Thursday, 1 November 2012

The Pickles Tax

The government, supported by much of the tabloid media, portrays those in receipt of benefits as workless and idle. The reality is that many of those benefits go to working families on low incomes, and they are going to be the hardest hit by a series of cuts in financial support.

Council Tax Benefit provides support to 5.9 million low-income families – including many pensioners- more than any other means-tested benefit or tax credit in the UK. The government is devolving decisions about and the budget for the benefit to local councils from next April. However, at the same time, the government is cutting 10 per cent off the funding it provides for council tax support, but limiting how local schemes can be constructed. Clearly the intention is that the government gets the credit for cutting welfare spending and councils get the blame for the cuts.

About 2 million low-income working households currently receive council tax benefit In fact, many more working households will be affected, as many low-income families experience temporary or short-term work and go in and out of benefit during the course of a year.

From next April, they will face a cut in that benefit of about £250 a year – for some it could be even bigger. Councils will be faced with the considerable expense of trying to collect £5 a week from millions of households. It’s little wonder that Conservative Lord Patrick Jenkin – who conceived the original Poll Tax – has described this as Poll Tax Mark 2. Personally, I think it should be called the Pickles Tax, after its originator Eric Pickles, the current Conservative Secretary of State for Communities and Local Government.

Now, after councils have ended consultations on local council tax benefit schemes, Eric Pickles has suddenly realized that his tax is heading for disaster and panicked. He’s suddenly announced a one year £100 million package – from the annual £500 million he’s cutting – to try to avoid the shambles ahead.

However, the conditions that Eric Pickles is proposing – and remember it’s only for one year – almost certainly mean that councils could only access these funds by increasing even further the cuts to other council services. Councils will be damned if they do, and damned if they don’t. Does Eric Pickles care? I doubt it.