Bexhill and Battle Constituency Labour Party has submitted it’s response to the consultation on the proposed changes to the Council Tax Reduction scheme for working-age residents. See the text below. Should you wish, you can respond to the consultation too by clicking this link which will take you to the RDC website – https://www.rother.gov.uk/consultations/council-tax-reduction-scheme-2024-25-consultation/.
Submitted by the Bexhill and Battle Constituency Labour Party on behalf of our local members who live in Rother.
To whom it may concern,
We write to express our full support as a local party for the proposals set out in the consultation documentation to provide up to 100% Council Tax Reduction for households on the lowest incomes and remove the minimum award of £5 per week.
Below, we have set out reasoning for supporting these common-sense proposals.
Proposal 1 – Provide up to 100% support for households on the lowest incomes. (i.e. Restore the full CTR scheme for those of working age)
Reasons to support this proposal:
- Increasing poverty and the Cost of Living
Recent statistics from the Child Poverty Action Group suggest 3 in 10 Children in Rother are living in poverty. With inflation, the cost of living, energy price hikes and the fragile state of the economy following years of austerity and low growth, it is clear that there is a present need to bolster and ratify the support networks and safety nets in place to prevent people from falling further into poverty. This proposal will improve the financial position of those on the lowest incomes, strengthening the safety net against further poverty.
- Rother’s policies – Anti-Poverty Strategy and Socio-Economic Duty
This proposal aligns with both the Council’s Anti-Poverty Strategy and the recently adopted Socio-Economic Duty.
The Anti-Poverty Strategy describes the “well-established link between money and resources and variations in health.” This concurs with other research into financial poverty as a determinant of poorer health and wellbeing. In the initial terms of reference for the Council’s Anti-Poverty Task and Finish Group, it lists “To consider the impact of Council Tax Reduction policy and the accessibility of Council Tax Reduction to those experiencing financial hardship” as an objective of the group and these proposals feel like the natural progression of this objective.
The welcome adoption of the Socio-Economic Duty by Rother means that the effect of policies on lower socio-economic households has to be considered alongside other protected characteristics. If, rather than removing it, the proposal was to introduce the cap, it is surely the case that any Equality Impact Assessment, when showing regard for the Socio-Economic Duty, would assess the cap as having a negative effect, disproportionately so, on those on lower incomes. This is because the cap forces those who were paying 0-19% of their Council Tax Bill to pay at least 20%, adding a financial pressure to those with the least ability to afford it. Ergo, removing the cap will have a positive effect on lower socio-economic households. This will show that Rother is serious about following the Socio-Economic Duty and improving outcomes.
- Age discrimination
As Government legislation decrees, those of pensionable age are eligible for the full scale of CTR up to 100%. This is good and really important as it can be a lifeline for pensioners experiencing poverty. However, by choosing to keep the cap, Rother will be continuing its current discrimination, that is to say: if you are a young person, of working age, or not old enough to draw a pension, you have to pay a minimum 20% of your Council Tax Bill, even if you absolutely cannot afford to do so, even if that pushes you into greater poverty. Removing the cap will end this discrimination between pensioners and those below pension age.
- Parity with other Councils in East Sussex
Rother and Eastbourne are the only Councils in East Sussex who cap their CTR for under-65s. This means that working age residents living in poverty in Rother are less supported with their Council Tax than if they lived across the border in Hastings, Wealden or most other places in East Sussex. It also means that Rother residents on low incomes are paying in more for Emergency Services and Local Authority services than those elsewhere in the County. This lack of parity would be addressed by the proposal.
- Burdening the least broad shoulders
From listening to debates in previous Council meetings, the main argument against removing this cap seems to be the loss of revenue for the precepting authorities during financially arduous times. How can it be fair to push poverty onto residents by capping their CTR entitlement just to sustain local services. This is in total opposition to the basic principles of good governing; that those with the broadest shoulders should take the biggest burdens. Instead, proponents of retaining the cap are suggesting that the additional burden on precepting authorities caused by growing financial pressures should be shouldered in part by those who should, under the old scheme and the proposed scheme, be contributing less than the 20% of their Council Tax bill that they are currently being asked to pay.
- CTR addresses the discrepancy between Council Tax banding and financial realities
Unlike Income Tax, which is scaled on the reality of how much someone earns, Council Tax banding is calculated in a way that we consider much less fair. The property someone lives in does not necessarily dictate their financial circumstance. It is highly likely that there are residents in Bands C and onwards who’s household situation more closely resembles that of those in Bands A and B. Yet, they will be being asked to contribute more due to the banding system. CTR addresses this discrepancy as it is a method of considering a household’s actual financial realities when calculating their tax bill. This is an important redressing of balance that should be applied fully without a cap. Especially as those affected by the cap are most likely to be spun into poverty by the banding discrepancies.
- Taking a ‘Cash First’ approach
Leading organisations and charities on the front line of combatting poverty, such as the Trussell Trust and the Independent Food Aid Network, advocate for a ‘cash first’ approach as a way to reduce demand on foodbanks and other relief services. Their research suggests that bettering someone’s financial circumstances directly is more effective at relieving poverty than indirect schemes such as food vouchers etc. and they recommend local authorities move to a cash first approach to reduce poverty. By restoring the full Council Tax Reduction Scheme, those Rother residents most at risk of falling through the net will have improved financial means to better sustain themselves. The provision of a full CTR scheme is a good way to put money in the pockets of those who need It most.
