Welfare

No Clear Benefit

Matthew Pennycook
Matthew Pennycook
Alex Hurrell
Alex Hurrell

Low-income families will see their council tax bills rise by up to £600 a year from April. As a result of council tax benefit reform, No Clear Benefit shows that three-quarters of local authorities are set to demand increased payments from the 3.2 million poorest working-age households who currently pay either no council tax or a reduced charge. Families are facing a hike of more than 330 per cent in the most severe cases.

It comes as the government hands responsibility for council tax support to England’s 326 local authorities, along with a 10 per cent cut in funding for it. The government has insisted that pensioners are fully protected from any rise under the new localised system, known as council tax support, meaning that working-age households will bear the full brunt of the changes.

Key findings

  • Nearly 6 million families currently depend on CTB support to ensure that they can get by on extremely low incomes. At a time when many local authorities are struggling with the fallout of tight Spending Review settlements, the nature of CTB reform – in cutting current funding by 10 per cent and imposing rules that ensure that support for current and future pensioners is protected – has left many local authorities with little choice but to introduce less generous systems of local support.
  • The result is that in just over two months millions of working-age CTB recipients – both employed and unemployed – will face increases in their Council Tax bills. In many cases, particularly for single parents who work part-time and depend on childcare and couples with children where only one partner is in full time work, these increases will be substantial. The precise social and economic implications of these changes are as yet unknown. Yet we can be reasonably confident that the result for some of the poorest households in England, when considered within the context of stagnant wages and ongoing reductions in tax credits and other in-work support, will be extremely painful. There is not only a very real possibility that large numbers of CTB recipients currently receiving maximum support will struggle to pay small amounts of monthly Council Tax but also that some of the poorest households in England, who rely on partial support to help them meet their Council Tax liabilities, will see their hard-pressed household budgets squeezed even further and, in future years, their work incentives undermined.

Further reading

In credit?
Assessing where Universal Credit’s long roll-out has left the benefit system and the country
·
Alex Clegg
Happy new tax year
Six big changes to pay, tax and benefit policy – and how they affect households across Britain
·
Torsten Bell, Adam Corlett, Alex Clegg
Pensioner progress
The impact of personal tax and benefit changes since 2010 on pensioner families
·
Mike Brewer, Alex Clegg, Lalitha Try
Matthew Pennycook
Matthew Pennycook Former Senior Research and Policy Analyst
Alex Hurrell
Alex Hurrell Former Senior Analyst