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Social impact of the new form of council tax

by
31 August 2012

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From the Revd Paul Nicolson

Sir, - Council tax as we know it is being abolished, but councils will reinvent their own schemes as required by clause 9 (1) 13A (2) of the Local Government Finance Bill, which is due to reach its final stages in the House of Lords in October.

Each council must make a scheme specifying the reductions that they are to apply, having decided which constituents they consider to be in financial need. They have absolute discretion to define financial need, but their room for manoeuvre is curtailed by the coalition. Ten per cent, or £500,000, has been cut from the central-government council-tax-benefit grant; on top of the 28 per cent already cut from the central grant; it was let slip by Earl Atlee for the coalition that the ten per cent is to help fund the railways (Hansard, 16 July 2012).

Councillors of Haringey are being told that "the cut in the national grant is based on the projected declining national demand for council-tax benefit, when Haringey has seen claimant numbers rise by 11 per cent over the past three years. This alone makes the cut of ten per cent more like 16-18 per cent. When you add that someone will need to pick up the bill for 'protected' pensioners (some 30 per cent of claimants in the borough), we are looking at a total cut of around 22 per cent for those affected. This potential cut to council-tax benefit will be dwarfed by the future impact of universal credit."

The equalisation procedure is abolished. This enabled higher central grants to be made to councils with a high population of impoverished constituents and therefore a higher amount of council-tax payments. The total amount of council tax currently collected by the councils may not be increased without a local referendum. Who is going to vote for a tax increase? If councils do not, or cannot, continue to pay 100-per-cent benefit to people who receive it now, then we have another poll tax, which taxed unemployment benefits with 20 per cent of the tax for that household.

The probable consequences include: a patchwork quilt of definitions of financial need, as councils make separate decisions, and the burden of the new council taxes fall on the working poor

and low-paid, because of the regressive nature of the bands. It will undo the lowering of the income tax threshold for the low paid, and probably tax the universal credit, so spoiling the Department for Work and Pensions's efforts to make work pay. The increasing number of unemployed will inevitably increase the number of council-tax claimants, so requiring taxpayers to pay more or the benefit to be cut further.

Financial need is created by the cumulative effect of the move of benefit uprating from retail price index to the slower-rising consumer price index, sanctions, civil penalties, housing-benefit caps, council-tax cuts, and the universal credit caps on the poorest citizens of Britain, which has not been calculated by the coalition.

No account has been taken of the low level of the proposed universal credit for single adults at £71 a week or £56.25, already hit by rising transport, food, and fuel costs. Discretionary housing payments designed to help households forced into debt by housing-benefit caps, which have been used to pay off council-tax arrears, will not be allowed to pay off council-tax arrears in the future.

Councils with reduced staff will take short cuts on enforcement of an increasing number of arrears. Bulk applications for liability orders, thousands at a time, will be made to the magistrates' courts, allowing the councils to dispatch bailiffs to thousands of households they know nothing about. This will hit pregnant women, the disabled, the bereaved, and the mentally and physically ill on low incomes with court, council, and bailiffs' costs of up to £600 on top of the inevitable council-tax arrears.

The enforcement procedures against unmanageable debt will increase both mental and physical illness and the costs to the health service. Food banks will increase in number, as will the number of families with hungry children and homeless single adults who need them; food banks can supply only three days' food.

Please sign our e-petition on http://epetitions.direct.gov.uk/petitions/25438. Stop the housing benefit and universal credit caps.

PAUL NICOLSON
Chair, Zacchaeus 2000 Trust, 34 Grosvenor Gardens, London SW1W 0DH

 

 

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