Council cuts consultations must offer wider range of options including tax rises, court rules

In the first case of its kind, the Supreme Court has ruled  that a local authority’s consultation on its Council Tax Support scheme was unfair and therefore unlawful. At issue was how to respond to a cut in central government funding that had previously paid for a council tax discount for low income households. In its consultation, Haringey Council had implied that it had no alternative but to pass the cut on in the form of a reduced discount. The Court ruled that the council should have offered other ways of making up the shortfall, for example by increasing council tax for all local residents.The judgment has implications for all local authorities not just Haringey. These implications are not just restricted to council tax.

Council Tax Benefit (CTB) was replaced with Council Tax Support (CTS) in April 2013. CTB gave low income households a discount on the amount of Council Tax they had to pay, often to reducing their council tax bill to zero. The change to CTS saw a single, nationally devised system replaced by 326 different local ones across England. At the same time, the money provided by central government for CTS was cut by 10%. In devising its own scheme within the reduced budget, each council had to consult with local residents.

Following its consultation, Haringey Council decided to meet this shortfall by requiring all working age CTS recipients except disabled people to pay 20% of their Council Tax however little income they had. Other changes included reducing the savings limit above which there is no eligibility for CTS as well as alteringthe rules relating to the back-dating claims for support. We estimated at the time that the changes saw around 18,000 Haringey households lose on average just under £210 per year.

In its consultation, the council had taken it for granted that the cut in funding had to be borne entirely by CTS recipients; the question left for consultation was how. The Court ruled that other options, including putting up the tax for all residents to make up the shortfall, or drawing on the council’s financial reserves, should also have been presented. The failure to set out these other possibilities – which in fact several dozen other English councils did indeed eventually opt for – was deemed unfair and the consultation therefore 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, not least in the light of its own consultation charter to consider whether a further, lawful consultation is required.

Any council planning to change its scheme in April 2015 – and many are known to be considering this – will have to ensure that their consultations adhere to this ruling. Furthermore, according to Solicitors Irwin Mitchell who applied to the Supreme 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 CTS or council tax.

It is easy to be cynical about a legal victory that is only about the process of consultation. After all, Haringey has lost, but it hasn’t suffered any sanction. Haringey – and all other councils must be more careful in future – but not one CTS recipient is better off as a result.

We think such cynicism is wrong. For one thing, it is only through fighting that things change for the better. The courts are an arena where the citizen, armed with sound evidence, can resist the state. To fight, win or lose, is to exercise power.

For another, the belief that this is only a small victory assumes that things would not have got worse. But is that really so? A danger with narrow consultations like Haringey’s is that a case can be made for abolishing them. With the broader consultations which are now required following this ruling, that won’t be so easy. A small step forward may have forestalled a step back.

Once a consultation has to offer real alternatives, it is no longer possible to treat it just as a technical exercise. The detailed 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 groups of people is unavoidably political. Elected members, rather than officers must take the lead.

This blog first appeared in the Local Government Chronicle on 11th November 2014.