Labour councillors in Brighton & Hove this afternoon face a problem – one of their own making. And to fix their problem, 16,000 very low income households, many of them hard working but very low paid families, must suffer a near doubling of the council tax they pay. This is a financial demand that will leave many of them reeling and wondering how on earth they are to find the money. It is a tax on the poor.
Labour’s problem arises from its local leadership’s determination not to support any headline budget measures from the Greens, including council tax rises. Labour has voted with the Tories to say ‘no’ to every Green council tax rise for the past four years, a bizarre act for a party that claims to be progressive and whose own record in power is of imposing far larger council tax rises. (14.5% in 2003!) For 2015, the ‘no’ trend continues: before it had even examined the reasoning in any detail, Labour rejected the Greens’ call for a 5.9% council tax rise and set its sights on the 1.99% (or less) condoned by the coalition government.
But this coming year, the reasons for a council tax rise take on a new urgency. The coalition cuts are biting far deeper into council finances than ever before, leading to effects the whole city will feel. If, as reported in the newspapers this morning, public expenditure is now to be lower than at any time since the 1930s (ie before the introduction of the NHS), our local councils and the people they care for are the ones bearing the brunt of this huge fall.
So far, through careful management and with the support of council staff, the Green administration has managed to pass on very little in the way of government cuts. But now, with everything already pared down to the bone, there is nowhere else to go.
One major government cut is to what used to be called Council Tax Benefits, now replaced by a scheme known as Council Tax Reduction (CTR). From next April, government cuts to CTR mean it wants the minimum council tax for affected households to be nearly three times what it is this year.
And these households have to find this money with no corresponding rise in income: yesterday the Chancellor announced that benefits are frozen for the next two years and the Institute of Fiscal Studies estimates that welfare overall is due for another £12bn in cuts.
The CTR cutting is a stealth tax aimed only at the poorest members of society. And, as George Osborne lines up tax breaks for the wealthiest, it is the very worst case of robbing from the poor to give to the rich. It is appalling.
However, councils have some limited wriggle-room. If they can find the money – a tall order as councils themselves are being cut by 40% – they can replace the government subsidy with their own subsidy and protect such households from this tax on the poor.
Brighton & Hove City Council does not have the money. The cost of shoring up the CTR subsidy is around £2m and it would be either wrong or impossible to take this money from other council services that already face a bleak future. But the money can be found if council tax goes up by a small amount for all tax payers. So the proposal to support CTR in 2015 – to keep council tax static* for the 16,000 affected households – forms almost half of the Greens’ proposal for a 5.9% council tax rise, which would raise roughly £4.2m.
The CTR subsidy proposal goes to the vote in Hove Town hall this afternoon. If Labour does not oppose it, it will go through.
Labour could support it. Or Labour could even simply abstain. Instead, Labour has confirmed rumours that it will propose a compromise … but what a compromise! Rather than treble council tax for the 16,000 households, it merely wants to almost double it. To avoid agreeing to the Greens’ 5.9% rise for every tax payer, it wishes to ‘save face’ by imposing a colossal 76% rise on the poorest tax payers.
In hard figures, taking a typical Band D property as an example, to avoid a council tax rise of £77** a year for all tax-paying households, Labour wishes to impose a rise of £100 on the working poor.
£100 for those already caught in the traps of fuel poverty and benefit freezes and who simply don’t have another £100 to spend.
This is Labour – supposedly the party of the people, defenders of the working poor – concerned more about ‘sticking to its guns’ than about the lives of real people. This is Labour, that defends its opposition to the 5.9% council tax rise on the grounds that it would hurt the working poor, now proposing to hurt the same working poor far more.
It’s also likely to be the Conservatives, let’s be fair. But we expect it from them. (Though they have also indicated on Twitter that they may not agree with Labour on this.) We should not have to expect it from Labour.
Let’s be clear: adding £100 to the tax bill of the most hard-up households but no-one else is immoral. It is taking money only from the poorest, effectively to subsidise everyone else. And as George Osborne hands down tax breaks to the very wealthy, it is taking from the poor to give to the rich.
And it is going to cause pain and suffering across the city. It is going to increase the number of people who cannot heat their homes adequately this winter. It is going to increase the number of kids going to school in the cold without the right shoes and clothes. It is going to increase the number of people visiting food banks. And in a city of exorbitant rents and housing shortages, ultimately it may tip some families over the edge into bankruptcy and homelessness.
This is why Greens cannot countenance raising council tax for these households. And why Labour should not.
I hope this blog post is proved wrong and Labour has a change of heart.
* If council tax for all tax payers were to rise by 5.9%, the 16,000 households would also be affected but the amount would be around £5.90 for the year, for a Band D household.
** The difference for a typical Band D household between the Greens’ 5.9% rise and Labour’s expected 1.99% rise is currently calculated as £77.48 per annum.