Katie Schmuecker, research manager for the Joseph Rowntree Foundation, looks at the sting in the tail of council tax benefit.
Yesterday was the deadline for councils in England to put in place their plans for managing the localisation of council tax benefit, an issue that has been concentrating the minds of councillors and their officials in town halls across the land; Katie Schmuecker, research manager for the Joseph Rowntree Foundation, offers them some useful context
For those that haven’t followed this closely, the government decided against including council tax benefit in the new universal credit payment, and instead is passing responsibility to local authorities to provide them with a growth incentive.
Good news for localists you might think, only this decentralisation had a sting in the tail: it came with a 10% cut to the budget, and a requirement to protect pensioners. This latter condition means the cut is effectively 19% for the average council, according to IFS research (pdf) for the Joseph Rowntree Foundation.
The New Policy Institute has been monitoring council plans as they’ve been announced. Based on this data, a new Resolution Foundation report (pdf) has calculated 74% of local authorities can be expected to require new or higher payments towards council tax from the lowest income households.
This comes at a time when many costs are rising while household incomes – whether from wages or benefits – are stagnant or falling.
Looking at these changes through the lens of JRF’s Minimum Income Standard (MIS) work paints a stark picture. This research calculates the minimum income different types of household need to achieve an adequate standard of living in the UK today, based on detailed discussions with members of the public.
Taking a couple with two children as an example, we looked at two scenarios for how these changes might affect low income households – in family one neither adult is working, in family two one adult works full time, earning the minimum wage:
The results of this are clear: under the existing system these two families already lack sufficient income to meet the Minimum Income Standard, and the changes to council tax benefit will push an adequate income that little bit further out of reach.
Some may look at these figures and think it doesn’t make a great deal of difference in the grand scheme of things. But it is not simply the reform to council tax benefit that we need to think about. So much in the benefits system is changing, most notably the introduction of universal credit and the decision to uprate benefits and most tax credits by just 1% per year.
While each individual change may be small, one thing we can be sure of is those with the least to begin with run their households on tight margins. Seemingly small changes to income can tip households into poverty or debt. But the far bigger issue will be the combined effect of the changes in train. Rather than be distracted by each individual change, it is their cumulative impact on low income households that we need to keep an eye on.
See also:
• JRF: Council tax benefit reforms will hit working-age adults in poverty – June 1st, 2012
31 Responses to “JRF: Council tax benefit – the sting in the tail”
LB
Over 7,000 bn of debt, linked to inflation
700 bn plus of spending
550 bn of taxes.
Tell us how you get that solved?
Newsbot9
I’ve said so many times. But hey, it’s your Tories who want to open the floodgates of inflation.
blarg1987
Simplist scenario is inest to save so things like youth centres which are long term projects should reduce crime for the next generation, this in turn will reduce resources required in this area so saving tax payers money, as you mentioned before the debt pile has been mounted since ww2 so schemes like the above will bring it down over the same period of time as it has massed :). Only thing that is stopping it is short term politics based on things to get elected in 5 years rather then things that benefict society ofver 20 – 30 or 40 years.
LB
OK, do the maths.
How much are you going to spend on youth centers?
How much money does that generate? Or if its savings, which cuts result as a consequence?
blarg1987
Well it costs at at the very least 30K a year to lock up someone, plus the police time, court time and resources on top. A youth centre costs a simular amount to run per year and looks out for tens if not hundreds of kids.
So if we do the basic maths you can say the scheme is self funding at the very least in the short term will make small savings but in the longer term over several decades as crime is reduced the savings will greatly increase.
The thing that would be cut is crime and since it is a generation thing no redundencies will be required.
That is just one example, there are many others, but as i said it will take decades just as the over spend as you claim took decades :).