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Council Tax changes - on the side of hard-working people
16/08/2012 09:25:00

The Government has announced that from April 2013 the current national Council Tax Benefit scheme will come to an end and local councils will be responsible for devising their own schemes. It believes decisions about who should get help to pay their Council Tax bills are better taken locally than by civil servants in Whitehall.

But at the same time as it is making this change, it is reducing the amount of funding available by 10 per cent – just one of the many cuts it is having to make to eliminate the huge deficit it inherited from the previous Government. For Croydon, that equates to a funding gap - assuming everyone continues to receive the same level of help - of £4.84 million.

Many councils will simply absorb this pressure - in other words, they will carry on paying Council Tax benefit in line with the old scheme and make savings or cuts in other areas to bridge the funding gap.

I am pleased to see that my Conservative colleagues on Croydon Council aren’t doing that. They are taking the opportunity to make some changes to who gets help to pay their Council Tax bills and how much help they get so that the system better rewards hard-working people.

The approach they are proposing is based on six core principles:

1. Council tax support should not be paid to those with relatively large savings.

2. It must be related to property type.

3. Everyone should contribute something.

4. Everyone eligible in the household should contribute something.

5. Work must pay.

6. The vulnerable must be protected.

These are good principles. Take the second principle: why should everyone else subsidise the full Council Tax bill of those living in the most expensive properties? The Council is proposing to restrict the amount of help those living in the most expensive properties receive (so if you live in a Band E property then you’ll receive no more support than the equivalent of a Band D property).

Or the fifth principle: people who take low paid jobs rather than sitting on benefits deserve more help - they’re doing the right thing. So the Council is proposing to increase by £10 per week the amount people can earn before their Benefit is reduced.

Or the final principle: pensioners and those on Disability Living Allowance should be protected so they won’t be affected by these changes.

You can take part in the consultation via the link above but it is good to know that we have a Council that is on the side of hard-working people.

Comment on this blog

Readers' Comments

On 16/08/2012 10:23:00 NS wrote:
Once again people who save all their lives get less support than those who spend beyond their means. I noticed you didn't comment on that point.

On 16/08/2012 23:36:00 Jim wrote:
Sounds good, but oh yet another consultation. I can see this becoming a field day for council bureaucrats spending our money producing discussion documents on how not to spend our money.

A £4.84m funding gap seems bad, but somewhat insignificant compared with the accumulated £350m council pension deficit. How about cutting council pensions for those with "relatively large savings" or living in expensive houses?

On 28/08/2012 13:51:00 R S Davies wrote:
Why should Council Tax be linked to property values? If you as an ordinary working class person bought a home a few decades ago when your area was cheap and it was what you could reasonably afford and you worked hard to make a home for your family and did all the right things yet events beyond your control determined that your area has become a "desirable" area that young professionals now want to move into and as a consequence the value of your home has sky-rocketed but your pay has stayed the same, how is it equitable that you on £25,000 p.a. should pay the same as the newcomers who earn £50,000 p.a.? Yet you do.

In the area I live in house prices have gone up four fold, yet my salary has only doubled in the same period. The only way you can get out of this dilemma is to sell up and move to somewhere cheaper.

Non-progressive tax empowers the wealthy to drive out the poor and as such is an unfair tax. What we need is a local tax based on the ability to pay.

The alternative is to build thousands of new homes to depress the market through over-supply.

On 28/08/2012 19:53:00 Gavin Barwell wrote:
R S Davies

Council Tax banding is based on the *relative* value of your property over 20 years ago. So the fact that property prices have increased by more than the average in your area over that period makes no difference to the Council Tax bills you pay (and won't do unless a future government orders a full revaluation of property).

It is true that someone living in a property in the same Council Tax band pays the same bills as you even if they earn a lot more. The only way to avoid this would be a local Income Tax, which is Liberal Democrat policy. It is however very complex - most of us pay Income Tax by PAYE ie where we work, not where we live and it would involve big increases in bills for some (eg households with multiple earners).

On 29/08/2012 20:36:00 wendy mortimer wrote:
Is this another way of saying that if you have got a spare bedroom that you will be getting less housing benefit. I have lived in my flat for 24 years and regulary have my daughter and baby to stay over, now I'm being told that I will be made to pay extra for this extra bedroom. I'm on ESA and just scraping by now. I can't buy normal food but wait for the bargains at the end of the day. Having to pay extra on my rent will just about cripple me. What is going on? Another law to target the poor.