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
I don’t understand your first question.
On your point 2, you are correct. So long as the reduction in heating costs, exceeds the cost of the loan, its a viable option. Doesn’t mean you have to make that choice, because there may well be lots of other choices with a better return. But in general, its correct, baring an assessment of risk. The plan may not work.
Now you mentioned you had research on the spend now, get the money back later in not spending on the police, courts, jails.
I’d like to read it. Care to post a link?
Meanwhile, there’s 5,300 bn of debt off the books, on top of the 1,100 bn, and other debts.
http://www.ons.gov.uk/ons/dcp171766_263808.pdf Bottom of page 4. 2 years out of debt, so make sure you increase the figure by the above inflation rate increases.
That’s the issue. The government has taken people’s pension money and ‘invested’ it. However, there investments have produce no assets (there is no fund) and since spending exceeds taxation, there are no savings.
That’s the hard evidence, and that puts the onus on you to justify more spending, when the evidence is that its been a disasterous choice.
e.g. 130K cost of a state pension, versus 560K fund that a 26K a year worker would have had, if the government hadn’t ‘invested’ their money.
So where’s the link. If we spend now, with numbers, what cuts will we be able to make going forward.
blarg1987
So in short you have not done the numbers on my idea of increasing youth centres to decrease crime?
I admit I have not done the maths as I do not have all the raw data, as you would be unable to. However if it links to a fall in crime which it has been and reports show it is expensive to lock people in jail and build new jails, then if crime is reduced that saves money, you do not need to be an accountant to work that one out.
If you want to but figures on why not dpo FOI’s to work out how many children are off the streets because of youth centres and how much it costs as a service then subtract that from the cost if these people are imprisioned later in life for crime.
LB
So in short you have not done the numbers on my idea of increasing youth centres to decrease crime?
==============
You’re the one who has said you’ve done the basic maths. I’d like to see your mathematics on.
Now it looks to me that you haven’t got any numbers, and are asking me to go and research the cast iron ‘it saves money’ claim.
Shouldn’t you as the proposer have the information available to back up your argument?
Hence I’ll keep pushing the point. We’ve had decades of such investment. Those investments should either be generating cash for the state, removing the need to pay tax, or they should be the sort of project you’re proposing, that saves money. Saving money means cuts in spending.
Well given the 5,300 pension debts, hidden off the books, but published by the ONS, its clear that spending people’s pension contributions hasn’t led to any assets that generate cash. Given the overspend, 700 bn on taxes of 550 bn, they haven’t lead to reductions in spending.
The evidence is against you.
blarg1987
I did provide a basics as per previous posts it is down to you to rprove to the contrary if you want a more detail analysis not me so again I ask you please prove a detailed break down to show it won’t work not the cast iron it wont work counter argument.
LB
Which post? There are no numbers bar a 30K a year imprisonment cost.
What’s the cost of the schemes?
How many people?
What cuts get made?
What percentage success rate?
Not mentioned. Hence no one can analyse.
Lets take an example. Lots of 5 a day organisers. How’s that investment going? Hmm obesity up. That’s a fail by anyone’s book.
Cost massive. Pensions and debt payments still to come. Negative benefits.