How Pickles’s brutal council tax benefit reforms will pulverise the working-age poor

Pickles' council tax benefit reform will disproportionaly affect the working-age population, incentivise local authorities to push poor people out to neighbouring boroughs, will penalise councils of poorer areas and create a patchwork of inconsistent systems.

By Ed Turner, Lecturer in Politics at Aston University’s Centre for Europe, and Deputy Leader of Oxford City Council.  The views expressed are his own.

The casual reader of the Department for Communities and Local Government website might think that the headline: ‘Supporting more people into work: councils to take the lead in boosting local economic prosperity’ was in some way good news.  Sadly not: instead it marked the start of the long-overdue consultation on cutting 10% off the bill for council tax benefit, and allowing councils to devise their own local benefit schemes.

 Of all the areas of the government’s welfare reform agenda, this is probably the most ill-conceived and unpleasant, for reasons of both principle and practice. 

Council tax benefit is cut paid to around 5.8 million people in Great Britain, at a cost of £4.8 billion (it’s a reserved matter and so the cut in funding will affect Scotland and Wales also, although these precise proposals will not). 

It is administered by local councils alongside housing benefit, and gives a full or partial subsidy to the council tax that would be payable by those on low incomes.  Currently, the government meets the full costs of council tax benefit; what we knew from the government’s spending review was that it intended to reduce the funding for council tax benefit by 10%, and allow local authorities to develop their own ways of paying it.

The government’s latest announcement includes one important new claim: that it intends to protect pensioners from any cuts by this policy.  As a result, the 42% of claimants of council tax benefit who are aged over 65 may be unaffected, although the government has not announced the details of how they will be treated. 

But of course this doesn’t affect the overall scale of the funding cut, so those below pension age will be hit nearly twice as heard.  In broad terms, if the average council tax per dwelling in England is £1,195, then the average poorer claimant of working age, prior to yesterday’s announcement, would have expected to fork out £119.50 per annum out of his or her benefits; now that sum will be around £200 per annum.

 This is wrong in both principle and in practice.  Let’s start with the principle.  First, the government has suggested that local authorities will be able to develop frameworks for council tax benefit costing less than their (reduced) government grant, and keep any difference. 

So an authority will be financially rewarded for cutting benefits to the poor.  In doing so, it might expect poorer people to move out of its area, further reducing council tax benefit bills, but adversely affecting neighbouring areas with more generous schemes, who will receive these desperate claimants – a classic ‘race to the bottom’.

 Secondly, the government’s consultation patronisingly suggests the reform will “Give local authorities a greater stake in the economic future of their local area, and so supporting the Government’s wider agenda to enable stronger, balanced economic growth across the country”. 

The idea that local councils are currently uninterested in levels of unemployment in their areas is pretty insulting, but more importantly, the government appears not to recognise that rises (and falls) in unemployment are, to a very significant degree, completely outside the control of local authorities.  So, if a major employer in a town closes, not only will the local council have to deal with the social consequences, it will also find itself severely out of pocket because it will have to pay out more in council tax benefit.

Thirdly, the regional effects of this cut are highly unlikely to be equal: instead, as Dan Paskins of the New Policy Institute has shown, the cut in funds, if applied equally, will hit the poorest areas hardest: Haringey, Hartlepool and Liverpool, for instance, are in the top ten of losers per dwelling.  In cutting funds for local government, it has been shown that the government has hit poorer areas the hardest, and this reform is set to exacerbate the trend.

The reform is also going to create mayhem in practice.  For a start, the government has the aim of simplifying the benefits and tax credits system by introducing the “Universal Credit”; it is very hard to see how having 300 different local schemes of council tax benefit will help achieve this aim. 

In addition, the hundreds of different council tax benefit schemes will be administered by local authorities.  This currently happens alongside housing benefit, but under the universal credit, the administration of housing support will shift to the DWP; there have been assumptions this will reduce staffing costs – but if the staff are still needed to process council tax benefit, savings will be drastically reduced. 

