YVONNE FOVARGUE MP

FIRST PUBLISHED BY:  PARLIAMENTARYCOMMUNICATIONS LTD

COUNCIL TAX CHANGES WILL HIT THE WORKING POOR

The government's proposal to localise Council Tax benefit (CTB) while cutting funding by 10 per cent will hit hardest the working poor, writes Yvonne Fovargue MP.  This reform is part of the decentralisation agenda and its aim is to create stronger incentives for councils to get people back into work and so support the work incentives that will be introduced through the government's plans on universal credit. 

The communities and local government select committee expressed scepticism over the level of local control that councils will actually have saying, 'the proposals for the localisation of Council Tax support seem to us to provide an illusion of delegation with a minimum of real discretion, virtually guaranteeing that the funds available to support working-age unemployed people will be squeezed'. However, the decision to abolish the national CTB from 2013-2014 and instead provide local councils grants to create their own systems will leave them struggling to design replacement schemes. Government has proscribed that existing and future pensioners are protected at current levels leaving no discretion in this area and in determining a scheme councils must also leave untouched the single persons discount. 

Therefore the cash funding cut, which equates to £2.6million for my local authority, Wigan in Greater Manchester will fall onto 18,000 local working-age households, already struggling against a backdrop of the current difficult economic conditions. The 10 per cent cut in the £5bn spent on CTB means that local authorities need flexibility to target support to the poorest and most deserving in society. Government inflexibility poses the danger that those on higher incomes will receive discounts at the expense of the needy. 

The timescale to completely redesign the existing scheme, consult, agree, put in place the administrative process and ensure that IT can deliver the scheme is very tight. Existing working age customers receiving CTB will see a reduction in amounts awarded – before any protection is applied for locally defined vulnerable groups. There is a potential for reductions in collection rates for Council Tax – Council Tax will need to be collected from customers who are receiving a decrease in their existing Council Tax benefit – this could be the first time that some people have had any liability to pay. Collection could be difficult and involve high levels of direct contact to recover the debt. 

This change compounds the effect of other welfare reforms. Households renting in the private sector will have seen a reduction in their housing benefit by December 2012. There are further reforms to housing benefit due in the social sector in April 2013. Local authorities will have to design schemes where very difficult decisions will have to be taken about caps on entitlement, minimum awards, amended capital limits and income tapers and even changes to disregarded income (child benefit, war pensions), or find money from within existing resources to plug the shortfall – politically difficult and at odds with child poverty strategies. 

Hard working families are already squeezed, councils are squeezed and it is inevitable that, yet again, the poor and vulnerable will suffer at the hands of this government.

READ WHAT: ERIC PICKLES ‘SECRETARY OF STATE’ SAYS ABOUT OVER-CHARGED COUNCIL TAX.

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