Council tax benefit: cost accounting

http://www.guardian.co.uk/commentisfree/2013/jan/30/council-tax-benefit-cuts

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The council tax, successor to the poll tax, was conceived in fear and introduced in haste. It depended on two factors. Ministers entrenched the huge switch away from funding local spending through locally raised taxes to central funding with which they had tried to buy off opposition to the poll tax. And they introduced a council tax benefit system that removed the burden altogether from 6 million of the poorest householders. All that is about to change, as councils are given the power to take their own decisions about who gets benefit and central government cuts its contribution by 10%.

Today, the last day of January, is the deadline for local councils to explain which of their voters will lose benefit, and by how much, when the new devolved system comes into effect in April. It may not bring the losers out on the street, but already councils everywhere are nervously anticipating the impact of sending the poorest a bill that could amount to as much as £600 a year for a tax from which they have previously been exempt. According to figures gathered by the New Policy Institute and analysed by the Resolution Foundation, while Scottish, Welsh and about 50 English authorities will absorb the cost and continue as before, a majority of English authorities will introduce significant cuts in council tax benefit that will not only hit those who've never paid it, but could double the bills for some of the poorest working households who do.

Ministers defend their policy as part of a bigger scheme of devolving powers to local government. But, only months before councils were required to publish their plans and two years after the proposals were first announced, there was panic in Whitehall at their likely impact. A transition fund was introduced, pensioners were exempted, and a ceiling was imposed on what proportion of council tax those who are now on maximum benefit can be charged. So much for devolution. Meanwhile, the plan also cuts across one of the principal attributes of the universal credit. Instead of unifying all benefits under a single agency, council tax benefit is now removed to a different agency to be applied at differing levels, undermining the single greatest advantage of the universal credit – its transparency.

Meanwhile, the underlying problem of the government's soaring benefits bill – the crisis in affordable housing – is untouched. Housing costs are rapidly emerging as the biggest worry for families. Homelessness, already rising sharply, is predicted to increase further. But housebuilding is in the doldrums and reform of the private rented sector is slowing. In the great sweep of benefit reform, the £480m saved by cutting support for council tax benefit is small beer. It is likely to have a profile out of all proportion.