Thanks to Retired Hack for his latest submission. This is something that will affect all of us and well worth a read. Ed
The Isle of Wight Council’s ruling Tory group is drawing up explosive plans to bill large numbers of the Island’s poorest households for Council Tax for the first time, just a month before next May’s elections.
Changes to Council Tax Benefit (CTB) rules, now before the House of Lords, mean responsibility for setting the benefit rates will pass from central to local government in April 2013. But the change is a poisoned chalice – the total CTB available is being cut by 10 per cent in cash terms.
Pensioners’ CTB ring-fenced, others to take up the shortfall
Councils with a high elderly population, such as the Island, face a particular problem because the Government is insisting that pensioners’ CTB is ring-fenced, meaning those of working age who get it must shoulder the whole burden. IW Council officers calculate that this would mean CTB cuts of 25 to 30 per cent for this group.
Cllr Pugh:”Incentivising people to get back to work”
Significant numbers of working-age Islanders claiming other means-tested benefits – Income Support, income-based Jobseeker’s Allowance, and income-related Employment and Support Allowance (ESA) – are at present automatically entitled to CTB covering the whole of their bill, and so pay nothing.
This rule is set to end, and IW Council leader David Pugh is on record as describing the changes as being aimed at “incentivising people to get back to work”.
Band C houses could face £325/year bill
As an example, a family living in a “Band C” rated property, with a Council Tax liability of about £1,300 a year but at present paying nothing because of their low income, would face a bill of £325 if their CTB were cut by 25 per cent.
Officers are known to be concerned that such bills may simply prove uncollectable, while at the same time involving the Council in expensive bureaucracy trying to get blood out of a stone when the first instalment of next year’s Council Tax falls due on April 1.
Could affect Conservative majority
But the decision will be a political one, and with polling cards for the 2 May elections following the tax demands through Island letter-boxes, Tories with wafer-thin majorities (notably Susan Scoccia, Ventnor West, majority 7; Eddie Giles, Whippingham and Osborne, majority 16) may feel they have particular cause for concern.
The Council has signalled its intention to “consult widely” on how to proceed. High on the list of targets is likely to be the Island’s large number of second homes, which at present attract a 10 per cent Council Tax discount. Scrapping this could be seen as the easy part.
Increase in council tax for everyone?
As an indication of the level of concern at County Hall, one option being considered is for some or all of the IW’s £1.7m shortfall resulting from the cut in CTB funding to be absorbed into the Council’s 2013-14 budget, rather than being passed on, as the Government intends. But this could be just as controversial, implying either a higher increase in the Island’s Council Tax rate for everyone, or yet more cuts in services.
Deja vu?
Voters in county and unitary authorities outside London, most of them Conservative-controlled, will also go to the polls on 2 May.
Nationally, comparisons have been made to the Poll Tax fiasco of the late 1980s, when a hugely unpopular universal local tax led to riots, and is credited with leading to the Conservatives’ decision to remove Margaret Thatcher from office.
The new year will reveal all
Shadow Communities Secretary Hilary Benn said recently: “Local authorities face a terrible dilemma. Do they increase council taxes on the working poor – or the disabled or families with young children? “¨Just as happened with the poll tax, councils will be forced to chase people on low incomes for money they simply don’t have.”
In a report to Cabinet last December, Cllr Pugh said of the changes: “The thrust is to provide initiatives to incentivise people to get back to work and thus reduce the benefit paid.” What exactly he means by that will be known by the end of January.
Image: Taxbrackets.org under CC BY 2.0
