JRF Comment on Postcode Poverty Report

  • Council Tax: Hefty Bills for Poorest Families Could Lead to Postcode Poverty

    Read full blog by Chris Goulden,
    Head of Poverty at the Joseph Rowntree Foundation. 

    28/3/13

     

    Research by the New Policy Institute for the Joseph Rowntree Foundation has canvassed all 326 English local councils about their plans and analysed the impact on families on low incomes. This shows that 2.4 million such families are facing a tax increase of an average of £138 over the coming year.

    The national Council Tax Benefit (CTB) scheme has been abolished and local authorities have had to devise their own systems, albeit with 10% less funding. A decision was made by the UK government to protect pensioners, which means tax rises are mainly being passed onto those of working-age.

    Although nearly 60 councils in England (as well as the Scottish and Welsh Governments) will retain their current arrangements, absorbing the cut into their overall budgets, most will increase the tax on residents whether they are out of work or not. A smaller number - around 300,000 - will have to pay over £300 a year more and 1.9 million will have to start paying Council Tax for the first time.

    Two out of three families getting the old CTB were already below the income poverty line and the new support schemes will eat into their incomes even further at a time when they can ill-afford it. [There are] also shows 300,000 families hovering just above the poverty line, who are in danger of falling below it once those large tax increases have to be paid.

    This is going to be difficult for councils to collect, but even harder for people to pay. Making up the shortfall will be beyond most, with working hours under pressure and benefits falling behind inflation.

    And the impact of the changes is clear - they are going to hit the pockets of families in poverty.



    Council Tax Benefit Reform Creates Postcode Lottery for Poorest

    Read full blog by Sabrina Bushe,
    Researcher at the New Policy Institute.

    28/3/13

     

    Today, JRF publishes research conducted by the New Policy Institute on the localisation of Council Tax Benefit (CTB).

    The headline finding is that 2.4 million low-income families will pay on average £138 more in council tax in 2013/14. Of these families, nearly 1.9 million currently pay nothing in council tax as they are considered too poor. Around 150,000 families will pay £300 or more a year extra in council tax.

    Not every council is changing how Council Tax Benefit works - 58 of councils (18 per cent) are maintaining support at the same level. The majority, however, are requiring everyone, regardless of income, to pay some council tax. This minimum payment varies in amount from place to place (and can work quite differently depending on how it is implemented).

    People in the same circumstances but in different council areas will now face different levels of support. For example, a family containing someone in receipt of Disability Living Allowance in the Wiltshire local council area will not be any worse off in April, as the disabled are a protected group in this scheme. But the same family living in the Derby Council area (for example, in a band A property, with a weekly income of £209) would be £180 a year worse off under the new local scheme.

    This reform has been promoted as an important step for local democracy that allows for policy design that more effectively reflects local needs or priorities. A variety of different schemes may also help to determine the optimum combination of work incentives and protection of the poor.

    The variety of different schemes will, however, add complexity and reduce the transparency of the council tax benefit system. The localisation of CTB also has serious implications for fairness, as claimants with the same needs and incomes are entitled to different amounts of support based on where they live, rather than their ability to pay.

     

     


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