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
So how much do you spend per year now.
When do you make the cuts?
How much do you cut from the police, the courts, and the prison service?
ie. The basic maths.is that if you borrow money at the moment, you have to pay it back in the future with interest on top.
You scheme only makes sense if you earn more money, or make savings or cuts, in excess of the interest payments. Assuming that its a 100% dead cert.
So put some numbers to it.
Now lets look back. Brown invested how much? Since it doens’t look like that’s resulted in tax revenue increases, the payoff is in terms of savings, or cuts. Pick whatever word you want.
Why aren’t we seeing the results?
blarg1987
Well sonce your the genius why don’t you do the maths on the said proposal or show me whther it will cost more or less as you are sure it won;t work then you will have the evidence to back it up.
I can back mine up by a report of a Manchester borough where the police over a decade focused on the next generation of kids, now 10 years later it has greatly reduced crime, so saving tax payers money.
When did I say I agree with Brown? be like me saying you agree with Thatcher without any actual evidence.
LB
I’ve done the maths. It’s not likely to work.
1. You don’t end up targeting just the criminals, since other people want the perks of society, not just the bills.
2. It’s borrowed money. That compounds up. End result, you’ve taken people’ spension cash, and just give then 20p in the pound back.
You could ask a worker on 26K a year. We’re going to take, 420,000 worth of pension off you, so we can run services for people who we think are criminals. That’s just another way of looking at your proposal.
Why not give them the democratic choice? Or are you worried they would say no?
What’s the link for your report?
So back to Brown and Blair. It was all about investment. I’ll ask again.
1. How much was invested?
2. What income are these investment generating?
3. Or if its saving ,how much has been saved?
It’s a simple question, or rather it should be.
blarg1987
Can you publish the data on the particular idea I mentioned on here NOT all goverment debt.
1 What perks are you on about?
2 its called invest to save, if a person takes out a loan to insulate their house and pays it back through reduced heating bills then the excess is a net saving.
And I think if it went to a vote people would approve it which i have nothing against :).
You did not answer my point so I refuse to answer your point about Blair and Brown untill you answer my question when did I say I agree with Blair and Brown?
blarg1987
Evidence can be supplied googling Manchester CDRP and if you delve throuhg its history, crime has fallen over the last decade.