Hackney Council has again come under fire for the council tax relief cut it introduced in April after newly released documents show it was warned by analysts that the move would hit the borough’s most vulnerable residents the hardest.
The Town Hall was criticised by anti-poverty campaigners and opposition parties when it announced a plan last year to increase the amount of council tax paid by the 27,000 working age people in the borough who get help paying their bill from 15 to 20 per cent, to offset growing costs and government cuts.
The backlash led Mayor Philip Glanville to scale back the increase to 17 per cent for at least the next two years – enough to cover the predicted £500,000 rise in the cost of Hackney’s Council Tax Reduction Scheme (CTRS).
Now, documents obtained by Hackney Liberal Democrats following a long-delayed Freedom of Information (FoI) request have revealed the different options considered by the council before it put forward its preferred choice for consultation last August.
The Town Hall paid consultancy firm Policy in Practice (PiP) to analyse the potential savings and impact on residents if the minimum contribution of working age claimants was increased to either 17 per cent, 20 per cent, 22 per cent or 25 per cent, as well as if the CTRS was left unchanged.
PiP’s modelling said the 17 per cent option that is now in place would mean vulnerable households being “more impacted than non-vulnerable households”, and a saving of £500,000 for the council.
For the 20 per cent option that the council initially favoured, PiP found it would save £1.3 million, but warned: “Vulnerable households are more highly impacted by this scheme than non-vulnerable households.
“Owner-occupiers and couples without children are especially hard hit. Households on out of work benefits face bigger income losses under this scheme than households in employment, so that work incentives are not supported.”
Darren Martin, vice chair of Hackney Liberal Democrats, said: “The numbers highlighted in the policy comparison models make it glaringly obvious that reducing council tax support is not the way to make this vital scheme cost effective in the future, vulnerable residents are impacted the most and for very minimal savings.
“The fact that the Mayor and his cabinet sat around the table and agreed to implement a policy that it knew would do this is scandalous.
“For half a million pounds more, it could protect vulnerable residents including social tenants and lone parents to a greater degree by just continuing with the current scheme as it is.”
Martin called for an immediate review of funding options for the CTRS, and said his party would be “happy to work with the council in a constructive way” to protect the scheme.
A spokesperson for Hackney Council responded by saying it did look at various options, and the reason for putting forward a preferred one was to “gather the views of residents and stakeholders”.
They said the decision to scale back the cut shows this feedback was taken into account.
Mayor Glanville pointed this out when he announced the rethink in January.
Glanville also defended the CTRS change at the time, saying: “The scheme needs updating so that it fully interacts with other welfare systems such as Universal Credit, and we simply do not have the money to pay for the predicted £500,000 a year increase in the cost of the scheme.
“Other councils have sought to absorb all these costs themselves and return to a fully funded scheme, to do this in Hackney would cost an additional £2.8 million, funding we don’t have, given the numbers of residents we have to support.”
The Mayor said the council invests over £25 million in the CTRS, but gets a “miserly £8.6 million from the government towards what until 2010 was a fully funded national benefit”.
Raji Hunjan, CEO of anti-poverty charity Zacchaeus 2000 Trust (Z2K), which campaigned against any changes to the CTRS in Hackney, said she recognises the financial strain councils are under, but she is “wholly opposed to pushing the burden of government cuts onto the nation’s poorest residents”.
She added: “It is disappointing that [PiP’s] modelling focused more on the savings for the council than the cumulative impacts this increase could have on residents, or the knock-on effects on local support services if more people are forced to suffer financial hardship.”
Hunjan said Z2K is “very pleased” that Hackney responded to its campaign and reduced the severity of the cuts, but urged the council to go further, adding: “Eight London councils, including the neighbouring borough of Tower Hamlets, have maintained 100 per cent support for claimants.”
Darren Martin revealed that the Lib Dems’ FoI request for the modelling data was answered in May, “after the elections”, despite being submitted on 17 January.
He said he complained to the Information Commissioner about the delay in April, and Hackney Council was then served with a decision notice.
The council told the Citizen it was dealing with a backlog of FoI requests during this time, and apologised for the wait.
Martin said: “Our opposition to the reduction in council tax support was a key campaign issue at the local elections and it is in our manifesto that we would reverse the Mayor’s decision.
“Whether information was deliberately withheld or not, we will never know. But key information that voters certainly would have been interested in was not available when it should have been.”
A council spokesperson said: “We apologise for the delay in responding to the FOI request. This was due to a high number of FOI requests during this period causing a backlog in responding.”
Policy in Practice (PiP) is run by Deven Ghelani, who is described on the company’s website as “the author of Dynamic Benefits (the blueprint for Universal Credit)”.
In a column for the Guardian newspaper in 2013, Ghelani was introduced as the “architect of Universal Credit”.
Universal Credit is a reform being introduced by Theresa May’s government with the intention of simplifying welfare system by merging six benefits into a single payment.
But claimants have complained that the reform has left them out of pocket amid delays and confusion over its implementation, and that it is less generous than the previous system.
Hackney Council has been critical of Universal Credit, with finance chief Cllr Rebecca Rennison labelling it “unfair” and the Mayor describing trial roll-outs last year as “disastrous”.
When asked why Ghelani’s firm was hired by the council to analyse options for a benefit cut, given his links to Universal Credit, Cllr Rennison said PiP had in “no way influenced” the Town Hall’s decision.
She said: “In Hackney we have long campaigned against the government’s unfair welfare reforms, including Universal Credit and cuts to council tax support.
“Policy in Practice has in no way influenced the council’s own decisions on how best to mitigate against these changes and support Hackney’s most vulnerable residents.
“Following a reduction in financial support from government, Policy in Practice were commissioned solely to provide independent assessments of the impact different options for changes to council tax support would have, based on modelling options provided by the Council.”
PiP has received two payments of £5,000 from the council since the start of 2017, but a Town Hall spokesperson said this money is “not solely for modelling”.
They added that the “exact details of the work those payments were made for is contractual and commercially sensitive”.
To read Policy in Practice’s modelling report in full, download the PDF here