Mike Wolfe: Slashing council tax benefits will do more harm than good

CHRISTMAS is supposed to be a time of good will and festivity.

Most of us are probably slowing down and planning whatever type of jollity we enjoy most.

For once, policy makers at the Town Hall have my sympathies.

You see, for them, midwinter is the time of budget setting.

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It is the time when they hear from Central Government how much they will be allowed to spend next year and plan the currently inevitable cuts to services.

I do not envy anyone who has to cut expenditure to meet the arbitrary spending levels imposed by the Old Etonians who govern us.

This year will be particularly problematic because Government is transferring to councils the responsibility for setting the level of some welfare benefits.

These were previously administered by councils but funded directly by Government under centrally set rules. From April, councils will no longer merely administer Council Tax Benefit and claim the total cost from Government.

Instead they will be given an amount of money and allowed to spend it on whatever they want, either supporting poor people struggling with their tax or on anything else.

The Government spin doctors want to persuade us that giving councils discretion to set the level of help they give to working people who are struggling to pay their council tax is a brave step towards devolution of centralised powers.

Actually, this is not a welcome step towards localism, but an opportunity for Government to shift the blame for benefits cuts away from itself onto councils.

The total amount being given to councils will be about 10 per cent less than the amount currently spent on Council Tax Benefit.

Overall cuts in grant income will be even greater, thus councils like Stoke-on-Trent's will be tempted to rob the benefits pot to pay for something else.

In Stoke-on-Trent, it is now proposed that working age residents who currently pay no tax will have to pay about £6 a week.

Only pensioners, the severely disabled and claimants aged under 25 'actively seeking work' will be exempt. I believe that this is both a cut too far and also one that will, in the long run, cost more than it saves. The fastest growing group of Council Tax Benefit claimants are working people. The Government is forever banging on about alarm clock Britain and the unemployed claiming too much.

In fact, a great deal of the housing and Council Tax Benefit goes to people who are working, but still can't afford to pay for accommodation costs or local taxes. Forcing such people to pay 35 per cent of their council tax will drive many into serious debt which can often lead to evictions or other consequences which not only cause huge personal distress, but also cost the public purse much more than the £6 per week they were trying to collect.

At a time when the council wants to reduce its dependence on Government cash, it should be doing everything it can to raise the collection levels of local taxes. Making poor people pay impossible sums will raise collection costs and decrease revenue.

The local CAB has reported this week that the number of city residents seeking help with council tax debt has more than doubled from 610 in 2008/09 to 1,236 this year – with the total level of tax debt in its caseloads increasing from £466,397 to £1.3 million. This problem will be made hugely worse if the existing help is cut. This is particularly true because low paid workers will also experience other cuts like the bedroom tax if their homes are considered too large or increased deductions if they take in working children who can't afford their own accommodation.

These locally decided reductions in the help available to working people are neither inevitable, nor will they be adopted everywhere.

The suggestion that everyone should have to pay at least a third of their council tax sounds like an idea from the council's accountants who don't understand the real struggle that low-waged locals are making.

It is the role of elected councillors to inject a bit of local knowledge, economic sense and compassion into the bean counters' proposal.

Councillors must urgently re-examine this simplistic proposal. It will cause huge distress and will not save money. The suggested cut to council tax benefit can and must be rejected.