It’s official: We have the highest council tax in Kent for the nineteenth year in a row.

Cllr Susan Carey (Con) got it wrong. The figures as published by the Ministry of Levelling Up Housing and Communities [MLUHC], on the 30 March 2022, once again, Folkestone & Hythe District Residents have the highest council tax bill for any district in Kent, for the nineteenth year in a row.

Jeffrey Matsu chief economist at Chartered Institute of Public Finance & Accountancy pulls no punches when he say’s,’Council tax is regressive in its nature‘, and goes on by stating ‘Council tax has been increasing every year since 2016.’

However, this year’s council tax increase comes during a particularly difficult economic climate of soaring inflation and uncertainty about our post-pandemic recovery.

The Consumer Price Index (CPI) shows that inflation is at 5.5%, the highest it has been since 1997 – driven by the recent surge in wholesale gas prices. This is expected to reach 7.25% next month when Ofgem increases the energy price cap by £693. In response, monetary policy is likely to tighten further. Although the £67 council tax increase in England may only form a part of wider cost pressures, its timing coincides with other increases. A 1.25% rise in national insurance contributions, equivalent to an increase of £230 for those earning a median income of £31,285, is set to come into effect in April. Meanwhile, soaring inflation has outstripped wage growth in real terms. Such cost pressures may seem modest when considered in isolation, but the cumulative impact can be substantial – particularly for lower-income households.

The most worrying thing is that we are only in the foothills of the cost of living crisis, with prices set to rise a lot more throughout this year. April is going to be a month of extreme strain. But not just for the retired or those in low income households

The rising cost of living is worrying for all of us.  AccountingWeb has a chillinng article by tax commentator Philip Fisher he notes:

Pre-pandemic, HMRC was owed £16bn; that sounds like a terrifying amount, until you discover that the figure now stands at £39bn, having peaked at £67bn in August 2020. The number of taxpayers in debt had risen from 3.8 million to 6.2 million (63%) by September 2021 and the average duration of repayment is 14 months.

To put this in context, that is 20% of all taxpayers now, apparently, being in debt. To put that another way, that’s all self-employed people and half of all tax-paying companies.

The average debt is £6,290, which is very high and must mean that there are some very big debtors out there.

Council tax along with the other increases will affect every household, working, retired and low income. If you were already spending nearly all your income on essentials, where do you cut back to manage when the prices go up? For many people the result will be deepening poverty, and just when there were green shots of improvement in some wards of the district.

Research by Policy in Practice for the Greater London Authority highlights the negative consequences of strict council tax collection policies for residents’ financial resilience and found that such practices did not lead to higher collection rates.

They could find no clear relationship between stricter council tax collection policies and higher council tax collection rates.

Higher council tax collection rates are associated with the generosity of a borough’s Council Tax Reduction Scheme and lower collection rates are associated with the level of poverty in the borough

Seeking to recover the full council tax bill, rather than a missed instalment, significantly weakens financial resilience, more so if charges for enforcement action are added

So where to turn

First, local welfare assistance schemes are a vital source of support when people face an unexpected expense such as a broken washing machine, cooker, bed, and  here in Kent we have Kent Support and Assistance Service (KSAS), who may be able to help you if you are having serious difficulties managing your income due to a crisis, or if you are facing exceptional pressures because of an emergency.

Second, from our Council support is available for residents facing financial difficulties. Research has shown that accessing the right benefits can be the thing that prevents someone from experiencing destitution.

The Shepway Citizen’s Advice Bureau, who can help with debt and other issues.

Folkestone Rainbow Centre

National Debt Line

Stepchange

Much of the power to protect the retired, low income and working in our district and county, from the rising cost of living lies in the hands of Rishi Sunak, and is complicated by world events.

The Shepway Vox Team

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