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Here I am, in Ermine towers, drinking a cup of coffee in the morning, when the local council freesheet rag drops limply through the letterbox. Normally it’s full of the inside skinny on the Christmas panto and which leading local celebrity is going to switch on the Christmas lights 1 in the shattered remnants of what used to be the High Street before all the shops turned into payday lenders and charity shops.
This time it was different. Hold the front page guys, the news today is:
Will you be hit by welfare cuts?
It’s a pretty leading question, no? It sets us up as losers from the off. There’s a lot of pain coming to the ordinary man in the street in the UK, because living standards are going to fall. We’ve been spending money that wasn’t ours to spend, and the hangover is usually worse than the party was good. That pain needs to get shared around a bit, and yes, we are going to see some real suffering. Everybody needs to suck in their guts and cut back, and that includes welfare recipients as well as people who are working or have worked. So if you get benefits, then it is likely you will get hit by welfare cuts. Other people get hit by earning less in real terms, or having to save money to pay taxes.
Normally, if you earn less, one of the things that leaves you more alone is tax. Which is probably all round as it should be, indeed it was a key part of my early retirement strategy, to drive my costs down so I need to pay less tax 😉 One of the things that really is intractable because it doesn’t follow this rule is Council Tax. I will never get anything off Council Tax, because you must have savings of less than £6000 to even be considered for a reduction. That’s savings, not income. So even though Council Tax is about 1/3 of my current income, I have to pay it. Which is fair enough, I knew this before I went down the path of retiring early so obviously I factored this in. However, it does rather make me spit bricks when I see all this bitchin’ about how terrible it all is for people on low incomes to have to pay something towards it. Someone on full income-based JSA has a higher income than I do. I’m okay with that fact per se, but I don’t want to hear the sob story. Got less money? Buy less shit, pal. And ice the Sky subscription.
Now I have gone out of my way to eliminate debt, to anyone. So no repo-men can legally come knocking on my door with hobnailed boots and turf me out of my home because I owe them money. However, Council Tax is an annually self-renewing debt. In the troubled times ahead, when the shocking levels of inflation due to QE bailing out excessive borrowers start to overwhelm my pension, I can cut costs. I can start shooting pigeons and rabbits. Or I can eat ramen every day, grow spuds in the front garden and scrump apples and pears.
But come what may, there is one bunch of people that have a hold over me with their annually renewing debt, and that is the Council. They are the only people now that can turf me out of my home if I become skint and can’t pay that debt, year after year after year. It’s as bad as continually carrying a credit card debt of £6000 2, without a chance to shift the balance to a cheaper card!
Unlike many people, it appears, I believe in looking ahead. I note this static load on my finances, and try and hedge it. I have to save £27,000 pounds to get an income at 5% that is enough to roughly guarantee that I can pay this tax, at its current level in real terms, for the foreseeable future. If I buy about 27k’s worth of FTSE All-share I can probably expect a 3.5% annual yield 3 and to track long-term inflation in real terms. So £27k of my net worth, as I shovel it into ISAs over then next three years, is purely dedicated to paying Councul Tax. Think of all the holidays, Sky TV subscriptions and pints of beer I have to forego to get that security. I’m prepared to do it, because that’s the law of the land, but it makes me intolerant of the whingeing of folk that didn’t have to pay it from their benefits, and now do. It’s not like they have to go out to work to pay for it or save up 😉
So thanks, Ipswich Council, for addressing us all as people who will be ‘hit’ by these benefit cuts. It’s kinda galling that there isn’t a tip of the hat to all of us who have to stump up to pay for these benefits, because we are probably the majority of the readers of this paper. I have to save £27k just to be able to secure myself from being turfed out of my own home by the Council’s jackbooted thugs demanding money from me with the threat of force if I don’t pay. It is the one totally inflexible part of my budget, over which I have absolutely no control.
Reading further, I observe that the whole article is basically couched in terms of how terrible it all is that we can’t keep on dishing out largesse at the expense of other council tax payers; welfare happens to be 35% of the councils’s spend, the largest line item and considerably more than the cost of the staffing and buildings. To wit:
The changes could mean:
- Cuts to your housing benefit;
- Paying part of your council tax even if you are on benefits;
- Making rent payments yourself rather than having them made for you;
- A limit to how much benefit you can get.
From April, every working age adult will have to pay some council tax regardless of their income.
Housing benefit will be restricted if you are living in a home considered too large for your needs.
And the amount of housing benefit you receive could fall further if you have an adult living in your home who is not claiming benefit.
I mean, for crying our loud, why have we been treating some the good citzens of Ipswich as if they were children without agency or responsibility for their actions?
Let’s take these points in turn.
Cuts in housing benefit
mainly a framing statement that you may get less. As the man said, there’s no money left. Whaddya do when there’s no money left? STOP SPENDING – don’t borrow it! That, above all else, is where previous generations had an edge on us now. They understood what Wilkins Micawber meant when he said
“Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”
and they acted accordingly, rather than living on the never never.