Moreover, the DWP, not local councils, will hold information (primarily on incomes and benefits) which will be needed to calculate the new council tax benefit entitlements, so the transfer of large amounts of data will be needed from the DWP’s highly risky, planned new IT system to local councils, just at the time when two systems of benefits will be running in tandem (universal credit for new claimants, administered by the DWP, and existing benefits including housing benefit for current claimants).  It’s hard to see this herculean task being accomplished without chaos.

Finally, local authorities, already under severe financial pressure, are going to be exposed to tremendous risks, potentially facing catastrophic funding shortfalls for council tax benefit for several years if, for instance, unemployment rises. 

 The consultation document encourages them to earmark contingencies for increases in the number of claimants as well as, in the document’s words, dealing with the risk that “Local authorities struggle to collect increased amounts of council tax from those households who experience a reduction in support with their bill”.  Pretty obviously, chasing people with little money for a proportion of their council tax will prove expensive, and will increase arrears.

 One suspects that this particular cut was announced with little consideration for the consequences, which is why it has taken nearly a year to come up with this pathetic consultation document.  Frankly, the government would do well to go back to the drawing board, rather than pressing on with a policy which is as economically inefficient as it is morally reprehensible.

Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.

73 Responses to “How Pickles’s brutal council tax benefit reforms will pulverise the working-age poor”

  1. Dave Citizen

    Divide and rule – yet again the Tory’s instinctive response to difficult socio-economic circumstances comes to the fore.

    Seems to me that the coalition’s vision of Britain’s future is one in which most of us cling on to whatever hard work comes our way while a seperated, affluent 10% run the show in their own interests.

    Goodbye democracy – hello elite managed UK plc. CALLING ALL RICH INVESTORS – we’ve got the plebs back under control, now you can come in and make a fortune and we’ll cream off the surplus)

  2. Noxi

    How Pickles's brutal council tax benefit reforms will pulverise the working-age poor: http://bit.ly/quGubl :writes Ed Turner RT @leftfootfwd

  3. Ed's Talking Balls

    ‘Seems to me that the coalition’s vision of Britain’s future is one in which most of us cling on to whatever hard work comes our way while a seperated, affluent 10% run the show in their own interests.’

    The Coalition must share the share goal which New Labour so ruthlessly and successfully pursued for its 13 years in power, then. Still, at least under this lot we won’t get ID cards.

  4. Anon E Mouse

    Dave Citizen – And how does this differ from Labour?

    At least being comfortable with people getting “filthy rich” we have the lowest paid taken out of tax altogether…

    Remember which party it was that doubled Inheritance Tax, removed the 10p tax rate from the poorest in society, wanted to put on a 1% jobs tax, rewarded the bankers, city slickers and spivs like no other government in history, wasted £billions on PFI and all their other quangos, presided on the biggest gap in inequality ever and has saddled this country with debts our grandchildren will be paying off.

    That affluent 10% you describe, Harriet Harman, Lord Hattersley, Alan Sugar – that type – have always existed and always will unless of course your land grab plan is put into action….

  5. Don Paskini

    RT @leftfootfwd: How Pickles's brutal council tax benefit reforms will pulverise the working-age poor http://t.co/qQakRfc

  6. Mike Rowley

    Article by our very own Cllr Ed Turner which shows how viciously this ConDem Govt is attacking poor people: http://t.co/GfgtRAr

  7. Dave Citizen

    Anon & Ed – I agree with pretty much everything you have just said – I was shouting at the tele when all that lot was being focus grouped onto me too. My take on it is that New Labour wasn’t Labour but a takeover by some very clever people with a smart talking front man. My belief (call it blind faith if you like) is that many people have woken up to the failure that was Blair & co. and are realising that economic policies based on sucking up to wealthy business interests can no longer deliver majority prosperity.

    More than perhaps at any time since the 40s, Britain needs a party that recognises the need for genuine change around the distribution of productive assets and the priorities that we mould our society around. My land grab (freeing up land and property for new entrepreneurs may be a better title?) is the sort of thing I think is desperately needed. Question is, does Ed M get it? – more blind faith on my part perhaps.

