The council tax cul-de-sac
Labour must expose the dishonesty of the council tax freeze and the damage it’s doing to our communities, writes DUNCAN HOTHERSALL
So all 32 of Scotland’s councils have agreed to freeze council tax for another year. The Scottish government breathlessly announces this in-principle COSLA agreement as “putting over £500 into the pockets of hard-pressed households since 2008”. And no doubt there are hard-pressed households who will have benefited to the tune of an estimated £500 by April 2013, assuming they live in a fairly large house. (Sorry, did you think that was £500 per year for everyone, or even £500 cumulative savings to date for everyone? Fraid not. You’ve got to read these things carefully.)
The freeze is a vote winner. We know this because focus groups, doorstep conversations and, let’s face it, election results tell us so. Working people welcome it as an effective tax cut, and any suggestion that it is depriving councils of proper funding is easily dismissed either by deploying the general “councils are full of politically correct functions nobody actually needs” argument, or by claiming, as the Scottish government does, that the freeze is “fully funded”. That neither of these things is actually true doesn’t seem to matter.
There are substantial arguments against the freeze. First of all, it is regressive – it is a tax cut for the richest as well as the “hard-pressed households” preferred by the government’s press office, while the poorest, who are already in receipt of council tax benefit, see little if any difference. Better Nation had a damning blog on the subject. (It is, of course, also true that CT as a whole is regressive.)
Second, it removes fiscal accountability from local authorities. The 2012 local elections will be the first in which the budgetary performance of councils will not be up for judgement – they can all simply point to the freeze as having cut their cloth for them, in the same way the Scottish government points to the block grant to avoid responsibility for the choices it makes each year. Expect to hear a great deal of that argument from current council administrations over the next few months.
Third, it has no exit – it is a cul-de-sac of a policy, designed as a stop-gap on the way to a local income tax which was never going to be feasible and which the SNP in the end decided not to bring forward. (Cynical readers might suggest a LIT policy drafted in such a way as to slash local government funding, centralise rate-setting control and ride roughshod over the powers of the Scottish Parliament was never intended to be anything but an empty manifesto promise.) Any argument which says “let’s start raising CT rates again now” is going to go down like a lead balloon. Meanwhile inflation is sitting at nearly 5% while the compensatory grant increases from the Scottish Government are sub-3%, meaning it becomes less and less feasible to maintain the freeze every year without drastic cuts to services.
As we know, none of these arguments seems to have traction with the public. The “squeezed middle” see the freeze as a boon and any argument to end it as being an argument in favour of further taxing their incomes, and turkeys don’t vote for Christmas.
But the reality is that this freeze is not a freeze at all for many of the most “hard-pressed households” in Scotland. What the SNP claim is putting money into their pockets is, in fact, costing them a lot more than would an inflationary increase in council tax. It’s going on right under our noses, and the Scottish government is washing its hands of the problem because it has offloaded it onto councils to deal with.
Here are a few examples.
- In Edinburgh, if you are over 80 or you have a qualifying disability, and you have no-one able to maintain your garden for you, there is a scheme called Garden Aid which provides minimal upkeep (lawn mowing and hedge trimming). Rightly it used to be free at the point of need for the most vulnerable people in the city. As the CT freeze bit into council revenues, a charge was introduced for this service, and it now starts at £85 for a tiny lawn with no hedge; charges increase from there, uncapped, according to the size of garden.
One elderly lady living alone in the Craigentinny area, in a Band A property, is now paying over £200 per year for this service. Her council tax sits “frozen” at £779.33, but in reality has increased by more than 25% by dint of this one charge. Is hers not a “hard-pressed household”?
- In Aberdeen, if your primary-age child doesn’t qualify for free school meals – and many families on lower incomes don’t – you are now being charged £1.95 per meal, compared to £1.60 last year – a 14% increase resulting directly from the council tax freeze. For a family with two children that’s an extra £100 per year (more if they are at secondary school). So if this “hard-pressed household” live in a Band D property, their CT is “frozen” at £1,230.39 but on this charge increase alone they are seeing in reality an inflation-busting 8% rise in a single year!
- In East Ayrshire (where incidentally they have also increased school meals charges by 10%) the “meals at home” delivery service has had its subsidy cut by 50%, leading to an increase per meal delivered of 40p. An average user of the service might rely on it for 250 days of the year or more. Assuming two meals per day, that’s an additional £200 per year from vulnerable people who simply have no other option but to pay. Assuming a Band B property, the CT freeze ensures they still only pay £924.77 in council tax – but the additional £200 per year to allow them to eat means in reality an increase of 22%!
The sad reality is that these examples and thousands more like them are repeated the length and breadth of the country. Instead of a modest rise in general taxation, those in most need are incurring huge additional costs merely to keep the services they rely on. And the SNP’s claim that the freeze was “putting over £500 into the pockets of hard-pressed households since 2008” rings utterly hollow.
This is the argument we need to take to the SNP at the local elections in May. This council tax freeze is no freeze at all – it is a license to bleed dry the young, the old, the disabled and the low-waged. And it must end.
It would be remiss of me to finish this piece without suggesting what should come after the Council Tax freeze. There are several good options. One, as suggested by the Burt review and covered in some depth in an excellent article by Prof Arthur Midwinter on this very site, would be to make CT more progressive by increasing the number of bands, and increasing the multiplier from 3 to 7. Another option – indeed past Labour policy – is the current Green party policy of a Land Value Tax, well explained here [PDF]. While the SNP’s Local Income Tax policy would also be progressive, it would severely limit the tax base and in so doing drive up avoidance, so it is not one I favour.
One thing is certain: we need to come up with a credible plan for what follows the CT freeze – quickly – because the effects of the freeze on the most vulnerable in our society is unsustainable. We cannot – we must not – allow this to last the promised five years. It is simply unjust.
Duncan Hothersall is a Labour Party member and was the founding chair of Pride Scotland as well as a founding director of the Equality Network. Follow Duncan on Twitter at @dhothersall.