Paying part of your council tax even if you are on benefits;
It’s the other side of the old 1776 cry of no taxation without representation; there should be no representation without taxation, even if that taxation does come from your benefits. Because otherwise you will vote for free stuff, paving the town streets with gold and jam today at other people’s expense. You need to have skin in the game, and understand that doing more costs more. Note that the money to pay the tax does come from the benefits, it isn’t real money in that sense and probably costs more administration. But we have to get a sense of responsibility into people, and hitting them in the pocket usually does that.
Making rent payments yourself rather than having them made for you;
Yeah, what exactly is the problem here? You get your housing benefit, some/all of it needs to get paid to the landlord. The clue here is in the name, housing benefit. Just like JSA, which is supposed to keep the wolf from the door, so you get it, you pay it to Tesco for your food, right? In my early working life I hated paying landlords, it was money down the drain. So I lived in sleazy dives and shared houses with other people to reduce the fixed costs of rent and household costs. I still had to pay the buggers, I just made sure it was as little as possible.
Paying for your shelter is part of what being a grown-up is all about, and why exactly did we infantilise people by pretending that housing was free? Grow up, people. The only people who should have their rent paid on their behalf are children, ‘cos keeping a roof over their heads is the job of their parents/guardians, and those who for some reason like disability aren’t able to comprehend or operate their household finances. Otherwise we are just creating a system where entitlement festers and escalates. Welfare was designed as a safety net, not a lifestyle choice.
A limit to how much benefit you can get.
I think that’s the same thing as the first statement, just double up to make it sound all mean and nasty. Of course everything has limits, because if you get more benefits, some other poor bastard has to pay more tax to pay for those benefits. Everything in the world has limits. There seems to be a subtext here, that this is done to be vindictive and mean. It isn’t. I’d love it just as much as the next man if we could return to the days of abolished boom and bust, the Goldilocks economy and everything was going swimmingly. We could afford our welfare then or so we thought. Now the repo-man has come to call, so we cant afford it so much. That means going without stuff we used to take for granted.
The whole article has a dreadful hand-wringing tone to it, automatically assuming the readers are victims, and framing them as such. How the hell are we ever going to pull ourselves out of the crap when we have people charging around telling adults that it’s a really bad thing if they have to pay their own rent, out of the housing benefit they receive?
Oh yeah. then we have the coup de grace in the first section:
And the amount of housing benefit you receive could fall further if you have an adult living in your home who is not claiming benefit.
Too bloody right. I am an adult living in the home who isn’t claiming benefit, though to be honest this Angle article makes me think I need to get off my ass and claim contributory JSA before Universal Credit comes in. And guess what? Even if I do claim JSA I don’t get my Council Tax paid for as well!
This putative adult living in the home can bloody well find the money to sub the household directly or go out to work. We presume this adult is more connected with the household than I am, given they live under the same roof, so they should be more involved in paying towards its upkeep than me.
So in answer to your question, Ipswich Council, no. I won’t be hit by the benefit cuts. Thank you for asking, all the same. I’ll bear it in mind, perhaps apply for JSA before April’s introduction of Universal Credit which debars me from all benefits, but if for some reason I don’t get it, then I will accept that shit happens and pay Council Tax from my own resources, even though the people you’re addressing with that article have a higher income than I do at the moment 😉 This is not leading from the front, at all. Contrary to what you’d guess from the headline, most of the town’s residents won’t be hit by the benefit cuts, so don’t make out like the town is full of people like Ray’s feckless family fruitlessly frittering our financial futures away. Don’t frame us all as victims, develop some spine and stand up for your council tax payers and say what the Council will do, what it won’t, and why not. The latter could start with the infamous phrase ‘there’s no money left’
As for the no representation without taxation, Council Tax is essentially about allocating cash resources, it isn’t about your inalienable rights as a human being. It’s all about divvying up the dosh, and if you want a say in how to divvy it up, you need to contribute towards the pot. I am not arguing against paying it, and indeed have outlined how I am going to pay for it. However, I am tired of people who don’t have to pay in having a say in how it’s divvied up. It’s easy enough to be all for paving the streets of Ipswich with gold, if you’re not part of buying the bullion. It would look lovely, but I don’t want to pay all my income towards it, thanks all the same. We do need to have a debate about how the limited resources will be allocated, and on the whole th council do a pretty good job. It’s now time for all the stakeholders to have skin in the game, so their choices are informed. If we really all do want to pave the streets with gold, I guess I just have to move, but at least I will know it really is the will of the people, and that they all have to go without something to do it.
- apparently we will have Xmas lights and they’ll be switched on on the 25th November. They’s also arranged for a market of 150 stalls to cover up the fact all the shops have turned into charity shops and Money Shops which is truly inspired – the Ermine tips his hat to fortitude in the face of adversity. ↩
- Assuming a typical usurous interest rate of 20% ↩
- Dividend yield is not the only component of the real return on the FTAS which is why there is a discrepancy. My actual Council Tax is £1200 p.a. so I neeed some capital gain over inflation and to sell down some proportion of units annually to match that. ↩