersea, would find herself fighting a seat with a notional Labour majority of just under 3,000, as opposed to her current majority of close to 8,000. 

But the net effect of the boundary review and the shrinking of the size of the House of Commons would be to the advantage of the Conservatives. If the 2015 election had been held using the 2013 boundaries, the Tories would have a majority of 22 – and Labour would have just 216 seats against 232 now.

It may be, however, that Labour dodges a bullet – because while the boundary changes would have given the Conservatives a bigger majority, they would have significantly fewer MPs – down to 311 from 330, a loss of 19 members of Parliament. Although the whips are attempting to steady the nerves of backbenchers about the potential loss of their seats, that the number of Conservative MPs who face involuntary retirement due to boundary changes is bigger than the party’s parliamentary majority may force a U-Turn.

That said, Labour’s relatively weak electoral showing may calm jittery Tory MPs. Two months into Ed Miliband’s leadership, Labour averaged 39 per cent in the polls. They got 31 per cent of the vote in 2015. Two months into Tony Blair’s leadership, Labour were on 53 per cent of the vote. They got 43 per cent of the vote. A month and a half into Jeremy Corbyn’s leadership, Labour is on 31 per cent of the vote.  A Blair-style drop of ten points would see the Tories net 388 seats under the new boundaries, with Labour on 131. A smaller Miliband-style drop would give the Conservatives 364, and leave Labour with 153 MPs.  

On Labour’s current trajectory, Tory MPs who lose out due to boundary changes may feel comfortable in their chances of picking up a seat elsewhere. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog. He usually writes about politics.