Birmingham City Council, Chris Game, council, council tax benefit, council tax support, Eric Pickles, funding, government, local authorities, localism, muscular localism, tax, we love local government
I noticed recently that, among the links on the right-hand side of this page, we still listed the We Love Local Government blog – which, despite its having been wound up, in characteristic style, several months ago, rather pleased me. It deserves to live on, and, should its belatedly unveiled authors, Glen Ocsko and Gareth Young, happen to see this blog, they may take it as a small personal tribute to them and their … I was going to type ‘baby’, but that would make them filicidists … creation.
WLLG was written by local government officers – often critical of aspects of the world in which they worked, but who managed at the same time to love it – or at least sizable chunks of it, for quite a bit of the time. This, of course, is what made it and them different – from so many of their fellow citizens who achieve only the harshly critical bit. This blog is addressed to these gripers, in the hope that, if ever there were a sequence of events that might arouse in them a tad of sympathy for local councils, it could well be the latest episodes of the Government’s council tax benefit changes, summarised below and using as an illustration Birmingham City Council.
These benefit changes are a pivotal and controversial Coalition policy, revealing what critics claim is the true nature of its welfare philosophy, its commitment to genuine localisation, and its sheer managerial ineptitude. Details are on Birmingham City Council’s website under ‘Council Tax Support’ – so what follows is a brief summary for the late arrivals at the Taxpayers’ Ball.
From next April, the Government is abolishing Council Tax Benefit (CTB), a means-tested benefit currently paid by the Department for Work and Pensions (DWP), but administered by local government – in Birmingham’s case, £100 million to approximately 137,000 council tax payers. Replacing it will be Council Tax Support – financial support schemes determined and operated by local authorities themselves.
This ‘localisation’ of welfare sounds a commendable transfer of responsibilities from Whitehall to town hall – until you examine the attached strings. First, the policy forms a key part of the Coalition’s deficit reduction programme, aimed at reducing the current CTB bill by 10% by strengthening councils’ incentives to get people into work, and cutting the fraud and error that the DWP was unable to control. And councils will need to achieve all this immediately, apparently, as the Government would pay them 10% less for their new schemes than for CTB, creating for Birmingham a funding gap of £10.9 million.
Second, the Government decreed that pensioners receiving CTB must be protected against any reduction in support. In Birmingham this means 54,000 pensioners are protected, while 83,000 working-age recipients (those born after October 1951) shoulder potentially the whole savings burden.
So far, so centralist, for it is only here that the localist part begins, with councils able to devise their own schemes to achieve these savings, provided they do so by January 2013.
In practice, this discretion amounts to three unenviable choices: spreading the funding cut 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 those already being demanded by the Government – for Birmingham, a possible £600 million over the next five years.
The Council’s selected option – essentially a version of the spread-the-pain-equally model – was revealed in early September in two documents: one setting out the proposed tax support scheme, the other asking for residents’ views by 2 December. Almost all working-age people could 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. Main exceptions would be those with a dependent child under six, and those receiving a disability or disabled child premium or war-related pension. A modest contribution to the scheme’s cost should come through removing council tax discounts on second homes, as permitted when the Local Government Finance Bill eventually completes its unhurried progress through Parliament.
Now here, I thought, is where the sympathy might come in – for the contemptuous treatment councils regularly receive, even from Community and Local Government ministers who are supposed to be vaguely on their side.
First, there’s the constitutional arrogance of requiring councils to prepare and consult on detailed schemes before the authorising legislation is even passed. Yes, it’s equally contemptuous of the Queen’s Royal Assent, but it seems almost standard procedure nowadays.
Then there’s the Government’s brand of centralist localism – ‘muscular localism’, as Secretary of State Eric Pickles calls it – which involves both setting all the main rules, then changing them in what ministers must know is the middle of councils’ consultations, but that to them presumably is merely a game.
In late October, weeks after most councils had formulated their support schemes and gone out to consultation, DCLG ministers announced that they’d had a quick whip-round and found an extra £100 million ‘transition grant’ 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 mainly to mean that those currently receiving full council tax support should pay no more than 8.5% of their council tax liability, or barely a third of Birmingham’s proposed 24%.
So, back to the drawing board – or perhaps not, who knows. An unpredictable share of the £100 million would represent a fraction of councils’ 10% funding cut and complicate budget-making. Besides which, collecting costs will cancel out much of the arbitrary 8.5% tax payments: £1.21 per week on a Birmingham Band A property. The smart money is on most councils sticking with their intended schemes.
Clearly, though, ministers have been spooked by the savage impact on the poorest households of their own inflexible funding restrictions – of which they were repeatedly warned, and which might have been largely avoided, had they allowed councils not just to remove tax discounts from empty properties, but, as proposed by the LGA, to reduce even slightly the 25% single person’s discount.
But no, that was another ministerial rule: “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 councils would take the blame. Now, no doubt, they’ll get additionally blamed, whether they change their proposed schemes or not – and if that lot doesn’t earn them a scintilla of sympathy, I’m at a loss to think what might.
Chris is a Visiting Lecturer at INLOGOV interested in the politics of local government; local elections, electoral reform and other electoral behaviour; party politics; political leadership and management; member-officer relations; central-local relations; use of consumer and opinion research in local government; the modernisation agenda and the implementation of executive local government.