Abolishing Council Tax Benefit
More than a million families could lose 16% or more of their council tax allowance under government proposals to replace Council Tax Benefit (CTB) with local authority-run schemes. But the language could lull you into acquiescence …
If you visit the Department for Communities and Local Government’s website you’ll find a consultation on plans reassuringly entitled “Localising Support for Council Tax in England.” (You can see the TUC response to the consultation here.)
What this means is that in England from 2013-14 Council Tax Benefit will be abolished.
Of course, there are millions of families who simply can’t afford Council Tax, so the abolition is a serious matter for them. The consultation document insists that CTB will be replaced with “localised schemes” in which local authorities decide “who should pay less council tax and how much less they should pay”.
All in accordance with the spirit of localism I suppose. But there are limits – whatever schemes local authorities design, they will have to continue to protect pensioners and to “support the positive work incentives that will be introduced through … Universal Credit”. The consultation document hints that schemes in which “council tax support is withdrawn quickly on entering work” will not be approved.
Well, that sounds fair enough, you may think.
After all, we don’t want pensioners forced into poverty by their Council Tax bills, and we don’t want to make employment less attractive to people on out-of-work benefits.
But, as always with this government, it’s the cuts, the cuts, the deep, deep cuts that make sure these plans are going to hurt the poor and weak.
Because the localisation of council tax support is being introduced alongside a 10% reduction in central government support, designed to “deliver savings of around £500m a year on the current council tax benefit bill across Great Britain.”
Put these requirements together (10% cut, protect pensioners, do not undermine work incentives) and this “localism” will leave local authorities with very little choice – apart from which groups of vulnerable people to hit hardest.
DWP figures show that, in June 2011, 38% of Council Tax Benefit recipients were aged over 65:
In 2009/10, spending on CTB stood at £4,974 million, so a 10% cut in spending on all recipients will amount to £497 million. (2011/12 prices).
The average weekly award of CTB recipients hardly differed for those under and over pension age, so we can estimate spending on those under pension age at £3.1 billion. A £497 million cut taken only from their benefits will amount to a 16% cut, not 10%.
But this won’t be the same cut for every working age family. For workless families (who are, of course, especially likely to be poor) the cut will almost certainly be higher. In June, 708,880 CTB recipients were in employment, most of whom will be under pension age. It will be very difficult to reduce their entitlement without affecting their work incentives, so they are likely to face cuts of less than 16%. But the corollary of this is that working age people not in employment will face a cut that is even higher.
This group includes 250,520 people passported to CTB because they receive Employment and Support Allowance as disabled people.
All but 17,750 of the 1,673,310 families with children currently receiving CTB are under pension age. There is no breakdown of these families by employment status, but it seems very likely that more than one million families with children will face these deeper cuts, inevitably increasing the number of children in poverty.
The answer is not to add disabled people and children to the list of groups local authorities have got to protect when they design their new schemes. Everyone who receives CTB at present is, at the very least, on the verge of poverty. Excluding children and disabled people from this cut would simply exacerbate the problem for those remaining.
The only realistic way to protect vulnerable groups is to withdraw the planned ten per cent cut.