Council tax benefit reforms will cut the original amounts available by 10%, leaving working-age adults worse off.
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Chris Goulden is a programme manager for the Joseph Rowntree Foundation
Council tax benefit reforms will cut the original amounts available by 10%, leaving working-age adults worse off.
Research published today for the Joseph Rowntree Foundation by the Institute for Fiscal Studies highlights some of the problems and opportunities caused by the decision to localise council tax benefit (CTB) from 2013-14. As well as devolving administration of the benefit, the amounts available will be based on 90% of what would have been spent on CTB in each area.
The department for communities and local government has also said that pensioners – as well as some locally-defined vulnerable groups - will be protected from cuts because they are less able to raise their incomes. Governments in Scotland and Wales will be responsible for deciding how to deal with devolution of CTB. In each nation, the cuts are concentrated in more deprived areas (see Chart 1).
Chart 1: Average annual cut per dwelling by IMD quintile of LA:
It is a decision that travels in the opposite direction to the major welfare reform of universal credit (UC), which is centralising benefits within a single wrapper under the charge of the department for work and pensions. While there are some sound reasons for localisation, given that it is a rebate of a local tax, it is likely to create headaches for claimants and for local administering agencies, as well as for central governments.
Not only is the 10% cut likely to affect people already in or close to poverty, the protection from this cut provided for pensioners means that working-age adults are hit much harder; on average losing almost a fifth of their current support and, in some areas of the country, up to a third.
At present, two out of three recipients are passported onto CTB based on entitlements to other benefits that are being phased out under UC. This is going to be difficult for councils to cope with in designing their own systems. An added complication is these systems will need to run alongside old benefits and UC for four years as UC is phased in.
• Budget 2012: Breaking down the benefits bill 21 Mar 2012
• Could the welfare bill signal the death of social housing? 22 Dec 2011
• Council tax freeze is a tax cut for the rich 3 Oct 2011
Given all these complications, and the many other issues that councils have to worry about, it surely would have been much better to have incorporated CTB into UC in order to stick with its sensible guiding principles of simplification and making work pay.
Will there be a U-turn? Unlikely.
Chart Notes:
• IMD quintiles are derived by dividing LAs in each nation into 5 equal-sized groups according to their overall IMD score. Quintile group 1 contains the least-deprived fifth of LAs in each country, quintile group 2 the second least-deprived, and so on up to quintile group 5, which contains the most-deprived fifth.
• Source: Author’s calculations using DWP (2010), VOA (2012) and Scottish Assessors Association (2012). See report for details.
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42 Responses to “Council tax benefit reforms will hit working-age adults in poverty”
Amanda Ramsay
Council tax benefit reforms will hit working-age adults in poverty, writes @Chris_Goulden: http://t.co/NRsE48fm
Abigail Scott Paul
Council tax benefit reforms will hit working-age adults in poverty, writes @Chris_Goulden: http://t.co/NRsE48fm
4D Research
Council tax benefit reforms will hit working-age adults in poverty, writes @Chris_Goulden: http://t.co/NRsE48fm
Rabih Chaaban
Council tax benefit reforms will cut the original amounts available by 10%, leaving working-age adults worse off http://t.co/RXs6qC4t
Pulp Ark
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