A lottery with no winners

Jeremy BeechamJeremy Beecham on the callous calculations driving the government's plans for Council Tax Benefit

Just under 46 years ago, as the newly selected candidate for the Newcastle council ward I continue to represent, I delivered my first leaflet to, amongst others, Ted Graham’s mother. Ted, later to become a much-loved Chief Whip in the Lords, was then MP for Edmonton. His mum lived in a rather grim block of flats owned by the Sutton Trust – since demolished and replaced by much improved modern housing. The leaflet brought good news to my future constituents. It told them that the Labour government was introducing rebates which would help thousands of Newcastle residents meet their local rates bill.

Rebranded as Council Tax Benefit (CTB) after the demise of the Poll Tax, the scheme has survived until now. It never reached all those entitled to it, with around £1.8bn a year going unclaimed, much of it by owner occupying pensioners. But it made a real difference to many households. Even though CTB effectively embodied an element of the Poll Tax, reinforced by the small number of bands and the limited ratio of payments made by householders between the top and bottom bands, it seemed to be a fixture in the landscape of welfare benefits.

Not any more.

From next April, if the Local Government Finance Bill passes unamended, a national scheme will be replaced by a patchwork of local schemes determined by London boroughs, metropolitan districts, unitaries and shire district councils – though not by the shire counties responsible for much the greatest proportion of local government spending in their areas. As with the transfer of responsibility to local authorities of the social fund which provides emergency grants and loans to the desperately needy, this represents a reversion to nineteenth century Poor Law, with different rates of benefit determined at local level – a postcode lottery with no winners.

And it’s worse than that, because the government is cutting the funding by 10% on the specious grounds that they expect demand for benefit to fall, when it is in fact rising, and when they have already made clear in an answer to a Parliamentary Question of mine that they have no intention of promoting take up.

But the 10% cut won’t translate into a simple 10% cut for people currently receiving CTB, because pensioners are to be statutorily exempt, and other groups might be under local schemes. It’s likely that the real cut for the rest will be around 20%, and that assumes no growth in demand. The people hit hardest will be the working poor, who also face reductions in housing benefit. In Newcastle, government funding for council tax benefit will fall by about £2.5m, even after reducing empty homes discounts. That’s around £3-£4 per week for the average household in the lower bands.

Councils face huge difficulties in designing local schemes, poring over countless pages of CLG departmental guidance and producing often complex documents for consultation. They have to decide, in the manner of the erstwhile landed proprietors of Downton Abbey, who will get what out of a fixed government allocation and how, if at all, they can cope with extra demand. Moreover, apart from having to make invidious choices between different groups of possible beneficiaries, they will have to cope with the difficulty of collection from hard-pressed residents. Prudent Treasurers are advising elected members of the need to take this into account in deciding the level of reserves.

Contrast all of this with the tax handout to the rich, reflect on the impact on the local economy and jobs of the reduced purchasing power of communities, and it is impossible to overstate both the callousness and the stupidity of this cynical change, effected under the banner of localism. Once again the government is demonstrating that its definition of localism is passing the buck without passing the bucks, and any transitional relief, rumoured to be under consideration will be limited in amount and time, probably financed by top-slicing councils’ funding.

Lord Jeremy Beecham is a member of Labour’s CLG team in the Lords and a Councillor on Newcastle City Council

Published 15th October 2012

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