Council tax hikes for poorest families

Could a poll tax-style debacle hit new plans for council tax? Funding for council tax rebates are being slashed by 10%. The move could also mean funding cuts for families where council tax credit is widely claimed. Upshot? If you're old and poor you'll be protected.

But if you're young and poor you'll be much more exposed to the changes.


Less benefits for the poor

Council Tax Benefit is by far the most popular means-tested benefit for sheer numbers: around 5.8 million households. Costing around £4.8 billion per year it's also worth an average £830. About half of claimants - 2.7 million households or so - are households containing people aged 60 plus while it's thought around three million working-age households also claim the benefit.

The London School of Economics reckons households from different age groups receive roughly the same amount. "This means that the required cut of £480 million must come entirely from the amount spent on working-age households," claims LSE research.
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"This policy," LSE authors Craig Berry and David Sinclair adds, "represents a recipe for intergenerational conflict. It seems unjust that one group of the poor population will be treated differently to another, based purely on age."

Court hassle

The move has also been criticised by the Institute for Fiscal Studies. Cutting support for council tax and then localising it are two distinct policy choices it says.

"Either could have been done without the other. Whether you think that cutting council tax support for low-income families is the best way to reduce government borrowing by £500 million will depend on your views about how much redistribution the state ought to do."

One consequence of this policy will be for councils to discourage poorer families from living in their boroughs - as well as the possibility of councils spending more time chasing (comparatively) tiny amounts of unpaid tax through the courts.

Chaos?

Labour have attacked the move. "We've been warning," said Shadow Work and Pensions Minister Stephen Timms, "for the last 18 months that Universal Credit was so badly thought through that chaos would ensue. Now, the IFS has revealed that the new benefit will be torpedoed by changes to Council Tax Benefit. One part of Government doesn't seem to know what the other part is doing."

He adds: "It looks like two parts of Government are simply at war with each other; and it's poor old ratepayers who could pick up the tab, with higher bills or worse services. Thousands could find themselves suddenly better off on benefits than in work."

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