Progressive Council Tax – some more questions and thoughts

The debate about Progressive Council Tax (PCT) in Brighton and Hove has so far generated more heat than light. There remain a number of key questions, and as well as raising those I’d like to offer some reflections on the politics of the proposal – as well as answering some of the questions that have been raised in response to my previous blog post.

A key question is the precise status of this proposal.

The official Green Party line is that it is an idea – something to be discussed with officers in order to think about feasibility. But that position has changed – bloggers suggesting rather more has been done, and that initial meetings have already been had with council.  Rumours abound that papers exist setting out a timetable leading up to 2015, emphasising the political benefits of the scheme.  This is a crucial question, because timescale is of the essence.  If it is just an idea to be explored, then it is obvious that, even if legal, it couldn’t be done before 2015.  The reason why is that the amount of work that has to be done is enormous, and it’s just not possible to do it before a binding referendum on a large increase – rumoured, though not confirmed, to be around 200% – is held in 2014.  Things you need to do would include:

  • modelling the impacts – working out how the rebate would work, and since the plan is essentially spatchcocking an income tax on top of a property tax, understanding the income spread across the different council tax bands – information that is not easily available.  You need in particular to conduct sensitivity analyses before you can set rebate bands, to avoid perverse incentives at the margins of bands (so that large increases in tax payments are not triggered by small increases in household incomes).  In a scheme in which the burden of taxation falls overwhelmingly on 20% of households, the sensitivity issue is potentially enormous; small variations in the tax paid at the high end could have a huge impact on the revenue from the scheme.
  • ensuring the scheme is legal – one letter from DCLG is not the sort of legal advice you need to commit big resources to a scheme, and there remains the question of whether HMRC has the legal powers to provide information to the Council to verify households’ income declarations.  This means there being legislation in place that would explicitly permit HMRC to release information for this purpose, because HMRC can only act within the framework laid down by Parliament.  I do not know whether such powers exist – I’d be delighted if proponents of the scheme could point me to the relevant statute – but without them there is no possibility it can work.
  • considering the interfaces – because it is obvious that the scheme would require an interface with HMRC for checking and verifying information, and this would involve both negotiating a service level agreement with HMRC and setting up an IT link to allow it to happen.  And HMRC has no incentive to expedite this work against Council timetables, and is likely to price its involvement accordingly – especially if Ministers are hostile to the idea (as seems likely).
  • developing systems for the council – costing, accurately, the implementation of the scheme, which means understanding how it will work so that you can allocate resources accordingly.  And in all of this supporting people – especially the vulnerable – through that first rebate claim will be key.  These figures will be substantial.
  • generating political consensus – local government finance remains overwhelmingly in the hands of central Government, which can simply take away funding from councils.  Such a scheme could only work if there were assurances that the Government would maintain its funding levels – but everybody knows that Eric Pickles’ much-touted localism is really just a euphemism for cutting services and budgets.  Why should a hostile Whitehall maintain the city’s grant and do anything other than obstruct work with HMRC?

All of these things require time and work – and unless these things have been done, the current proposal (such as it is) is quite obviously a non-starter before the 2015 elections.  It’s worth remembering that Ken Livingstone’s congestion charge – which had a clear legal framework and Government co-operation in establishing database links – took nearly an entire four-year term to implement.  If the Green Party is now arguing that PCT is just an idea, it is explicitly admitting that there is no chance of delivering it before the 2015 elections.  Indeed, there is barely time to do the work necessary to develop a coherent policy position before those elections.  If that’s the case, some of the triumphalist rhetoric from some Greens about dealing with the immediate effects of austerity when Labour are reluctant to do so, really needs to stop.

So if we accept that the official Green Party line means no PCT before 2015, there are some important political questions.

The obvious one is that PCT is not a long-term policy.  PCT does not reform local government finance, it games it.  It’s about finding a work-round, not producing a model that is fit for long-term purpose.  In order to do that you need buy-in from Government and, frankly, other political parties. There is a real likelihood that Labour will be in power after 2015 – there is none that the Green Party will be.  In other words, if the Green Party is serious about reforming local Government finances, it needs to start building alliances.  In the context of Brighton and Hove, local Green councillors and activists going round claiming that the policy is about showing Labour up as a bunch of neoliberal Quislings is not an especially intelligent start.  And what you need to do is to build a case – a credible, sustainable, rigorously-argued case – for change.

And part of that process is about accepting responsibility for undertaking proper policy-making.  Intellectual rigour is absolutely essential for the political radical.  The rationality of the ruling elite is what goes by default – in the media and in political debate; assumptions and axioms and methodologies accepted without challenge, because they are the conventional wisdom of the powerful.  And in attacking those, rigour and method are the radical’s friend; they’re what enable you to turn the logic of establishment against itself.  It cannot be emphasised enough that that logic and rigour can be the tools of technocrats, but they are – crucially – what allows you to challenge technocrats and create the conditions for change.  It’s what allows you to beat technocratic, prevailing wisdoms at their own game, and turn the tables on them.

