Bill McKenzie on why proposals for the future of Council Tax Benefit reveal Ministers' double standards on localism
With the Local Government Finance Bill continuing its passage through Lords committee stage this week, proceedings are now focussed on the big issue of localisation of Council Tax Benefit.
To date, this Benefit, paid as to nearly 6 million people, has been demand led and met by central government. Ministers however, are now seeking to pass the risks to local government and with 10% less funding than the assumed starting cost of support. Labour would prefer to see it all as part of Universal Credit but the door on this approach has been closed – for the time being at least.
The government’s proposals will add to the huge financial pressures presently felt by local authorities. The current spending review is already taking some 28% from council coffers and there is doubtless more to come. And this at a time when the strain on local services – especially adult social care – is increasing inexorably.
The challenges for local government are made worse by the speed of the introduction of the Council Tax changes, as well as the Business Rate Retention Scheme. In future, the collection risks of business rates will fall partly on local authorities and Council Tax demand and take up will also be at their risk. Particularly in the early years of a new system, this makes budgeting difficult and prudence will likely dictate extra for the reserves adding to council tax pressure and local service cuts.
In future, any major factory closure will not only reduce the business rate base at a cost to the authority but is likely to lead to higher unemployment in the area, with the knock on effect of increased claims on council tax support.
The 10% funding cut is in fact, likely to be higher as the current state of the economy suggests the number of claimants will increase and this will be underfunded at the start. Moreover the government is insisting that pensioners are fully protected from the cuts, as should an undefined category of vulnerable people. Fine in principle, but another central diktat which runs contrary to Ministers supposed ‘localist’ agenda.
What all of this is doing is to focus the full effect of the cut onto a smaller group of inevitably poor working age people. This will not only hit them direct but worsen work incentives at a time when policy is focused on getting people into work. Obviously, the more pensioners and other vulnerable people in an area the greater the squeeze on the remainder.
Some local authorities may be able to use new freedoms on empty rates to meet the costs of the Council Tax Benefit cuts. Others most certainly will not.
I know we shouldn’t expect anything less from Ministers in this government but once again, under the guise of localism, we are seeing a cuts agenda in which they are shirking their responsibility for the outcomes.
Lord Bill McKenzie of Luton is Labour’s is Labour’s Shadow Minister for Communities and Local Government in the Lords