Introducing Agent 151: Is council tax thinking on the money?
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Agent 151 is a senior local authority finance director and S151 officer. The agent writes exclusively for Room151 and is licensed to speak candidly.
Like many of you, I have a draft report on my desk that will, from next year, remove many of the discounts and exemptions that are currently available to certain council tax payers. Those with second homes, those whose properties fall empty, and those undertaking major structural repairs will all be worse off. I’m also about to conclude consultation on a new council tax support scheme to replace council tax benefit from 1st April 2013 that reduces the amounts that can be claimed by some people.
Both of these projects are the result of government policy making rather than being local government led initiatives. Indeed, the changes are so new that regulations relating to each are yet to be laid, and there is the distinct whiff of policy-making in a hurry about them. They have been badged by some as evidence of Localism being put into practice. But I am left wondering whether the thinking behind these policies is consistent.
Some of the existing council tax discounts and exemptions have been at best pointless and at worst have reinforced unhelpful behaviour on the part of property owners. The changes offer councils wider discretion, and that is to be welcomed. Now we can use the council tax to help us get more homes occupied more quickly. We can even introduce a premium on council tax when a property has been empty for more than two years. The change also allows us to increase council tax income by taxing assets that are contributing no local social benefit and without increasing the headline council tax level. Hmmm… it’s starting to sound, dare I say it, rather clever!
On the other hand, the abolition of council tax benefit and the creation of council tax support, another form of discount, has had its critics. Many of us said that as a means-tested benefit it should have become part of Universal Credit. I know I did. That was brushed aside, and now councils are scurrying about to get their council tax support schemes in place because there is no time to be more ‘joined up’. The outcome will be hundreds of different and complex schemes that taxpayers will have no chance of understanding. Many benefit recipients will have to make a payment of council tax for the first time, and this will lead to more recovery action being taken against people who have no ability to pay. Council tax collection levels will inevitably go down. Will councils have new flexibility to incentivise people into work and keep them there? No. In fact, the only people that will be worse off under most of the new council tax support schemes will be the working poor. This is an example of a policy that is clever in a different way: a hospital pass of a funding cut that insulates the originator nicely from the negative fallout.
Perhaps councils should be flattered, as there does seem to be a blind faith inherent in the government thinking around council tax benefit: don’t worry because councils will make it work. We must hope that this faith will blossom into trust and that the Government will do more listening to councils. Perhaps then we will see more of the first kind of cleverness and a lot less of the second.
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The Local Authority Treasurers’ Investment Forum September 25th, 2012, London Stock Exchange
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