Friday, 29 June 2012

Council Tax Benefit

It appears that low-income working families are heading for financial pain and an administrative shambles

This week, I joined MPs from all parties in challenging Liberal Democrat Minister Andrew Stunnell about the Government’s proposals for a 10% cut in each council’s council tax benefit budget.

It appears that Eric Pickles, the Conservative Secretary of State doesn’t care about the concerns, and that his Liberal Democrat Under-Secretary of State doesn’t understand them.

Under the Government’s proposals, the council tax benefit budget of each council is to be cut by 10% from 2013 and each council is meant to design a local scheme to achieve that reduction.

As the Government is exempting pensioners and the single-person discount from any reduction, the cuts will inevitably fall hardest on low-income working families. Thus, the biggest cuts in council-tax benefit will be felt by low-income working families in those areas which have the highest proportion of pensioners.

MPs from all parties challenged the Minister about the Government’s proposals:
  • The biggest cuts will hit working-families in the poorest economic areas harder than in wealthier areas
  • In areas with a high proportion of pensioners and single-person households, low-income working-families could face a 30%+ cut in council tax benefit
  • The IT software providers to local authorities have consistently said that it will not be possible to have new schemes in place to meet an April 2013 start, because the Government itself is unable to provide the detailed regulations
  • Because the Government is centralising housing benefit (under the Universal Credit) but localising different council-tax benefit schemes. This means that for any income changes, people will now have to notify – and provide the necessary evidence to - the council and the Job Centre (or online) separately.
  • Big cuts to council-tax benefit will create work dis-incentives at the very time when Government says it wants to make work pay.

As each day passes, it is becoming clearer to MPs from all parties that the Government simply hasn’t thought things through.

Eric Pickles is relying on local councils taking the blame for cuts and administrative shambles, which are entirely of his making.

Ministers can’t even answer these three simple but crucial questions:
  • Will universal credit be counted as income in the means test for council tax benefit?
  • Will local authorities have access to universal credit data when calculating people’s council tax benefit?
  • Do you accept that councils will not be in a position to implement any new system in time for April next year, because the Government is unable to specify the regulations in time?”

I am now very concerned about the way the Government is just moving on and failing to listen.

I just think back to 1999 when Sheffield City Council (then Liberal Democrat controlled) privatised the housing benefit service and transferred it to Capita in a rushed and botched way.

I remember my constituents, often elderly, coming to my surgeries in tears; not because they had done anything wrong, but because the administration of their benefits was in chaos and, as a result, the arrears on their council tax and rent had risen. They were distraught because they had never been in arrears in their lives.

I am really worried that we will end up in a similar situation next year.

You can read the full debate at: