Progress | Centre-left Labour politics

Stealth cuts hitting cities hardest

A day after thousands of students marched in London against the well documented and unfair hiking of tuition fees, it is worth considering a less well known form of unfairness around student funding.

Students are right to be angry about tuition fees rising – people don’t like promises being broken.

The tuition fee rise, however, is a very public cut in government funding around students. Behind the scenes the government has used the system to deal yet another blow to local government finance.

One of the greatest anomalies in local government finance is student property exemption from council tax.

Big four or five bedroom houses, often converted to house seven, eight or nine, are not required to pay council tax. Even when they get their bins collected, with more rubbish, and streets cleaned just as often. When I was a student (a couple of years ago) my landlord collected £1960 a month from the 7 of us. Yet he is not expected to pay the c£2,000 a year our non student next door neighbours had to pay for use of the exact same council services.

This in itself is an injustice, ordinary families paying when student landlords don’t and increasing the damaging cuts on the poor, vulnerable and young in cities, in order to allow people making huge profits on the backs of students to pay nothing. Something I am amazed has never been corrected.

It’s also an injustice against councils. The blow was lessened by the government’s compensation scheme, built into the local government finance grant. Despite being significantly less than would be collected it reduced the gap. Why local or national government should cover any of the cost for the council tax not required of my former landlord – I do not understand.

Recent analysis done by Newcastle city council, shows the government has decided to cut the support to councils from £1,415 to £1,035 per annum – a 27 per cent cut.

This stealth cut means Nottingham city council, with approximately 9,000 student properties, will lose £3.477m in funding per year. This with £22m of grant cuts this year, in addition to £60m in cuts last year.

Sadly, this boils down to just another example of this Tory-led government changing the system to target cities.

It is cities which have had to deal with the bulk of cuts to local government finance. In 2011/12 Nottingham’s grant was cut by 8.44%, Liverpool 11.34% and Manchester 11%. Compared to Dorset’s 0.25% increase, Surrey’s 0.3% cut and Buckinghamshire’s 0.6%.

Now this student compensation cut will hit cities even more. Students represent 12.5 per cent of Nottingham’s property base. The government is moving the goal posts to ensure the cities are being hit hardest once again – acting as Robin Hood in reverse to protect the leafy rural Tory heartlands.

Add this to council tax benefit devolution, business rates proposals and many other impending changes and this Tory-led government is using stealth cuts to hit the poorest cities, and therefore the poorest people, hardest.

So, while I hope the next Labour government rectifies the entire system of council tax exemption, which forces both national and local government to foot the bill despite the excessive rents of many student landlords, and redresses the damage of the many other loaded changes brought in by this government. And it’ll be Labour councils in Britain’s cities left trying to protect the poorest and most vulnerable in our communities.

Photo: Dave Hamster

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Jamie McMahon

Jamie McMahon is a Labour Party activist working for the Labour Group of Nottingham City Council.

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