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”
blarg1987
Please read back again there was more, as I said youth centres cost that much to run i.e. about £30K a year, so read into the detail more and as I said you have dozens if not hundreds of kids pass throuhg each year, they are off the streets not getting into trouble.
Brings down costs in anti social behavour = saving.
Kids stay out of gangs most gang culture leads to prison sentences – Reduces chances of kids going to prison = saving which self funds for one person.
Less prisons required = savings in prison numbers and therefore later on possble closures.
I accept it will not eradicate crime and is one example others include not outsourcing to the private sector as your the genius I am sure you are well aware that outsorcing costs can be anywhere from 10 – 20% more.
LB
No you didn’t. The 30K figure was from this
Well it costs at at the very least 30K a year to lock up someone
Hence the 30K I quoted.
I accept the premise, however, you need the numbers to back it up.
For example, I’d like an Aston Martin, paid for by the tax payers, on the grounds that would employ British workers to build it.
Employing British workers, who pay tax, how can you argue against it? Pretty obvious, its not a good use of money because its a negative return. The car depreciates, and it deprives other people of tax, adds to the debts.
How do we tell if your scheme isn’t in the same category, without a cost benefit analysis?
blarg1987
That requires more specilists then either you or myself have as we do not have all the raw data or time, the underlying point I am saying though is that my belief is in long term projects that cost money up front but will save money later will bring tax liabilities down.
You and I can not do cost benefit analysis in enough detail to show that it will work or that it won’t as we do not have enough data feely available.
LB
Well, I’ve no doubt there are projects that do make sense. There are also projects that are completely barmy.
From what you posted, you said you had the evidence that the youth centers were sensible, and had the numbers to back it up. OK, perhaps that was a bit of puffery on your side :-), maybe they are, maybe they aren’t. You’ve got a gut feeling that they are money making. I’ve a gut feeling, that its the other way. So I would rather give the tax back to people, and then they can make their own value judgements. Lots will make the choice. They will spend on sports clubs, or on tuition. Some won’t. I’m not going to force my spending decisions on them. You think that you should be making the decisions for them.
However, what we can tell, is the government is more barmy than sensible. After all, if their choices had been positive on the cost benefit, debts would be down, government assets generating cash, and the spending on prisons, police and justice, legal aid bill etc, slashed, because the need is down. I don’t see that, I see the opposite. They are being slashed, but I don’t see the need gone. That’s after vast spending by the state over the Labour period, and the first 3 years of the condems. Up in real terms.
Pretty strong evidence that over all, they are making bad decisions.
blarg1987
Well the linkI said to google shows evidence to support what I said that crime is down throuhg a combination of things including uouth centres.
People are also more barmy then sensible if we are being honest alot of Labours failures include to large scale spending was because everytime they said vote for us we will improve services although you have to pay more for them the people voted against it, after they said vote for us we won;t increase your taxes and improve services people did vote for them, so does that not show as strong evidence that we as people are also very good at making very bad decisions?