The council tax freeze announced by George Osborne is being made at the expense of low-paid, local government workers’ pensions
The chancellor’s announcement of a further council tax freeze in 2012/3 comes as no surprise to members of the Local Government Pension Scheme – or those of us involved in discussions over the £900 million ‘savings’ from it demanded by CLG secretary of state Eric Pickles and the Treasury.
For some time now, we have been led to believe that the £900 million is needed to enable councils to cut – or freeze – council tax. That’s why we have been calling the proposed increase in LGPS contributions, a lower pension and later retirement age a ‘tax’ on our members, rather than a measure designed to enhance the sustainability of the LGPS itself.
None of the savings will go into LGPS funds. Instead, the tax will – as has been confirmed overnight – enable councils to reduce their contribution to the LGPS and thereby freeze council tax. If you add to the £900 million tax the £250 million saved on ‘the bins’, then you have your council tax lolly (aka freeze) plus some.
Far from being the result of savings across Whitehall, as the chancellor claimed yesterday, this freeze comes on the backs of LGPS members and this lolly means further cuts to the incomes of the lowest paid public sector workers in local government. They are – it seems – being required to undergo further hardships to subsidise the entire council tax paying community.
Don’t forget – 80% of local government workers who make up the majority of LGPS members earn less than £21,000. None of them received the £250 compensation for the public sector pay freeze which they have endured for two years now. Car allowances have not been increased this year and myriad attacks on pay and conditions are taking place at local level.
Aside from this, let’s just look at who will benefit most from the freeze – aka the chancellor’s ‘compassion’. His announcement assumes a 2.5% increase in council tax. The average CT in 2010/11 is £1,439. So savings in 2012/13 for 5.7 million households in Band A will be £23.98 pence. The 130,000 households in the highest banded properties – H – will each save £71.97 pence.
So guess what? It’s the poor and the lowest paid public sector workers who will pay. Not just through the increase, but through the whacking great hole in council budgets which the freeze will create as a consequence of the gearing mechanism. More cuts and higher thresholds for social care, more cuts to youth services, more cuts to pay and conditions,fewer libraries and more redundancies.
There’s an interesting regional dimension too. Most high band properties are in London and the South East. 261,000 households in Council Tax Bands G and H in London save more than 659,000 Band A households in the North East. That’s ‘compassion’ for many who least need it I think.