Recalling his days as leader of Bradford Council, he said: “Now, I haven’t been a councillor for 20 odd years. When I was a councillor I was putting away something to deal with this. Most authorities did. But Birmingham ploughed on regardless. So Birmingham has a particular problem due to its inability to wake up and smell the coffee.
“Now I have a choice. I can either say to Albert, ‘it’s your own fault, get out of it’, in which case the people of Birmingham suffer, or we could look at creating ways in which we could try to help Birmingham through the problem of this enormous sum of money, more than £700 million
“It’s an enormous sum of money. It’s so big that I’ve decided I can’t deal with it in the settlement. So we’re going to have to deal with Birmingham separately to be able to get them out of the mess that they are in. And we’re actively looking at ways we can achieve that.
"It wouldn’t have mattered whether David Cameron, Gordon Brown, Ed Miliband or Mao Tse-tung was running the government, the level of public spending was going to come down."Eric Pickles
“But it’s probably the biggest, most difficult problem that I have had to deal with, and it’s entirely self-inflicted.”
The Local Government Secretary attacked councils for cutting services – and suggested that some councils were deliberately cutting services used by the least wealthy in an attempt to make the Government look bad.
“It wouldn’t have mattered whether David Cameron, Gordon Brown, Ed Miliband or Mao Tse-tung was running the government, the level of public spending was going to come down.
“They were warned it was coming down, they were warned by Labour it was coming down.
“And some chose to ignore that and some have chosen to use the poor as a battering ram.
“And I think that’s a dereliction of duty.”
Councils could raise extra cash by putting up council taxes, he said, although they are now obliged to hold a referendum if they plan an increase above the level set by the Government.
“We do give them the possibility, if they say they can’t cope, they can put the council tax up. I’m not stopping them putting the council tax up. They can do what they want.
“The difference is they’ve got to go to the people, and say: ‘We’d like to increase the council tax, will you vote for it in a referendum?’
“And funnily enough, in all these cries and screams of we can’t cope, that’s the one option they are not prepared to go with.”
He condemned proposals to make low-income households pay a share of council tax as “disgusting” .
The possible change, which critics have compared to the introduction of the poll tax, will mean that some city residents who currently pay nothing could face bills of £244 a year or more. Many other authorities are taking similar steps.
It follows the Government’s announcement that it is cutting funding for council tax benefit in the city by £10.9 million.
Birmingham City Council will decide how to respond early next year. But in a consultation published in September, it said it was considering asking residents who currently pay nothing because they are unemployed or on a low income to pay 24 per cent of the standard bill.
This could mean £244 a year for a Band C property, up to £500 a year for a large property in Band H.
The council says it has to raise the money somehow, and the only other option would be to cut spending – which is already being cut by £62 million this year. Mr Pickles said: “What I thought was disgusting, objectionable, what I thought was irresponsible, was authorities who rather than helping people get into work, were going to tax them.
“That struck me as being obscene.”
Mr Pickles threatened to change the rules to stop councils charging council tax on poorer residents.
Councils wanted power but they hated taking responsibility for difficult decisions, he said.
“Everyone wants local power except when it’s a difficult thing. Then it’s ‘oh no, let the Government give us more grant.”
He added: “If I was a city boss now, there’s no way I’d think about charging people on benefits but I would think about making the system better.”
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