Council tax on the poor: Consultation about possible 194% increase

Few people like the idea of paying more tax. Unless it is other people who pay it.

P19CouncilTaxBillPicFew people like the idea of paying more tax. Unless it is other people who pay it. You know, the rich - because they can afford it. Or the poor - because they get the benefits. In short, anyone else except you and yours.

Earlier this year, the minority Green Party administration on Brighton and Hove City wanted to increase council tax by 4.75%. The Conservative Party wanted a freeze. The 14 members of the Labour and Co-operative Group, the smallest of the three parties on the council, wanted 1.99% - because poor families on the estates surrounding the city could not afford to pay an extra £2.94 a week.

Now, some of those same people - in the poorest households, in the poorest parts of the city - could be in for a shock.

Brighton and Hove City Council is undertaking a formal consultation - as it must, every year - about the council's Council Tax Reduction Scheme (CTR), whereby 17,000 households are have to pay only 8.5% of their council tax bill; in other parts of the country, such schemes are not as generous: a minimum contribution of 25% is common.

The government has said it will be reducing the funding for the scheme over the next few years. In 2015/16, the shortfall will be at least £5 million.

The money has to come from somewhere.

Otherwise, campaigners argue, the poorest families will suffer. The examples they give include:

•    Two people on Jobseeker’s Allowance in a Band A property - currently, they pay £1.67 a week; from April 2015, they would pay £4.91 a week. That's an increase of 194%;

•    Two parents with four children in a Band E property - currently, they pay £3.06 a week out of their Income Support; from April 2015, they would pay £8.06 a week. That's an increase of 163%.

Other changes, however, mean the situation could be even worse, according to Brighton People's Assembly.

The maximum amount of savings a working-age person can have and still be entitled to CTR will be reduced from £16,000 to £6,000. This means anyone of working age who has more than £6,000 in the bank, building society, shares, premium bonds, and other types of savings will no longer be eligible to claim CTR.

As a result, it is estimated that two self-employed people earning £85 a week, with £14,450 in savings, currently pay £2.23 a week in council tax. From April 2015, they would have to pay £26.20 a week.

By law, the council must have a council tax reduction scheme in place by January, before next year's council tax increase is agreed.

Yesterday, however, Green Party leaders said they would not countenance changes that will make the poorest pay for government cuts in funding.

Councillor Ollie Sykes, lead member for finance and resources said: "Government rules mean council officers legally have to do an annual consultation on the council tax reduction scheme, but that doesn’t mean that we as an administration want it to be changed.

"I would like to make clear now that Green councillors will not support any change to the scheme. We want to keep the current levels of support to help the poorest with their council tax.”

A spokesperson for Warren Morgan, leader of the 14 Labour and Co-operative councillors, said: "The reduction scheme is out on public consultation at the moment so, unfortunately, we are not in a position to give a comment on it at this stage. Once the results of the consultation are published, however, we will be happy to comment on it."

The Conservative Party did not respond.

In the run-up to this year's council budget, the council asked 3,280 citizens about their spending priorities. Reducing the council tax reduction scheme was the most popular option for funding cuts, with more than one in three (35%) wanting it reduced.

Citizens have until Friday, October 31 to take part in the consultation. For more information, visit: www.consult.brighton-hove.gov.uk