The Coronavirus pandemic has necessitated a shift in the way in which we, as a society, think about vulnerability. Historically, we have tended towards a moral definition of vulnerability, which gives rise to a set of obligations and duties which have been enshrined in legislation such as the Social Services and Wellbeing (Wales) Act, 2014 to protect those perceived to be the weakest members of our communities. Notably, both the UK and Welsh Governments have sought to protect those considered to be extremely medically vulnerable whilst at the same time making provisions for those who are financially vulnerable. This has created a dilemma for local authorities who were already under significant financial pressure prior to the pandemic: how do they maintain funding for essential services and their statutory obligations while helping those who may be struggling to pay?
The scale and pace of the changes in people’s working lives in recent months has meant that many have seen their incomes drop. With many not having a savings buffer, the pandemic has shone a spotlight on how financially vulnerable many people in our communities are. By early April, 34% of renters in Wales had fallen behind, or expected to fall behind, on their rent and one in nine (11%) had already fallen behind on one or more household bill. With benefits not always being sufficient to cover large household expenditures, increasing numbers are having to turn to foodbanks because they are unable to meet their basic needs.
A number of steps have been taken to provide financial support for those unable to work. This has included mortgage holidays; the suspension of evictions from social and privately rented accommodation; help from utility companies for those struggling to pay their bills, and the expectation that lenders will provide temporary, exceptional and immediate support for those consumers facing payment difficulties due to circumstances arising out of coronavirus. However, a key liability which has been excluded from these is council tax.
Even before lockdown, nearly a quarter of Welsh adults liable for council tax said that they had found it ‘difficult’ or ‘very difficult’ to keep up with council tax payments, whilst one in seven said that they had missed a payment in the last two years. Those whose income varies month by month including the self-employed, living with a mental health condition, being a single parent and being a tenant in the private rental sector have all been identified to be at a higher risk of missing payments. These are the very people who have been hardest hit financially by the Coronavirus pandemic. This has implications for local authorities who are dependent upon the revenue generated by council tax payments, income from leisure centres and parking, and business rates to provide services including those targeted at the most vulnerable.
Local authorities run residential care homes and sheltered accommodation; support vulnerable adults and children in their homes and in care settings; provide domiciliary care for people in their own homes and help those discharged from hospital as part of their statutory duties under the 2014 Act. They are also involved in distributing food to those in need and in poverty including the provision of free school meals; helping and accommodating the homeless, and providing other essential services (highways, environmental health, public protection and refuse collection etc). The anticipated economic recession will increase the demand for public services as more become reliant upon Universal Credit. This in turn will increase demand for the council tax reduction schemes and reduce the number of households liable to pay council tax.
In Wales, public services and their contracted partners have identified ways to better respond to vulnerable debtors, with the threat of imprisonment for non-payment of council tax being removed. The Council Tax Protocol for Wales commits to taking a more consistent and resident-focused approach to debt, arrears and enforcement, and whilst exemptions for the mentally incapacitated have been promoted. The Welsh Government has also promoted the council tax reduction scheme and eligibility for discounts/exemptions as mechanisms to relieve the individual burden whilst some local authorities have made commitments to suspend enforcement action. But this is likely to have lasting consequences for local authorities for whom council tax is a major source of revenue – the WLGA has suggested that local authorities are facing £33 million per month in loss of income.
There has been some support with the UK Government acknowledging the essential role that local authorities are playing in response to Covid-19, initially providing an additional £95 million to Wales, followed by a further £24 million in May. However, even with the contributions made by the Welsh Government including the additional funding made available in the supplementary budget, it is estimated that it will take a generation for councils to pay for the coronavirus pandemic.
Following a prolonged period of austerity, a renewed squeeze on funding will lead to a point where difficult choices need to be made so that local authorities can fulfil their statutory obligations to support the most vulnerable. An appropriate balance will need to be struck between relieving burden on individuals and generating the revenue required to pay for essential services. Unless structural funding and distributional issues are addressed, local authorities will be faced with choosing which vulnerable group to prioritise — a position that we should seek to avoid.
Read our next blog in this series: The Coronavirus pandemic and the cost of health