The wrong reform - at the worst possible time


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

Volunteer Trustee opportunities now available at The Society for Experimental Biology

Unpaid Voluntary Position : Reach Volunteering: Volunteer your expertise as Tr...

Early Years Educator

£68 - £73 per day + Competitive rates of pay based on experience: Randstad Edu...

Nursery Nurse

£69 - £73 per day + Competitive London rates of pay: Randstad Education Group:...

Primary KS1 NQTs required in Lambeth

£117 - £157 per day + Competitive London rates: Randstad Education Group: * Pr...

Day In a Page

Read Next
Good old days? Social justice had real meaning for those who lived through the war  

Social justice is political pie in the sky

DJ Taylor

Street harrassment: There are some things only a man can explain

Katy Guest
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam