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Council tax could pay for welfare cuts

In The Herald today a group of influential academics, specialising in housing issues in Scotland, calls on the Scottish Government to intervene to prevent communities being broken up and families driven into extreme hardship by the bedroom tax.

The SNP administration has already pledged to revoke it if Scotland becomes independent, though it has declined Labour's attempt to give legal protection from eviction to tenants who accumulate rent arrears as a result of the change.

As Shelter, Citizens Advice Scotland and other charities have made clear, the consequences for many thousands of the most disadvantaged Scottish households of this brutal and ill-thought-out policy could be devastating. A majority of those involved have at least one family member who is ill or disabled. Many more are single parents. Both groups rely on local networks and family members for help with care. Because of the drastic shortage of one-bedroom flats, those who no longer qualify for two-bedroom homes are either likely to be forced into the private sector or pay a supplement many of them simply cannot afford.

Nearly half of households affected are already in financial difficulties. Though many work at least part-time, the shortage of work opportunities in the worst affected areas means that few are likely to secure extra hours to boost their incomes. A recent study found that about 10% of the Scottish working population is involuntarily underemployed.

For these reasons none of the Coalition Government's stated objectives of reducing the housing benefit Bill, making more efficient use of the social housing stock and improving work incentives, is likely to be realised. Moreover, as arrears accumulate, the financial stability of councils and housing associations is likely to be threatened, along with their ability to meet housing demand.

Though benefits are a reserved issue, the Scottish Government could intervene, as it has in postponing the cut in council tax benefit. The academics throw down the gauntlet to Scottish ministers by making a radical suggestion. Council tax has become a politically untouchable subject for the SNP, after its failure to introduce a local income tax that turned out to raise as many thorny issues as it solved. Despite mounting pressure on council budgets, it has been frozen for years. There has been no revaluation since its introduction in 1992. Though a regressive tax, as it stands, it could be made more progressive by restructuring it and adding more bands or increasing the top rates, as The Herald has argued before.

As the bulk of those affected by the bedroom tax are young and poor and those who have benefited most from the long council tax freeze are older, better-off homeowners, a modest increase in the top rates of council tax would help tackle what many regard as the intergenerational unfairness of Coalition welfare cuts.

There is certainly a moral argument for such a move but would the Scottish Government risk the ire of middle-class voters in the run-up to the independence referendum?

Contextual targeting label: 
Local government

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