Council tax support: from bad to worse

Agent 151 is a senior local authority finance director and S151 officer. The agent writes exclusively for Room151 and is licensed to speak candidly. 

The latest move by the government to offer a share of £100m funding to councils whose council tax support scheme meets a never-previously-discussed set of criteria compounds a series of bad decisions.  Here’s a reminder of the decisions so far:

• The government discounted the obvious solution of including council tax benefit replacement with Universal Credit.  The result of this is a benefit system that will not be universal.
• The government decided to make a 10% cut in the funding that would be passed to councils.  This meant that councils would either have to pass on the cut to claimants or to make cuts in other services to residents to fund the gap.
• Perhaps in an attempt to soften the blow, the government decided to offer councils the freedom to design their own council tax support scheme.  The result is that there are now hundreds of schemes being consulted upon, each slightly different to the next, and this has meant that there has been lots of entirely unnecessary duplication of time and effort.
• The government has failed to deliver the detailed regulations and guidance in time to allow councils to prepare in the way they would have wished.  Because of software development timescales, the best that could be achieved is a tweaking of the existing system.
• It might be argued that a political response by Labour-controlled councils that involved passing on the cut to claimants and blaming the government was entirely predictable.

And now the latest decision, in response to the policy of some councils to pass on the cut to claimants, is to offer a share of £100m as a one off transition payment to councils whose schemes meet certain criteria.  The criteria are:

• Claimants on 100% support under current arrangements  pay no more than 8.5% of their council tax liability
• The taper rate does not increase above 25%
• No sharp reduction for those entering work,
• No large increases in non-dependant deductions, and
• Councils should avoid schemes that require them to collect small payments.

This is, in a nutshell, too little, too late.  For one thing, if councils have already planned to pass on the increase, a share of the £100m will not be nearly enough to fill the budget gap that would be created by reversing that decision in order to meet the new criteria.  For another, if councils, having completed their consultation, respond to the government announcement by fundamentally changing their scheme, I can’t help wondering whether they run the risk of judicial review on the basis that the consultation was flawed.

I also feel obliged to point out a contradiction inherent in the criteria.  Cap the council tax payable to 8.5% of the total bill, but don’t create small payments that have to be enforced?  Councils have shown time and time again that they are good at adapting to change, but now we are being asked to perform the impossible!

For these reasons, I expect most councils that have already consulted upon a scheme that passes on the cut to ignore this latest offer.  Of course, the political spin will be that these councils have cynically passed on the pain to claimants when they didn’t have to.  But in light of the litany of errors I have described above, these councils will have plenty to say in return!