- Applying the principle of ‘invest to save’ in tackling financial hardship.
We understand that there is broad cross-party consensus in the idea of ‘investing to save’ and we believe this applies to support for lower income households. Debt recovery and homelessness present a huge cost burden to the Council and forcing lower income households to pay more towards their Council Tax than they can afford increases the risk of these additional costs. If removing the cap on CTR can prevent households from debt and homelessness, there are bound to be financial savings to the Council down the line.
- The policy change is affordable – as per the report
The officer report into this proposed change states the following.
“Significant improvements have been made to the working age scheme with the introduction of a banded scheme in 2019, which has both simplified the scheme for applicants and reduced the administration burden caused by the introduction of Universal Credit.”
“Whilst the principle of all working age households paying ‘something’ was initially thought to be an approach that would be central to the design of CTR, the reality is that, since its introduction, low-income taxpayers, the poorest households, have been unable to pay the balance leading to additional costs, court, enforcement action and, in some cases, the amounts demanded have been written off as uncollectable.”
“18.20% of all outstanding arrears since 2016 are for residents in receipt of working age CTR, with 63% of these arears for residents receiving the maximum 80% support. Therefore, with the difficulties in collection experienced, the relatively high level of arrears and the administration costs, it may no longer make the amounts economically viable to collect, notwithstanding the negative effects to those poorest households. In addition, the costs of administration of these cases by the Council has increased significantly over the years. These costs are borne mainly by Rother District Council.”
“The costs of the CTR scheme have reduced as a percentage of the Council Tax Base since its inception in 2013, due to both the changes in caseload and the change in Tax Base itself. […] Council Tax Reduction, as a proportion of the Council Tax Base, has reduced each year whilst at the same time the actual base has increased. It can be seen that the tax base is increasing year-on-year and since 2013 has increased by 9.57%, whereas the effect of CTR on the base has reduced over the same period by 34%”
This suggests that the proposals will be somewhat offset by less recovery and admin costs, plus the reduced cost of the scheme means that it should still remain less costly than when the cap was introduced.
The report also goes on to say:
“The proposals will increase the cost of the CTR scheme for 2024/25, however the general increase in the taxbase plus the potential additional income detailed later in the report allowed by new legislation may offset all the additional costs.”
This refers to the second homes premium, more details of which are now known. This should further provide a way of offsetting additional cost.
- Counter to the “Cost to ESCC” argument
The idea that removing the cap will be some great loss to ESCC’s finances is flawed as it assumes that the money generated from the cap’s existence is something ESCC are owed. Not only do no other authorities (aside from Rother and Eastbourne) make this contribution, but it could be considered an additional levy on the poorest Rother residents, who are being made to pay more than a full CTR scheme would determine they can afford. If there is seriously a suggestion that ESCC’s budget is contingent on this additional income from Rother’s poorest, then there is clearly a more fundamental issue with ESCC’s financial situation.
Proposal 2 – Remove the minimum award of £5 per week
Reason to support this proposal:
- Every Penny Counts
If someone is entitled to a payment, they should receive that. We believe that every penny counts, especially when it comes to those on the lowest incomes. The removal of this minimum payment seems like a sensible proposal that will prevent money being held back from those it is owed to.
- Concurrence with the report
We agree with the points in the report that:
“When CTR was first introduced in 2013, [minimum payment] resulted in a significant cost reduction. However, with the introduction of Rother’s current scheme in 2019, it now effects very few CTR recipients and therefore should have been removed when the banded scheme was introduced.”
The current economic situation is dire. 13 years of failed austerity and faulty trickle-down economics has culminated in low economic growth, stagnant wages, soaring inflation and deepening poverty. Communities have lost public services, infrastructure is crumbling and across the country, there are foodbanks with queues out the door with people, often working people, who are struggling to get by. We know that Local Authorities have also taken a hit and budgets are tighter than ever before, and that is why it is imperative that, in lieu of being able to stop the poverty that manifests across our District, Rother should do everything within their power to lessen poverty’s effects. Reforming the CTR scheme by removing the cap and the minimum award is a low cost, high impact way of doing just that.
As Labour members and activists, it is no secret that we hope and campaign for a change of Government. One that will commit to tackling the cost of living and properly supporting local authorities with the long term funding needed to address the deepening issues austerity has caused in our communities. It is not a coincidence that areas like Sidley, Rye and Bexhill Central – where data shows poverty is highest in Rother– have voted in Labour Councillors to represent their interests. We hope that Councillors of all parties can see the benefits of these policy changes and support a reformed CTR scheme as set out in the Council’s report.
For a fairer Rother. For a Rother with less hunger, less hardship and higher wellbeing. We support these proposals and hope our elected representatives do the same.
 Article on Child Poverty Statistics in Rother https://www.rotheralliance.org/post/child-poverty-22
 Rother District Council’s Anti-Poverty Strategy 2022-2027 https://rother.moderngov.co.uk/documents/s5746/Appendix%20A%20-%20Anti-Poverty%20Strategy%20FINAL_.pdf