|Sylvanian Families Against the Cuts. No idea who did it, but s/he is a genius.|
thanks for your expensively produced survey about what you're rather offensively terming 'The Cuts Challenge 2013-2014', as though it's a little bit like The Apprentice or Masterchef. While it's very lovely that you're asking someone with a PhD in Welsh Literature to help direct your economic policies, I'm not sure it's going to work, and I've a few problems with what you're up to.
Let's have a closer look, shall we?
The Government is abolishing the national Council Tax Benefit Scheme from April of next year. To replace it, each council has to design its own local scheme.
This is made more difficult by the fact that, at the moment, the government meets the whole cost of council tax support. In future, it will pay under 90% of the bill, based on what it contributed in 2011-2012 – a 12% cut.
OK. I can't quite tell whether you're subtly indicating that this isn't your fault but you're too scared to openly criticise the government because you think some voters hate the idea that anyone gets benefits at all. Personally, I think it's sickening. The government's plan is to make councils institute the most savage cuts, thereby hoping that voters will punish whichever party runs the local authority. As that's mostly Labour, it's a particularly dishonest and sneaky tactic. The idea is that rich Tory councils which don't have to do much because all the poor people have or will be deported, won't have to make cuts because they don't do much anyway. Meanwhile communities hardest hit by the government's economic mismanagement and vicious ideology will be hit again - and most people won't take the time to work out who is really at fault.
The council has been left with a difficult decision to make. It must either reduce the amount paid in council tax benefit fairly to recover this shortfall, or cut funding to essential council services.Hmmm. The passive 'has been left' is reasonable enough. It's been dumped with making cuts of £3.2m. Not sure about the rest though. 'Essential' is a subjective term, as is 'fairly'. Let's see what 'fairly' means, shall we?
The council is proposing a scheme which passes on some of the cut in government funding. As people of pensionable age are protected from reductions in benefits, all those affected will be of working age.This must be some new definition of 'fairly', one with which I was unfamiliar. It seems that being old is somehow superior to being younger, however rich the older person and however poor the younger person. We all know why pensioners are protected. Politicians will come out with all sorts of guff about contributing to the public purse over their working lives yada yada yada but that doesn't apply to council tax. Pensioners are protected because a) they vote more than everyone else and b) they vote Conservative more than everyone else. So it's essential that even the richest pensioners in the West of the city are protected by national laws from sharing the pain. So the poor people of working age will be hit harder, and they'll hate the council and either vote Tory or not vote at all. Quite frankly, from the government's perspective, either result is good for them.
The council believes that it has come up with the fairest scheme possible under the circumstances. Before going ahead, however, we want to consult with local people to explain how it will work and – most importantly – to get their views.Ah, I love the smell of cowardice and/or tokenism in the morning. This isn't a delegational democracy, it's a representational one. We elect people we hope know what they're doing. We don't expect them to beg us to help them out with ideas because most of us are untrained and beaten down with work and life. When they start holding consultations, we should assume that either it's an attempt to share the blame for whatever they've already decided to do, or a sham. Or a bit of both. After all, 'get their views' is a long way from 'acting on'. Cuts are going to be imposed. Organised groups will lobby to protect their privileges or services. Unorganised ones - however worthy - are going to be hit hard.
Anyway, what's with the rush to consultation?
We understand that you may be surprised that the council is launching another consultation on council tax and perhaps a little concerned that the consultation period is shorter than usual.Aha. Here it is. In short, we're screwed. Broke. I've a lot of sympathy for the council here: despite the usual incompetence and waste found in local democracy, the fact is that this is a poor area made poorer by the central government's viciousness. One solution, of course, is to refuse to set a legal budget. The Liverpool Labour council did this in the 1980s as a symbolic gesture. Lots of Labour councils did it in the 1930s in protest against Means Tests and all sorts of appalling attacks on the poor. Would it work? Not in any practical way: the government would impose a punitive budget. But symbolically, it would be an act of defiance rare in a democracy which has largely abandoned principle and ideology to the Tories. While the government applies the Chicago/Pinochet playbook pretty much just because it can, our local representatives have allowed themselves to become technocrats, passing on the pain with little more than a grimace of disaffection. Politics has become too reified: current parties have moved away from the battlefield of ideas, while councils have become part of the state's machinery rather than representatives of the local population. The government talks about decentralisation, but everything it does, from council tax to education, is about central control. Local government becomes hollowed out and bereft of ideas.
The reason for this is that the council’s financial position has been changing continuously in the past few months as new pressures have emerged. There is a serious concern that we may not be able to meet our legal obligation to set a balanced budget for 2013-2014 unless decisive action is taken.
What's actually being done?
The council proposes to restrict the maximum amount of Council Tax Benefit that a person can claim to 91.5% of what they are liable to pay.
This proposal will affect everyone of working age, employed and unemployed alike.
People on disability benefits as well as those with children will also see a reduction in their council tax benefit. This means that they will have to pay more council tax than they currently do or in some cases pay council tax for the first time.
So however poor you are, there's a bill coming, regardless of whether you can pay it or not. I don't see any more jobs coming round the corner. State benefits are being reduced in real terms thanks to yesterday's Autumn Statement. So if you're in a low-paying job, you're going to get poorer. Unsurprisingly, yesterday's cut in corporation tax means that the company which uses the benefits system to subsidise your low wage is going to make more money.
This council tax benefit cut isn't fair in any sense I understand: a section of society already impoverished is going to be hit again, with no clear sign of how they're meant to make up this shortfall. This is why I'd abolish benefits for the working poor tomorrow in one move: make the minimum wage a living wage. Companies have got used to massive executive pay packets and enormous profit margins by avoiding their taxes and squeezing those at the bottom. If they had to pay their workers properly, we could let them have low taxes because we wouldn't need to pay benefits for workers. Simples!
What would I do if I were the council? I'd add some bands to the Council Tax rating. There are only eight, with the top one covering properties valued at over £320,000 in 1991. Property prices have risen massively over the past 20 years, so there's plenty of room at the top for more bands, or a general revaluation.
For instance, the handy House Prices Index calculator over at the Nationwide calculates that a house worth £320,000 in 1991 would now be worth £832,000: a 160% increase in value without taking inflation into account. That's a hell of a boost, and all without the homeowner making any further contributions to local government.
But this is the one thing governments and councils are agreed on: upwards revaluations lose votes. Rich people vote. So there's absolutely no way that rich people will be asked to pay more even though there's a strong case to be made that they've had a very easy ride since the Council Tax was instituted. Sadly, I don't think councils can individually change the banding system.
So if councils can't just tax the rich more based on their property values, what should they do? I'd start looking at clever local taxes. A congestion charge would do nicely. Nobody can avoid the ring roads round here. Slap a whacking great charge on large, heavy and powerful vehicles so that all the 4x4s and bourge-mobiles cough up or start taking the bus like the rest of us. Invent a golf club charge. Tax antisocial activities: gum-chewing, off-premises alcohol sales and cigarette outlet sales. Perhaps a sales tax. Pollution and higher waste disposal charges so that consumption, particularly of socially-damaging goods, attracts a charge. If people stop doing these things, the local infrastructure won't need so much cash anyway. I'd also cut back on business relief rates so people like my local MP, who made millions from property speculation, doesn't get a subsidy from us if he'd rather leave property empty than lower his rents. Sadly, the Chancellor extended this tax relief yesterday.
There are plenty of things our council can do. Sadly, it lacks the spine and the imagination to do any of them. Instead, the poor will be hit again and the rich voters will continue to be cosseted.