If I lost my job tomorrow, one of the things that I would expect would be that while I was not earning, I would not be paying tax. However, in 26 out of 33 London boroughs this is not the case: I would still need to pay council tax.
In April 2013, council tax benefit was localised, and with localisation came a 10 per cent cut in funding. This left councils stuck between a rock and a hard place, working out a new council tax support scheme that protected their most vulnerable residents as well as their own financial stability.
Today, together with Z2K, we publish A new poll tax? chronicling the impact of the localisation of council tax support on London and Londoners. It will come as no surprise that taxing people previously deemed too poor to pay has had some disastrous consequences.
It is particularly striking how the amount that you have to pay depends on where you live. The average increase in payments across London for people receiving Council Tax Support is £151 per year. That is more than two weeks’ worth of Jobseekers Allowance – which as an unemployed single person would be my only form of subsistence income. Harrow claimants have seen the biggest increase in how much they have to pay at £385 per year. That’s equivalent to over 5 weeks JSA. If I happened to live in Westminster or one of the 6 other boroughs who have not introduced minimum payments, I would not have to pay anything.
This new payment comes at the same time as wages have stagnated and benefits are being cut in real terms. Many have also been hit by other welfare reforms that have seen their incomes reduced. People are simply too poor to pay. 4 in 10 council tax support recipients have been issued with a court summons as a result of falling behind on payments.
As well as giving new information on levels of payments, arrears, court charges and use of bailiffs that have resulted from this change, the report also gives examples of personal hardship. Harry has a serious liver condition, but can only afford to eat toast. Georgina and her three young children fled a violent home to start a new life. They have now been hit by the benefit cap and all four are living off £133 a week and are expected to pay £5 a week in council tax.
We are calling for an end to this regressive taxation policy which levies payments from London’s poorest households. Central government needs to reinstate full funding to councils. Councils have the power to end the hardship by stopping charging their poorest residents. Seven London boroughs have already managed to do this, we are asking others to follow their lead.