Local Council Tax Reduction Scheme (2 Jan)

From 2011 Rugby Borough Council has been responsible for running its own "local council tax reduction scheme". The scheme is run for people not old enough to be eligible for a pension and who have low income and low savings. The scheme pays for some or all of their Council tax bills.

The scheme takes account of the household circumstances of all those eligible and calculates a target minimum level of income. All households whose income is greater than this have to pay 20% of the difference towards their council tax. So for a household with an income of £11,000 and a target minimum level of income of £10,000 the Council would calculate 20% of £11,000 less £10,000 and ask for a contribution of £200 towards the household's council tax bill. The rest of the Council tax bill is met by the "local council tax reduction scheme".

The jargon name for the target group for those eligible is "working age poor". It includes both the unemployed and workers with low wages. The "working age poor" term is likely to be used increasingly frequently over the next few months because George Osborne has threatened to freeze all benefits for this target group to fund tax cuts for the rich if the Conservatives win an absolute majority at the 2015 general election.

In August of last year (2014) the ruling conservative group on Rugby Borough Council considered what changes should be made to the scheme for the start of the new financial year in April 2015. They wanted to provide more relief for those who worked. At present a single working person gets £5 a week added on to the calculation of the target minimum income and a couple get £10 a week added on to the calculation of the target minimum income. As £5 a week does not go very far towards the extra costs of being in work the conservatives decided to propose doubling these add-ons to £10 a week for a single person and £20 a week for a couple. All of this came at cost and the conservatives decided to meet that cost by reducing the maximum level of savings anyone could have and be considered by the scheme from £16,000 to £10,000.

A key point here is that politics sometimes demands tough choices. To help people in work the conservatives proposed to disadvantage people with savings.

In September the Council consulted residents about the proposed changes to the scheme. Letters were sent out to 3,700 people who were then eligible under the scheme and 77 people responded. The majority of those who responded were in favour of the changes which benefited those in work and funding this change by reducing the savings limit. The changes were also considered by the Council's Universal Credit and Welfare Reform Task Group on 10 September and 27 October 2014. The task group did not propose any alterations to the proposed changes to the scheme. The leader of the Labour Group on Rugby Borough Council, Cllr Claire Edwards, is a member of the Task Group.

Having been signed off by the Council's cabinet on 17 November the revised "local council tax reduction scheme" was put to the full council on 9 December 2014. Two Labour councillors, Andy Coles and Steve Birkett, proposed that the scheme be changed to add £15 to the calculation of the target minimum income for single people and £25 to the calculation of the target minimum income for a couple. Unlike the conservatives the labour councillors made no proposal whatsoever as to the way the changes should be funded.

In the same week Labour's UK national leader Ed Miliband promised that all future Labour spending commitments would be "costed, credible and funded".

We understand from the debate on 9 December that Rugby Borough Council's staff had done a quick costing of Labour's proposals and costed them at £75,000 a year.

The issue is not whether or not a higher add-on for those in work is desirable or not. The question is whether we can afford to go back to the old Gordon Brown days of government spending with no idea of where the money is to come from.

Labour's proposals were defeated by 9 votes to 26.

During the debate the Liberal Group Leader, Cllr Jerry Roodhouse, criticised Labour for making a proposal for change late in the day without a proper costing and without saying where the money was to come from. He said that if the Labour group genuinely wanted change then they should work with others from the start of the consultation to achieve that change.

Links

For previous reports of this debate see http://rugby.lib.dm/a2Rpv and http://rugby.lib.dm/a9Rjq.

For the minutes of the Council meeting of 9 December see http://www.rugby.gov.uk/meetings/meeting/488/council .

For the changes proposed to the Local Council Tax Reduction Scheme see http://www.rugby.gov.uk/meetings/meeting/502/cabinet .

For Ed Miliband's commitment to make all future Labour spending pledges "costed, credible and funded" see http://news.sky.com/story/1389675/miliband-in-costed-credible-and-funded-pledge .