How council tax benefit cuts have hit the poorest

More than a million low-income households are now required to pay the tax after the coalition cut support by 10 per cent last year.

While the baleful effects of the bedroom tax and the benefit cap have been well documented, far fewer have noticed the other large welfare cuts that was introduced last April: the abolition of Council Tax Benefit (CTB). Until that month, those households deemed too poor to meet the monthly charge received CTB to cover all or part of their bill. With 5.9 million recipients, it was claimed by more families than any other means-tested benefit or tax credit.

But last year the coalition scrapped the payment and transferred responsibility for the new regime from central government to local councils. At the same time, it cut the fund for support by 10 per cent. Councils in England were left with the choice of either maintaining current levels of support and imposing greater cuts elsewhere, or asking those who received a full or partial rebate to make a minimum payment. They were required to protect pensioner households, leaving the working-age poor to bear the burden of any increase. 

New research published today by the IFS shows what the results have been. Seventy per cent of English local authorities have introduced minimum council tax payments (forcing many poor households to pay the charge for the first time), with more deprived areas more likely to introduce them owing to a larger reduction in funding. Of the two million working-age households that could have claimed full relief under the previous system, 70 per cent (1.4 million) are liable to pay some council tax in 2013–14, with half liable for at least £85, a quarter liable for at least £170, and 10 per cent liable for at least £225. The new system led to an average increase of 30-40 per cent in the number of people seeking help from the Citizens Advice Bureau in relation to council tax debt between July and September 2013. Last October, Labour found that up to 500,000 vulnerable people had been summonsed to court for failing to pay the monthly charge. 

Labour-run local authorities were more likely than others to introduce minimum council tax payments, although the IFS notes that "this seems to be a reflection of the characteristics of LAs where Labour has a majority rather than a result of political preference". Once these factors were accounted for (most notably, the size of the funding cut and the number of low-income pensioner households), Conservative-majority councils were found to be more likely to introduce minimum payments: 14 per cent more likely than Labour councils and 25 per cent more likely than Lib Dem ones. 

Stuart Adam, a senior research economist at IFS and the co-author of the report, said: "Localising council tax support has, of course, led to considerable variation in the level of support available. Low-income working-age families are now likely to receive more help with their council tax if they live in a better-off area without too many low-income pensioners among their neighbours. Conversely working-age people living in poorer areas and in areas containing more low-income pensioners receive less help."

In response, Brandon Lewis, the local government minister, said: "Spending on council tax benefit doubled under Labour and is costing taxpayers £4bn a year - equivalent to almost £180 a year per household. Our reforms to localise council tax support now give councils stronger incentives to support local firms, cut fraud, promote local enterprise and get people into work. We are ending Labour's something for nothing culture and making work pay." But the steep rise in council tax is one reason why, for too many, work still isn't paying. 

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Council-run housing in Lambeth on November 5, 2012 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Labour will soon be forced to make clear its stance on Brexit

The Great Repeal Bill will force the party to make a choice on who has the final say on a deal withg Europe.

A Party Manifesto has many functions. But rarely is it called upon to paper over the cracks between a party and its supporters. But Labour’s was – between its Eurosceptic leadership and its pro-EU support base. Bad news for those who prefer their political parties to face at any given moment in only one direction. But a forthcoming parliamentary vote will force the party to make its position clear.

The piece of legislation that makes us members of the EU is the European Communities Act 1972. “Very soon” – says the House of Commons Library – we will see a Repeal Bill that will, according to the Queen’s Speech, “repeal the European Communities Act.” It will be repealed, says the White Paper for the Repeal Bill, “on the day we leave the EU.”

It will contain a clause stating that the bit of the bill that repeals the European Communities Act will come into force on a date of the Prime Minister's choosing. But MPs will have to choose whether to vote for that clause. And this is where Labour’s dilemma comes into play.

In her Lancaster House speech Theresa May said:

“I can confirm today that the Government will put the final deal that is agreed between the UK and the EU to a vote in both Houses of Parliament, before it comes into force.”

Later that day David Davis clarified May’s position, saying, of a vote against the final deal:

“The referendum last year set in motion a circumstance where the UK is going to leave the European Union, and it won’t change that.” 

So. The choice the Tories will give to Parliament is between accepting whatever deal is negotiated or leaving without a deal. Not a meaningful choice at all given that (as even Hammond now accepts): “No deal would be a very, very bad outcome for Britain.”

But what about Labour’s position? Labour’s Manifesto says:

“Labour recognises that leaving the EU with ‘no deal’ is the worst possible deal for Britain and that it would do damage to our economy and trade. We will reject ‘no deal’ as a viable option.”

So, it has taken that option off the table. But it also says:

“A Labour approach to Brexit also means legislating to guarantee that Parliament has a truly meaningful vote on the final Brexit deal (my emphasis).”

Most Brexit commentators would read that phrase – a meaningful vote – as drawing an implicit contrast with the meaningless vote offered by Theresa May at Lancaster House. They read it, in other words, as a vote between accepting the final deal or remaining in the EU.

But even were they wrong, the consequence of Labour taking “no deal” off the table is that there are only two options: leaving on the terms of the deal or remaining. Labour’s Manifesto explicitly guarantees that choice to Parliament. And guarantees it at a time when the final deal is known.

But here’s the thing. If Parliament chooses to allow Theresa May to repeal the European Communities Act when she wants, Parliament is depriving itself of a choice when the result of the deal is known. It is depriving itself of the vote Labour’s Manifesto promises. And not only that - by handing over to the Prime Minister the decision whether to repeal the European Communities Act, Parliament is voluntarily depriving itself of the power to supervise the Brexit negotiations. Theresa May will be able to repeat the Act whatever the outcome of those negotiations. She won’t be accountable to Parliament for the result of her negotiations – and so Parliament will have deprived itself of the ability to control them. A weakened Prime Minister, without a mandate, will have taken back control. But our elected Parliament will not.

If Labour wants to make good on its manifesto promise, if Labour wants to control the shape of Brexit, it must vote against that provision of the Repeal Bill.

That doesn’t put Labour in the position of ignoring the referendum vote. There will be ample time, from October next year when the final deal is known, for Labour to look at the Final Deal and have a meaningful vote on it.

But if Labour supports the Repeal Bill it will be breaching a clear manifesto promise.

Jolyon Maugham is a barrister who advised Ed Miliband on tax policy. He blogs at Waiting for Tax, and writes for the NS on tax and legal issues. 

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