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Biggs slaps “austerity tax” on Tower Hamlets voters

Labour’s John Biggs has balanced his budget – by getting local residents to dig into their pockets to make up the shortfall. Gone is Mayor Lutfur Rahman’s cast iron pledge protect the most vulnerable in our community – replaced with John Biggs promise to “try to support those in need”.

Tower Hamlets Council has forecast that cuts to its grant and increased demand for services due to inflation and demographic pressures will result in a budget shortfall of around £59 million over the next four years. At a Cabinet meeting on 5th January, John Biggs decided how he would like to make up the shortfall.

The main measure John Biggs wants to take is to increase Council Tax by 4% from this April. The annual Consumer Price Index (CPI – an official measure of inflation) stood at 0.1% at the end of November. John Biggs’s increase in Council Tax is 40 times the rate of inflation!

The increase comes in two parts.
Nearly half of the increase (1.99% – 20 times the rate of inflation) will go to cover routine spending (see below).
Just over half of the increase (2%) comes because the Tory Government is grappling with the cost of social care (cost of looking after frail and elderly people, etc). The Government is cutting the amount of general taxation which it spends on social care, and has given Councils a new power – to increase Council Tax by 2p in the £ to fund social care. Labour’s John Biggs wants to pass on the full amount the Tories have permitted Councils to charge their local population. For the first time, individual residents who earn too little to be paying income tax now have to pay this new “tax” to fund social care spending.

The Council’s initial announcement is not entirely clear in terms of what the 4% increase will mean for Council Tax payers. Its formal statement says:
“a resident paying full council tax in a band D property will see a rise of £16.33 per year, the equivalent of 31p per week in their bills”;
and that John Biggs wants to set
“Council Tax (Band D) at £920.85”.
Both statements cannot be right. If £920.85 is the band D tax from April, that figure includes the 4% increase. Remove the 4% increase, and you arrive at £885.43 – which gives you an annual increase of £35.42 (not £16.33) or 68p per week (not 31p). We have asked the Council for an explanation.

The Council is quite vague about what the general increase will fund. It is going to make up for some of the cuts in national funding of Councils but also invest in John Biggs’s “priorities”. These include “tacking street cleanliness and anti-social behaviour, providing a range of initiatives to support vulnerable people, those looking for work and young people going into further and higher education.” These are well established as popular measures – but there are no clear pledges, such as to keep the funds paid to youngsters who stay on at school or go to university. You will also be paying for an increased cost of waste disposal (can’t we decrease the cost instead?).

John Biggs tried to put the best spin he could on the situation with a waffly statement which may have been meant to make him sound like he is a responsible politician who can be trusted not to overspend – issues that were on the political agenda in the 1980s and 1990s, when he was last a councillor in the borough, but from which the political debate has moved on. He stuck to generalisations rather than make clear pledges.

“Ongoing cuts to local government funding means that we need to make tough choices,” he said. “We need to address the pressures we face, invest in improving key services and ensure that we are working as efficiently as possible. Revenue from Council Tax will help bridge the gap that we face in funding important local services as well as enabling us to address several long term issues for the council that are still outstanding.

“We remain committed to providing ongoing financial support to all Council Tax payers on a low income. This, alongside our wider work to raise awareness about welfare reform, will help protect the most vulnerable in Tower Hamlets. There are hard choices ahead, but we must act efficiently and also try to support those in need.”

What does he mean? “Providing ongoing financial support to all Council Tax payers on a low income” falls short of Mayor Lutfur Rahman’s pledge to cover the 10% of Council Tax benefit which the Government does not refund to Councils. Raising “awareness about welfare reform” falls short of Mayor Lutfur Rahman’s pledge not to evict any tenant whose rent arrears arise from the bedroom tax and who cannot find smaller accommodation.

The Council says that it has to set its Council Tax level formally by the end of January. There should be further consultation on the Budget itself: watch this space.


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