The record of the Green Party in office in Brighton shows that it has not succeeded in managing the relationship between power and politics.  Over the CityClean dispute they handed political responsibilities to officers; on PCT, process is ignored.  But if you are serious about effecting real change, your radicalism needs to be grounded.  You need to be able to demonstrate to people, and a political establishment, that you can justify change in their terms as well as yours.

The biggest problem for this proposal – and one that the well-meaning Greens proposing it do not appear to realise – is the way in which it mirrors the failures of austerity.  The austerity narrative is unsupported and looking increasingly out of tune with reality, and lacking in empirical underpinning.  But they are getting away with it: George Osborne pins the Tories’ electoral hopes on an feel-good factor built on a property boom, although empirically we know that this was the immediate cause of the current economic crisis.  Likewise, the Green Party appears to offer an unevidenced, partially-worked narrative – with the details to be filled in later – and claims that it is a credible alternative to local austerity.  It is an approach that diminishes the role of evidence and empirical understanding, and threfore mirrors the  Coalition mindset with a discomfiting precision – although I’d guess that the supporters of this scheme would be horrified by the very suggestion.  Ironically, Greens argue that they do politics differently; but the political method of PCT, unevidenced and ideological, is essentially neoliberal in an uncanny way.

Austerity is failing, but politically remains dominant.  Austerity is a mindset; and by gaming Council Tax you are reinforcing, not challenging that mindset.  PCT remains an evasion, not a strategy.

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4 thoughts on “Progressive Council Tax – some more questions and thoughts

  1. Hopefully I can contribute towards this discussion, I work in council tax. I have not been able to get any actual answers out of the main proponent of this scheme, on twitter, so this is how I assume it will most likely work.

    The council currently has its own council tax support scheme (council tax benefit), which works exactly as mentioned above, ie an income-based rebate on a property-based charge, however in this case just for the poorest people. I think it is highly likely that PCT will follow the same outline as council benefit, using the same computer systems etc, and possibly the two schemes being one and the same ie an expansion of council tax benefit to include nearly everyone. Councils now set their own council tax support schemes so they would probably have the ability to do this.

    Regarding the point about HMRC, local councils do not have the ability to find out details of people’s earnings from HMRC. Under the existing system of council tax benefit, claimants are required to provide monthly wage slips when they make their claim and when their circumstances change. I see no reason why this would not be the case under the proposed scheme, and it would obviously result in a huge workload for the assessors, who will already probably have a backlog due to the bedroom tax and benefits cap.

    In terms of tapers between bands under the proposed scheme, that itself is not likely to be an issue as council tax benefit is not worked out in brackets, it is done on a sliding scale according to a mathematical formula. The formula is, slightly simplified:

    Income – amount government says you need to live on = excess income.

    (20% of excess income is expected to go towards council tax.) Council tax charge – 20% of excess income = council tax benefit awarded. Most councils only give benefit up to 90% of the full charge due to government cuts.

    There are still many questions which the Greens are refusing to answer, such as whether capital will taken into consideration in the calculation. At the moment, if you have capital over a certain level, usually between 6 and 16 thousand pounds, you do not qualify for any rebate and are expected to pay the bill in full. This does not appear to have been thought through in terms of people with low incomes and a moderate amount of capital, as the current threshold would not even cover one year’s full charge.

  2. This is a very interesting and thoughtful line of posts. Thanks Neil (and Will). I hope I can also contribute.

    I’m not going to comment on the main body of the posts and the feasibility of the scheme – that’s for others – but I would just like to elaborate on what you call the ‘official Green Party line’. PCT was or is indeed an idea that was worked up by a member, who’s now apparently revising it: an idea that has yet to be debated or decided on by the party. The only act of the party so far was to request, a couple of weeks ago, further investigation. People wanted to see if PCT had legs.

    Yes, there’s a paper knocking around that was drafted by the member. It’s quite out of date, having been produced in early July, and its author has several times since said that he’s revising it substantially.

    And it is a matter of record that the architect of the PCT idea had one fact-finding meeting with two council officers, to help him build the picture of what he was trying to tackle. It was facilitated by a councillor (Leo Littman) but that doesn’t add any status to the idea and I’m told the meeting left him with more questions than answers.

    The rest of the perception – that this may somehow be the Green policy that it isn’t – is probably down to one blog post by Ben Duncan that implied (carefully without saying so) that it was policy; this blog post was then interpreted by a few national papers (but not by the Argus or BBC) as meaning more than was said. And, of course, this coverage was happening in the quiet month of August.

    It’s perfectly reasonable and normal for activists in any political party to explore new ideas for policies: isn’t that what ‘policy wonks’ in parties do? This one’s been aggrandised by a blog post and some newspaper coverage but that’s all.

    And at the very least it shows a political party whose activists regularly challenge the concept of austerity and the cruel regime of welfare cuts, which most political parties in this country would rather espouse. It shows activists who are looking for new imaginative ways of tackling economic affairs instead of the old method of milking low income people in the hard times in order to return the nation as quickly as possible to the boom, bust and insecurity of the bank-borrowing-fuelled growth that got us in this mess in the first place.

  3. Pingback: Progressive Council Tax: an appeal to the Green Party conference | Notes from a Broken Society

  4. Pingback: Greens, council tax plebiscites and the undermining of local democracy | Notes from a Broken Society

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