Birmingham’s poorest families are facing an extra £300 a year council tax bill following Government benefit cuts.
Unemployed and low income households will be hardest hit under plans set to go before Birmingham City Council’s Cabinet on Monday.
The tax rise comes after the Government ordered the city council to reduce its Council Tax benefit bill by ten per cent – or £10.9 million – next year.
The Government has already told the local authority it could not increase the tax charge to pensioners and the Labour-run council has opted to extend that protection to households with disabled people and those with children under six.
The council will also introduce a charge for the owners of empty homes with the aim of raising an extra £4.4 million to offset the impact on low income homes.
“The city council cannot afford to make good this cut in Government funding without increasing the already severe savings it is making in all other service areas.
“This means that we face the hard choice of how we pass on this funding shortfall and we will be consulting with residents on this over the next three months.
“The Government has simply passed the buck, knowing full well that councils cannot afford to absorb the shortfall and that we have no option but to pass the impact on to hard working families in our cities.”
The council has rejected a plan to spread the cost across all council taxpayers and instead will offer only a 76 per cent discount to many of the 135,000 people currently receiving Council Tax benefit.
It means households with part-time or low income workers will have to find an extra £250 to £350 per year depending on their Council Tax band and the tax rate set next April.
A hardship fund of £1 million will be set aside to help households with special circumstances or greatest need.
The council will consult people and voluntary groups over the plans for the next three months before the proposal is formally adopted.
Lets get it into prospective and not forget that the Birmingham City Council coalition had many opportunities to put this right from 2004-2012 yet they chose to spend our hard earn tax money on grand projects in places like Birmingham Sutton Coldfield with the revenues it received by the coalition and yet they have the cheek to say it was the Labour Council fault.
A leading business group has slashed its growth outlook for 2012 and urged the Government to start ‘radical policies’.
The UK economy will shrink by 0.4% this year as the worsening global outlook hits businesses, the British Chambers of Commerce (BCC) said.
It had previously forecast 0.1% growth in UK.
“UK businesses have got what it takes to help the UK return to growth, but they can only do this if the Government acts quickly and radically to introduce both short-term stimulus measures and radical long-term policies for growth,” it said in its quarterly economic forecast.
The BCC, which represents more than 100,000 firms, also revised down its growth expectation for next year to 1.2% from 1.9%.
This is despite businesses are reporting more positive trading conditions and expressing intensions to expand, it added.
It had more bad news for the construction sector, which it forecast to fall by 1.7% in 2012.
And unemployment is also likely to rise, the BCC said – by 186,000 people between the second and third quarter of this year.
The group called on the Government to change its economic strategy by giving bigger tax breaks for spending on infrastructure such as machinery, and lowering National Insurance contributions to encourage job creation.
And said the deficit reduction measures should continue – with spending cuts reallocating funds that could help boost investment.
“A new model economy for Britain cannot be summed up as “Plan A” or “Plan B,” BCC director general John Longworth said.
He added that business wants a strategy that delivers both deficit-reduction and growth.
“This means a continued commitment to public spending cuts, support for the economy without a new and damaging consumer credit bubble, as well as a strong push to improve business access to finance and unlock massive private funding to renew Britain’s infrastructure.
“Politicians need to get some political backbone and show leadership. If they put Britain above politics, they will be rewarded for it in the long run.”
The forecast comes a day after a survey by the Confederation of British Industry (CBI) showed that business in Britain’s service sector shrank between June and August.
Companies are now more negative about their business situations than they were three months ago, the CBI said, and expect business to get worse – making a rebound in the third quarter look unlikely.
Low earners will be hammered by coalition plans to replace council tax benefits with a mishmash of schemes drawn up by local authorities running on decimated budgets, Unison warned today.
The public-sector union wrote to Prime Minister David Cameron and his deputy Nick Clegg urging them to rethink the benefit shake-up to be introduced in April.
Under the Local Council Tax Support scheme, which replaces council tax benefit, councils will be free to devise their own methods of distributing benefits but due to cuts will only have 90 per cent of the previously available cash.
Unison’s letter points out that the new scheme rightly gives priority to pensioners but that this will leave some of the lowest-paid households shouldering the burden – leaving some families hundreds of pounds worse off.
And the union warned the shake-up will effectively wipe out any gains to low earners from changes to personal tax allowance – a central part of the coalition’s claim that it is helping those on low incomes.
The letter reads: “The coalition government claims to be introducing tax measures that will help the low-paid.
“Yet the fact is that while some workers will find that their income tax bill is reduced by £220 a year next April, many other low-paid workers will feel no benefit at all.”
The total council tax benefit paid in 2011/12 was £23 million of which £13.1m went to pensioners and £9.9m to claimants of working age.
Pensioners are protected – so the overall 10 per cent budget cut of £2.3m must all come from the £9.9m to help those of working age, meaning their share of the budget will be slashed by nearly a quarter.
Unison general secretary Dave Prentis said: “It is time for the government to put its money where its mouth is.
“We hear a lot from Cameron and Clegg about helping low-paid workers but actions speak louder than words.
“For many hard-working families the changes to council tax benefits will wipe out any gains from changes to the personal tax allowances next April.
“Only this week, Nick Clegg called for the wealthy to pay more tax. And the coalition has claimed that it has taken real action to help low and middle-income earners by changing personal tax allowances.
“But what the government is giving with one hand, it is taking away with the other.”