A tale of two West Midlands cities
A different approach to benefit cuts by two Labour-controlled cities means that Birmingham’s poorest families must pay council tax bills for the first time while those in Coventry will not have to.
As many as 70,000 Birmingham households stand to lose out from April when Communities Secretary Eric Pickles passes responsibility for administering council tax benefit schemes to local authorities, and cuts the amount allocated for the payments by 10 per cent.
Birmingham said it couldn’t make up the 10 per cent – £11 million – from other sources and would have to scrap 100 per cent benefit payments for claimants who are unemployed or on very low incomes.
Coventry Council, however, decided not to pass on the 10 per cent cut, which is about £2.9 million in its case, and will continue to pay council tax rebate in full to the poorest families.
After a period of consultation Birmingham’s cabinet decided to reduce the maximum rebate people can claim from 100 per cent to 80 per cent, rather than 76 per cent as had been suggested.
But the decision still means that thousands of households will have to make a direct contribution towards the town hall services they receive for the first time since the poll tax in the early 1990s.
The bills they must pay range from about £170 for Band A properties to £260 for Band D homes.
Some people will be protected. These include claimants with children under six, pensioners, disabled people and anyone in receipt of Employment and Support Allowance (ESA.
Protection will also be provided for claimants who receive a carers premium and a hardship fund of £1million will also be made available.
Birmingham’s Labour leaders say they have no option but to pass on the cut and have accused Mr Pickles of presiding over a “divide and rule” policy which leaves councils facing impossible choices. If Birmingham was to find £11 million to protect the poorest families, the figure would have to be added to an existing cuts package.
The council must find £110 million in savings in 2013-14 as part of a £600 million Government-imposed austerity drive.
However, the decision to set a maximum 80 per cent rebate has caused consternation among left-wing councilors on the backbenches, with Coventry’s move to continue paying council tax benefit at 100 per cent serving only to stoke the fires of discontent.
Council leader Sir Albert Bore is under pressure to spell out why he refused to bid for a £2.1 million Government grant to cover transitional costs of the new system. Had it been successful in the bid the council would have been able to pay 91.5 per cent of council tax benefit rather than 80 per cent.
Sir Albert told a cabinet meeting that the funding would have been for one year only and that the council would have had to make the cuts anyway in 2014-15. Some Labour councillors are arguing that the £2.1 million would give Birmingham a breathing space to identify alternative means of funding council tax benefit, but Sir Albert ridiculed the proposal as a “something will turn up Micawber approach”.
Cllr Ian Ward, Deputy Leader of Birmingham City Council, said: “We simply have no choice but to make changes to our benefits system because of cuts that are being imposed upon us by national government.
“If there was any way we could maintain the existing scheme, we would, but the sums do not add up. This is one of the most difficult policy decisions we have ever faced.
“However, we have listened to public opinion and attempted to do everything we can to soften the blow, and can now offer some further concessions to protect some of Birmingham’s poorest and most vulnerable families at a time when they need as much help from us as possible.”
