New local lotteries

Hollispatricia4x3.jpgLabour Peer Patricia Hollis on the government's deeply flawed plans for Council Tax Benefit

Social security benefits for people of working age– such as JSA, Income Support, Incapacity benefit, Housing benefit – national benefits, demand led, will from next year be brought together by DWP into one simple single benefit, Universal Credit (UC).

Except that Council Tax Benefit (CTB), has been excluded.

Instead, it will be funded by DCLG and each local authority will invent its own council tax discount scheme. In the name of localisation.

So what’s wrong with this the government’s approach to localisation? Rather a lot.

Council Tax rebate will no longer respond to need. Now, if a factory closes and more people claim, they are all eligible for it. Now, if a charity runs a take-up campaign, everybody eligible gets it.
Not in future. Because the money will come from a capped grant, which not only doesn’t increase if need increases, but is actually 10% lower than the previous year’s funding. Councils will have to make cuts to the benefit.

It gets worse. As DCLG has insisted that all pensioners, who form around half of CTB recipients, must be protected from these cuts, it means 20% of cuts have to fall on all other claimants. As DCLG has also required councils to respect Equalities legislation, it means that perhaps cuts of 30% to 40% will fall on the remaining claimants, such as the working poor. Last man standing stuff.

Your claim, in other words, depends on how many other people are claiming. A high number of pensioners? You get less. A high number of disabled people? You get less. An increase in take-up? (and only 55% to 65% of people claim CTB now). You get less. A complete lottery.

One final warning. Each local authority must construct its own Council Tax rebate scheme. Some 200 to 300 ‘local’ schemes”, each different from its neighbour. More cost and confusion.

It is already clear that some councils will do a flat rate cut of, say, 20%, on every claimant, including people on JSA who have always been fully ‘passported’. So councils will be collecting £2 or £3 a week from many thousands of people who have never paid before, and don’t want to pay now – the poll tax scenario – which led to distress, distraint, and the imprisonment of 5000 people for non-payment.

Other councils will tie the right to discount to living in a band A or B property – which means poor families with children in slightly larger homes will be facing substantial Council Tax bills for the first time, perhaps pushing them below the poverty line.

Other councils will tinker with the existing CTB scheme. Some will include Disability Living Allowance as income, others will not. Some will include child maintenance and child benefit, others will not. Some will protect carers as “vulnerable”, others will ignore them. Some will rule you out if you have savings over £6000, others will allow you to keep £16,000. Every scheme different, reflecting the perceptions and attitudes of local councillors.

The group that will be hardest hit are people in low paid jobs who depend on housing benefit and CTB to to make it worth working. They will face the greatest cuts of all.

And the effect on the government’s flagship Universal Credit? It sabotages it.

Simplicity? Instead of one single benefit, one set of forms, one taper, one payment, we now have a second means tested benefit, a Council Tax rebate, running alongside it, and in some cases overlapping UC, so that the same slice of income is means-tested twice over.

Correction: there will be 200 or 300 different council tax rebate schemes running alongside UC. What you get will depend on where you live, how many pensioners and how many other claimants are living in your local authority. Your discount will depend not on your need but on their need.

Work incentives? With two tapers, one for UC, one for Council Tax discounts, some people could lose 95p in the £ –just 5p better off for every pound they earn.

It’s deeply unfair, costly and undermines work incentives; so I am sure that by 2020 CTB will be built back into UC. Just as a previous Tory government had to replace poll tax by council tax.

They never learn.

Baroness Patricia Hollis of Heigham is a backbench Labour Peer and a former Work & Pensions Minister

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