  8. Anon E Mouse

    Dave Citizen – I like “Land Grab” and I’ve capitalised it for you.

    Your problem is that whilst you are balanced in your approach there are an awful lot more who aren’t willing to see the truth if it hit’s them like a kipper – matthew fox, Leon Wolfson – those types who would deny white was white if Labour told them otherwise.

    Those useful idiots would vote for the Labour Party if a chimp was put up in a red shirt.

    So until Labour admit the mess they left this country in, just like the Tories admitted they were perceived as the “Nasty Party”, they have no chance of re-election. The whole of the world has moved rightwards in elections as it always does at times of economic uncertainty.

    The other problem is that Labour has lost it’s core working class vote. Not enough steelworks or mines left to make a block vote for them.

    Along with immigration the party keeps going along with things the public just don’t like such as the nonsense of climate change where, despite the fact the evidence shows the planet continues to get colder (especially the NASA actual measurements instead of computer models) and the bills and taxes in the future are going to cripple this country they keep battling on with it.

    And the real piss*r with it is that not more than 20 miles from where I’m typing this is enough coal in the valleys to power this country for the next 400 years and we continue to import coal from Germany.

    The world has gone mad Dave Citizen!

    Have a good weekend fella….

  9. AsifK

    RT @leftfootfwd: How Pickles's brutal council tax benefit reforms will pulverise the working-age poor http://t.co/y52ujsI

  10. Leon Wolfson

    Ed – Really? So the fact Labour failed to stop a slow slide towards capital, while making strides on child poverty is the same as a much bigger shift towards capital AND a reverse on child poverty since the election?

    Oh right, you’re applying your aspirations to everyone again.

    Anon – Funny man. No, if any politician says something I check. With Labour, it’s a double check. With the Tories, it’s a forensic examination. With the LibDems it’s bleach, I don’t want them on me.

    “So until Labour admit the mess they left this country in”

    Yes, I mean, before the bank crash (and the Tories urged LESS regulation…), the country was only in a better position that the Tories had left it, after all.

    “The other problem is that Labour has lost it’s core working class vote. ”

    No shit, by New Labour’s pandering to the Tory vote, rather than getting the moderate left majority out to vote.

    “despite the fact the evidence shows the planet continues to get colder”

    LMAO, what a surprise – you also deny science.

    You | Reality.

    Growth is *still* too high for you isn’t it…

  11. Dave Citizen

    Anon – Once the coal is back under the control of people who live in the communities close to it then maybe they will take more trouble to make good use of it.

    ‘The world has gone mad’, but I’d want to run that past a focus group before adopting it as the new mantra of the left!

  12. Anon E Mouse

    Leon Wolfson – You say; “and the Tories urged LESS regulation” but weren’t in power. It’s meaningless what they said just as Ed Ball’s recommending lowering VAT is meaningless.

    Pointless remark.

    Are you seriously saying that when Labour took over in 1997 the country was in more of a financial mess than the last election? Are you stark raving bonkers?

    Labour lost it’s core vote after people started buying their own council houses under Thatcher and only got it back under their best electoral asset ever, Tony Blair. With Tony Blair the winner, he brought the centre voters in, both right and left so the core vote was unimportant to the mass of supporters.

    Ed Miliband is unelectable as a leader which is why he’s only there thanks to the union dinosaurs. After his rejection by both the voters and then the party after 2015 the party will need to undergo a massive “New Labour” moment to try to get support. These things are cyclic and in times of austerity right wing governments always do well.

    As for Climate Change I haven’t denied anything, just stated the FACT that the planet continues to get colder despite the computer models used by the Climate Alarmists.

    But then presenting evidence to you never seems to work does it Wolfy Boy so please explain why you think the planet is getting warmer….

    Climate: http://www.thegwpf.org/science-news/3540-climate-change-far-less-serious-than-alarmists-predict-says-nasa-scientist.html

  13. Anon E Mouse

    Dave Citizen – Very good ;-}

  14. Clare Fernyhough

    So areas will be socially cleansed, tenants not only suffering income cuts, benefit cuts, housing benefit cuts and now council benefit cuts? To ‘encourage’ them to move to cheaper areas: total nonsense and bunkam!

