The wrong reform - at the worst possible time

 

Share
Related Topics

Britain’s poorest households - already struggling to cope with falling wages, rising living costs, and a series of cuts to tax credits and benefits - are about to receive another blow. And very few of them know it’s coming.

Within weeks they will receive an unexpected council tax bill in the post. Many will assume it is a mistake.  Not surprisingly those providing debt advice, as well local MPs, are bracing themselves for a surge of concern and complaint.

The reason for this is an impending change to council tax benefit. The Government is cutting the amount spent on helping those on the lowest incomes by 10 per cent at the same time as it is transferring responsibility for administering support to local councils.

Centrally-set rules mean that councils will protect all pensioners leaving them with a stark choice: either substantially increase the bills of the working-age poor who currently receive council tax benefit or find the savings elsewhere from already shrinking budgets. In political terms it amounts to the decentralisation of blame and pain.

Today’s Resolution Foundation report reveals that faced with this invidious choice three-quarters of English councils are set to introduce less generous systems of council tax support. Over a third of these are planning to introduce schemes that charge affected households an extra 20 per cent of the total bill. Harsher still, many councils will for the first time include child benefit in their calculations of a family’s income, meaning that those with children will face the biggest hikes. Only around a quarter of English councils feel able to absorb the funding shortfall within other budgets as the Scottish and Welsh administrations are doing. 

It is a policy with few redeeming features. It is punitive on the poor. It will be fiendishly complex, hard to administer and end up in hard-pressed councils chasing non-payment from some of the poorest households in the land. It’s also likely to result in significantly larger bills in 2014 than this year. And, perhaps most surprisingly, it undermines the goal of universal credit – the Government’s own flagship welfare reform – by increasing the effective tax rates of those on low pay.

If recent history has taught Whitehall anything, it is to tread very carefully when it comes to introducing local property taxes on the poor.  There are other ways for the Government to find the savings it is seeking:  our regressive system of council tax is ripe for a new top band raising revenue from the most expensive properties. This is the wrong reform made at the worst of times.

Gavin Kelly is chief executive of the Resolution Foundation think tank

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Sales Executive - OTE £30,000+

£16000 - £30000 per annum: Recruitment Genius: They are looking for individual...

Recruitment Genius: IT Project Coordinator / Manager

£25000 - £40000 per annum: Recruitment Genius: A Project Coordinator is requir...

Recruitment Genius: Mortgage Advisor - OTE £95,000

£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Trainee Vehicle Inspectors / Purchasers

£20000 - £40000 per annum: Recruitment Genius: Trainee Vehicle Inspectors / Pu...

Day In a Page

Read Next
The possibility of Corbyn winning has excited some Conservatives  

Labour leadership: The choice at the heart of the leadership campaign

Jeremy Corbyn
Pablo Iglesias, the leader of Spain’s anti-austerity party Podemos  

Greece debt crisis: Trouble is, if you help the Greeks, everyone will want the same favours

Charlotte McDonald-Gibson Charlotte McDonald-Gibson
Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

EU 'family' needs to forgive rather than punish an impoverished state

An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

Gaza, a year on from Operation Protective Edge

The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
How to survive electrical storms: What are the chances of being hit by lightning?

Heavy weather

What are the chances of being hit by lightning?
World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

World Bodypainting Festival 2015

Bizarre and brilliant photos celebrate 'the body as art'
alt-j: A private jet, a Mercury Prize and Latitude headliners

Don't call us nerds

Craig Mclean meets alt-j - the math-folk act who are flying high
How to find gold: The Californian badlands, digging out crevasses and sifting sludge

How to find gold

Steve Boggan finds himself in the Californian badlands, digging out crevasses and sifting sludge
Singing accents: From Herman's Hermits and David Bowie to Alesha Dixon

Not born in the USA

Lay off Alesha Dixon: songs sound better in US accents, even our national anthem
10 best balsamic vinegars

10 best balsamic vinegars

Drizzle it over salad, enjoy it with ciabatta, marinate vegetables, or use it to add depth to a sauce - this versatile staple is a cook's best friend
Wimbledon 2015: Brief glimpses of the old Venus but Williams sisters' epic wars belong to history

Brief glimpses of the old Venus but Williams sisters' epic wars belong to history

Serena dispatched her elder sister 6-4, 6-3 in eight minutes more than an hour
Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy