Labour must fight to reinstate Council Tax Benefit

By Cllr Seema Chandwani

Although Labour needs to introduce a new local taxation system that is fairer when it gets into government, now is the time for us to demand the reintroduction of Council Tax Benefits.

Since its inception in 1992, Council Tax has had a plethora of unresolved issues,  from its calculations for valuing property, to archaic collection legislation that has left councils chasing the very vulnerable residents they were set up to support.

In April 2013, the then Secretary of State for Communities and Local Government Eric Pickles (now Lord Pickles), abolished Council Tax Benefit and replaced it with the Council Tax Reduction Scheme.

This meant an estimated 5.9 million people on the lowest income were expected to pay a proportion of their council tax. This reckless policy change was known as the ‘Pickles Poll Tax’.

Council Tax Benefit was means-tested, since the government knew the income of the residents expected to now pay was very low. The decision to scrap it was an ideological attack on millions of working class households. As predicted by so many at the time, it led to further indebtedness of low income households and a plunging into poverty for so many struggling to keep afloat.

As a result, still to this day, there exists on the ground a perverse and vicious circular economy.  The needs of poorer households are such that a range of expensive interventions are required to be provided by local councils.  Yet by chasing poor households for council tax payment, they are being driven deeper into debt. Bizarrely, this increases yet further the cost of council interventions, which outweighs by millions the income generated.

In June 2020, a Conservative Lord wrote: “Getting behind on your council tax is one of the most problematic debts someone can have. With over two million already getting behind – and millions more saying they expect they’ll have to miss a payment – a crisis is building in household budgets.

“This must be combined with changes to the Council Tax rules. Councils need more flexibility on how they can collect debts in a way that lets them consider the effect of COVID-19 on their residents. And people who have fallen behind on their bills should have the security of knowing that councils will take all reasonable steps to avoid referring their debt to bailiffs and the courts.”

Incredibly the Conservative Lord who penned these words was none other than Eric Pickles himself! I kid you not.

Labour must seize this opportunity and fight for a tried and tested method to be reintroduced – a fully funded Council Tax Benefit.

It will enable:

  • Councils to have a more stable income.
  • Councils to focus on COVID recovery, not waste resources on Council Tax recovery on those that cannot pay.
  • Residents to have the security required to recover from COVID rather than be caught by a system that traps and further plunged them into debt.

In Haringey we have used powers in the legislation to restore 100% Council Tax exemption to our low income families with young children which is approximately 6,000 households.   However, we have over 25,000 residents claiming via the Council Tax Reduction Scheme, which covers up to 80% of the bill.

We cannot keep using our own council finances to exempt more residents to create something that resembles a Council Tax Benefit – we simply do not have the money.

The call from Lord Pickles is good at identifying the problem – which he caused, incidentally – but it’s not enough to make the tweaks he is calling for. The solution isn’t a change in rules – councils can already cease the use of bailiffs: we do so in Haringey and it’s also done in a handful of other boroughs such as Bristol and Hammersmith.

What we need to do is stop chasing low income residents in the first place by exempting their requirement to pay.

Bringing back a fully funded Council Tax Benefit scheme achieves that.

Cllr Seema Chandwani is the Cabinet Member for Transformation and Public Realm Investment for Haringey Council.

Image: https://www.lbhf.gov.uk/articles/news/2015/02/hammersmith-fulham-set-be-only-council-london-cut-tax

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