    I’ve said this before, but I will say it again. I live in one of the cheapest areas to rent in the country, so where am I supposed to move to that is cheaper?! As a chronically disabled person am I supposed to live in a tent facing the winters we have had recently?

    No one has yet suggested where I live, but one thing is absolutely certain now: I won’t be able to afford to live in my home of 24 years or anywhere else for that matter.

    As bad as labour were with regard to ID cards, and all sorts of things, would they really have made millions of vulnerable people homeless? Let’s be clear about this, I will also repeat this again. 8 million social housing tenants of which over 5 million claim some level of housing benefit. The remainder are largely not well off even if they are currently able to pay rent. Of that group, once the ‘Affordable Rent Programme’ is initiated, rents will rise to upwards of £250 per week within 12 years. Long before that time, those on low incomes will find it impossible to afford social housing, and impossible to afford private lets, and way before unless all of the 5 million housing benefit claimants can stay with relatives or find some way to rent a property, they will become homeless. There are not enough homeless shelters now to meet demand: what kind of chaos will this cause?

    This attack on the working poor, pensioners (whom by the way WILL be affected by the rent changes despite what the government previously stated), the disabled and the unemployed is unprecidented. The last time the Conservatives just tried to force Poll Tax on the poor, we saw the consequences. These moves go much further and they also make no sense, as analysts have said that this enforced homelessness will cost local authorities more to address than they were paying out in housing benefits; London as a whole is a good example of this.

    I am just hoping that the public outcry when this happens will be so immense that the government will have to back track. Unfortunately, for many millions of people it will probably come too late; they will either be dead or they will be homeless with no realy prospect of being rehoused for the rest of their lives, because their homes have been given away to those who could afford the £12,000 or more rent, namely average wage earners.

    Within 10 years if not sooner, we will be viewed as a third world/first world country, similar to Mexico and India where great wealth and abject poverty exists side by side.

  15. Leon Wolfson

    @11 – Of course parties calls while out of power are relevant. You’re quite willing to sneer at Labour for what they call for today, your entirely partisan call “but, but, we CAN’T hold the Tories responsible for calling for even less bank regulation” is transparent and biased.

    And no, YOU are stank raving bonkers, or alternative illiterate – what I actually said was that BEFORE the financial crisis, the UK was in better financial shape than the Tories had left it.

    You deny science, deny jobs and deny the Tory actions consequences. Typical rich-boy politics.

    Let’s find one of MANY debunks of Spencer – http://www.realclimate.org/index.php/archives/2008/05/how-to-cook-a-graph-in-three-easy-lessons/

    @13 – And well before that, they’ll be turning off the utilities. WE’LL be turning off the heat – three of the five people living here are very low paid, and the two others are not paid that well either…we won’t be able to afford the heating this winter (and with an expensive meter, much electricity either).

    Heck, having to disconnect the internet access cuts you off from a large number of government services, pushes you onto expensive phone calls and pushes many OTHER costs onto you as well…

  16. Anon E Mouse

    Leon Wolfson – Pathetic response. Is that it?

    You’re like one of those Action Man dolls where the cord gets pulled and it repeats the same thing again and again irrespective of the question.

    You are blaming the tories although Labour had a record majority in government – that’s bonkers Wolfy Boy.

    And now you’re saying BEFORE the financial crisis Labour had got the economy in better shape. Better than what Wolfster – have you not heard of PFI projects because your grandchildren will when they’re still being paid for. (Why did Labour continue those disastrous Tory projects?) Why was the gold sold off at a historic low? Why didn’t the books balance from 2007 onwards?

    Finally when did I deny science? I did exactly the opposite and linked you to the DATA from NASA – not some computer model. That isn’t denying science – that’s exactly the opposite.

    The people denying science are the ones refusing to believe the data because it doesn’t fit their Tory invented Global Warming nonsense and by the way I’m AGAINST the “Green Taxes” scam – something you seem to favour despite the fact the poor will be disproportionally affected by it.

