The Supreme Court has ruled that Haringey LBC’s consultation on its council tax support scheme was unlawful.
At issue was how to respond to a cut in government funding that had previously paid for a council tax discount for low-income households. In its consultation, Haringey implied it was obliged to pass on the cut as a reduced discount. The court ruled that the council should have offered other ways of making up the shortfall. The judgment has implications for all local authorities.
Council tax benefit was replaced with council tax support in April 2013. CTB gave low-income households a council tax discount. The change to CTS saw a single, nationally devised system replaced by 326 different local ones across England, while central government cut funding for CTS by 10%. Each council had to consult residents on their new CTS schemes.
Following its consultation, Haringey decided to meet this shortfall by requiring all working-age CTS recipients, except disabled people, to pay 20% of their council tax, whatever their income.
It also reduced the savings limit above which there was no eligibility for CTS and altered the rules relating to back-dating claims. We estimated that 18,000 Haringey households would lose on average just under £210 annually.
In its consultation, Haringey had taken for granted that the cut had to be borne by CTS recipients. The court ruled that other options, including increasing tax for all residents or drawing on financial reserves should have been presented. Failing to present these possibilities was deemed unfair and the consultation unlawful.
The court did not quash the scheme. It still stands and no money will be paid back to CTS recipients but there will be pressure on the council to consider whether a further consultation is required.
Any council planning to change its scheme in April 2015 will have to ensure that its consultations adhere to this ruling. According to solicitors Irwin Mitchell, who applied to the court on behalf of Haringey residents, as the first-ever Supreme Court case about what a council must do when it consults the public, the ruling may not be restricted to council tax.
It is easy to be cynical about this legal victory because although Haringey and all other councils must be more careful in future, not one CTS recipient is better off.
However, once a consultation has to offer real alternatives, it is no longer possible to treat it just as a technical exercise. The design of a CTS scheme that absorbs the cut in government funding can largely be left to unelected officials.
By contrast, a decision about how to share the burden of a cut in funding among different people is unavoidably political. Elected members, rather than officers, must take the lead.
Peter Kenway, director, New Policy Institute