The localisation of Council Tax support is part of the package of the Government’s welfare reforms and represents a £470m saving to the Treasury and financial hit to claimants. The implementation of this cut has been handed on to local councils who are being required to introduce local Council Tax support arrangements following the abolition of Council Tax benefit.
The 10% cut in total funding of the scheme is intended to force each Council to decide how much to pass onto claimants and what to fund from Council coffers. In Birmingham’s case the 10% cut in funding equates to £11.08m.
The final proposal agreed at Council has been modified to introduce additional financial protection to people in receipt of Carer’s premium and claimants in receipt of Employment Support Allowance and who are also in receipt of a disability benefit. It includes provision of a £1m hardship fund. The Council is subsidising the local Council Tax support with £300k from its own funds.
Cllr Ian Ward, Deputy Leader, informed the Council meeting that it had been decided not to apply for transitional funding from the Government, which would have allowed it to have delayed implementation for 12 months, on the grounds that it would result in an additional cost of £1.3m to the Council’s budget in 2014-15 and require additional cuts.
The debate in the Council meeting centred on two motions moved by the opposition Liberal Democrats and Conservatives Groups respectively, they both charged that the Labour Group should have accepted the transitional relief and questioned the practicalities of enforcing and collecting the charge from low income families.
The guillotining of the debate only allowed the movers and seconders of the motions to speak and provided a right of reply by the Deputy Leader. No Labour Councillors spoke in the debate but voted as a block against the opposition motions to accept the Cabinet proposal.
The Council has conservatively estimated that up to 20% of claimants won’t pay but research reported in The Guardian that many Council’s expect the non-payment rate to be 50%. The administration of the enforcement of this scheme will be massive headache for the City Council and is only likely to make the Cities debt collection agency and Bailiffs rich.
While 20 miles down the A45 in Coventry, the Labour Council is proposing to replicate the current Council Tax Benefit scheme and to protect its poorest residents from this 10% top slice. It decided not to pass on the charge on the grounds that it ‘ would place significant financial pressures on low-income households, many of whom will be impacted adversely by other changes to the welfare system. The Council would then have to collect council tax from low-income households which would be costly and resource-intensive.’ (pdf)
In Birmingham this 20% charge coincides with cuts to Housing Benefit and Child Benefit on 1st April. This continuing attack on the living standards of claimants will lead claimants to the simple choice of: Can’t Pay Won’t Pay!