    Your arguments are incoherent, inconsistent and are as if Labour didn’t lose the last election. Love it….

  17. Leon Wolfson

    Oh, so sticking to the facts is “pathetic”, right. Because I don’t and won’t lie, you have to insult me.

    Your complete denial of any possible consequences of Tory policy positions, while still blaming Labour for everything that happens is pathetic.

    PFI? Oh, the PFI that the Tories are using with abandon, far far more than New Labour ever did. And you are still mistaking my having no use for the New Labour with my bitter hatred of Tories.

    And you are denying science *vigorously*. 98% of scientists are wrong, you cry. More in the field itself. I linked you to a thorough debunking of the data fiddling which you posted, but of course you’re allergic to the truth…

    Also, funny, you’re lying through your teeth AGAIN on green taxes. I most certainly do NOT favour the current structure of credits and feed-in tariffs. Instead, I support a carbon price at an EU level and nuclear power.

    My argument are utterly consistent, which is why you hate them. Your style of trolling, your need to come on sites which have different views than yours and spew venom across then, cannot deal with someone with consistent convictions and the courage to face your constant trolling down.

  18. Anon E Mouse

    Leon Wolfson – “You won’t lie” WTF!!! That must be the understatement of the decade with tales of the NHS being free because a credit card isn’t required, the numerous attacks on your life from goodness knows who this week!

    When did I deny any possible consequences of Tory positions? You are trying to excuse Labour’s slavish following of Tory policies. I know – I voted for them my whole life pre-Brown.

    As for the Tory invented Global Warming rubbish I am comparing actual temperature measurements with computer models which have been consistently shown to be wrong with alarmist lies about the glaciers in the Himalayas melting by 2035 blah blah blah.

    As for this site I have been posting here since it started and your incoherent and inconsistent ramblings brighten up my day Wolfy Boy – what I can’t believe is that you are so bone headed you cannot see how unattractive your dishonest position is. Next you’ll be telling me there are free people in the world who vote for Socialist governments. Love it….

  19. Antonia Bance

    @Helen_Barnard it's going to be awful. Link here http://bit.ly/p9AxN3

  20. Helen Barnard

    Potential effects of council tax ben changes: cf IFS warnings post budget too via“@antoniabance http://t.co/BWACh2R

  21. Rob Andersen

    @ Leon Wolfson
    u really believe the tories handed over a worse book in 97 than the last lot did? 97 was falling inteerst rates, falling unemployment, structural deficit that had been falling and was about to show a sSURPLUS (u may need to look this up), year after year of increasing foreign direct investment into UK, the north east with nissans most EFFICIENT car plant in the world, it goes on- yet u have the temerity to suggest the recent handover was for a better state of affairs.
    You are clearly one of the debt clowns, the so called economists who seek to enslave this nation under a mountain of debt- u perpetuate lie after lie jst to drive a political point and u simply don’t care the price to the man in the street.
    You either don’t understand the scale of the problem and it’s complexity, possibly you are simple minded, but to suggest the recent handover was anything like 97, it’s criminal. Do you even stop to consider that in 97, with the largest lead in the house ever (was it 447 seats labour) , the coffers awash, faklling unemploym,ent, blair could have set out on any re-modelling of the uk he saw fit- there was the advantage in parliament and the money to enact the change- but look at where we ended up, yet u perpetuate more of the same. And u thinki the man in the street hasn’t spotted the fraud u are?

  22. Rob Andersen

    re the article
    for years people have talked about abuse of the system- then someone tries to reform it, opposition agrees, then goes screeming to the press and followers start bleeting about homelessness, unfairness etc… all this backdropped by just about everyone knowing of someone who was taking the mick out of the system, but this was always dismissed as anecdotal- a whole generation of anecdotal stories, and turned out it was all true!! and yet the left clings on to them… and u still want the man in the streets vote? it’s his money your chucking down the drain, so good luck wity that one…

  23. Council Tax freeze is a tax cut for the rich | Left Foot Forward

    […] How Pickles’s brutal council tax benefit reforms will pulverise the working-age poor – Ed Turner, August 4th […]

Leave a Reply