From the TUC

Abolishing Council Tax Benefit

24 Oct 2011, by in Society & Welfare

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 The consultation document hints that schemes in which “council tax support is withdrawn quickly on entering work” will not be approved.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.

5 Responses to Abolishing Council Tax Benefit

  1. Clare Fernyhough
    Oct 24th 2011, 3:48 pm

    I am claiming ESA and in the ‘support group’. I also ‘under occupy’ my house rented from the local housing association, and I am supposedly a ‘secure’ tenant’, although I feel far from ‘secure’ at present.

    After my illness deteriorating 2 years ago, I was financially reassessed for my care and now have to pay £230 every 4 weeks (it was free when I worked!), which represents all of the benefit I receive within my benefits for care. This bill is a great struggle to pay during the winter when I am trying to heat a home 24/7

    I have calculated that from April 2013 I will also face approximately an extra £135 bill per monthe (and rising year on year) for the under occupying levy for living here, plus the extra 16% of council tax. I may just be able to manage to pay this ‘fine’, but I suspect that the new Universal Credit and the Personal Independence payment will be much lower. This will basically leave me in abject poverty, unless there is somewhere cheaper for me to move to, which there isn’t because I live in an area with the cheapest rents in the UK.

    I will by any means stay in my home of 24 years: at 48 years old and chronically ill, I can neither afford to start all over in a new home or do have I the health to cope with a move. I hope that all disabled people will do their utmost to stay in their homes; if you are a secure tenant you have a right to it.

    The new policy is not designed to free up homes for families. For example, if I was a disabled person with private means living in a 3 bedroom property, and I could afford to pay the full rent, they would not force me to move.

    The housing policy as a whole is sinister; only middle income earners will be able to afford to rent a property like mine, and then they will be given massive discounts in order to purchase it, but as yet no minister has explained where the millions of dispalced tenants will live (apart from ‘boats). What is even more concerning about the council tax policy is that everyone has to live somewhere, and every property – no matter how cheap the rent is – attracts council tax; you cannot cut your costs in any way. The housing policy and council tax policy combined will impoverish millions of poor and vulnerable people, who may ultimately become homeless.

    I hope the government are prepared for a humanitarian crisis and civil unrest as a consequence. If people rioted about the Poll Tax the last time they were in power, they will certainly revolt when faced with losing their homes and having nowhere else to go: you can only push the poor so far. Hopefully, on this issue alone, this government will not be re-elected in 2015.

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  4. Coastliner
    Nov 8th 2011, 7:22 pm

    The gravy train is coming to an end. Life is expensive and the the country cannot continue to hand out tax payers money hand over fist to subsidise people through all manner of benefits.
    Welfare reform is long overdue.

  5. derek ellis
    Nov 21st 2011, 11:06 pm

    i am A tax payer, have been my working life, does this mean that they the government is going to reduce the amount the take by the threat of force from me. No it certainly does not, removing council tax benefit will not benefit me any way at all. They will probably try and take more.

    enough is enough, i think i will just sto paying this unlawful usurpation from hard working individuals within society.

    if we stop feeding the parasite in local authorities there would be enough money to support the people who need it.

    in the county their are 6 million public servant, 22% of the workign population, this is where the cuts should come from. not from producers