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Working families are likely to bear the brunt of reform for some authorities, as ministerial projections ignore local caseload
The reform of council tax benefit has been hailed by critics as the return of the poll tax, but supporters see the government’s plan to allow councils to design a local council tax support system as localism in action and an effective way to reduce welfare spending.
There is some truth in both arguments, but the figures used by ministers – including claims it will only lead to a 10% cut in support for households currently receiving the benefit – are misleading. For authorities such as Gedling, the government edict that pensioners must be protected from any of the 10% cut in expenditure on council tax support actually results in a 20% reduction for working age claimants. We, like many other councils, have a 50/50 split in the number of pensioners and working age claimants who receive financial support to pay their council tax.
The assumptions that underpin the financial case for this policy are also worrying. The predicted year-on-year reduction in caseload for those claiming council tax support, made by the Department for Work and Pensions and the Office for Budget Responsibility in the last comprehensive spending review – has proved to be far from correct. The assumed 2.3% reduction in council tax support claims for 2013-14 is some distance from the 2.94% increase in claimants here in Gedling over the 12 months to June 2012.
These Treasury assumptions will mean a reduction in the level of national funding for council tax support – with an increase in caseload, as we have the cut to working age families becomes even greater.
The financial case for such a reform is at best weak; the projected year-on-year saving of £480m contained no consideration of the cost of each local authority having to totally redesign a local scheme for administering council tax support, and consult on it with its residents. The lack of growth in the economy, as demonstrated by the recent 0.7% fall in UK GDP, dealt a further blow to the financial case for this policy, as do the (not unrelated) rising number of people claiming council tax support.
Many local authorities are also beginning to worry that a 10% reduction in government grant for council tax support now looks more likely to be more than 12%, when calculated using the grant illustrations outlined by government. In Gedling, the cut in grant funding from government will only cover 87.3% of our current costs for council tax benefit, leaving us with a grant reduction of 12.67%.
The further this policy is scrutinised, the clearer it becomes that it will struggle to produce significant savings for the taxpayer. Funding allocations from government for this reform, which are based on economic assumptions that reflect anything but the reality, impose a significant financial risk on councils at a time when budgets are already under immense pressure.
As always with such reforms, the headline may be good but the devil is in the often hidden detail.
This article was written by me and first published by the Guardian on Wednesday 29 August 2012 at 09.01 BST
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