Council Tax Support: postcode poverty

Today, the Joseph Rowntree Foundation publishes research conducted by the New Policy Institute on the localisation of Council Tax Benefit. In April 2013 Council Tax Benefit will be abolished and replaced with schemes devised by local authorities, but with a 10% reduction in spending. The report looks at how local authorities have designed their schemes and how it will affect claimants of Council Tax Benefit.

The headline finding is that 2.4 million low-income families will pay on average £138 more in council tax in 2013/14. Of these families, nearly 1.9 million currently pay nothing in council tax as they are considered too poor. Around 150,000 families will pay £300 or more a year extra in council tax. 

But these headline figures obscure the great deal of variation that comes with having 326 different benefit systems across England. Not every council is changing how Council Tax Benefit works – 58, or 18% of councils, are maintaining support at the same level. The majority, however, are requiring everyone, regardless of income, to pay some council tax. This minimum payment varies in amount from place to place (and can work quite differently depending on how it is implemented).

Before, the amount of council tax paid was based on income and savings and council tax band. Now many more factors need to be taken into account: income, savings, location, and age (pensioners are completely protected from the changes). Location now effectively determines how much additional council tax people will have to pay.

People in the same circumstances but in different council areas will now face different levels of support. For example, a single unemployed person relying on Jobseekers Allowance in Brent will have to pay £136 more a year in Council Tax but someone in the same circumstances in Oldham will have to pay £202 more. Both of these individuals were previously deemed too poor to pay any council tax. Now, they are considered well-off enough to pay council tax and despite having the same income will have to pay different amounts. 

Likewise, a family containing someone in receipt of Disability Living Allowance living in the Wiltshire local council area will not be any worse off in April, as the disabled are a protected group in this scheme. But the same family living in the Derby Council area (in, for example, a band A property, with a weekly income of £209) would be £180 a year worse off under the new local scheme. 

Even within local authority areas persons in similar situations may be treated very differently. For instance, Ealing Borough Council is protecting lone parents with children under 5. So, a lone parent in Ealing with a child under the age of 5 receiving full Council Tax Benefit will get the same support under the new local scheme. However, a lone parent with a child of 5 years and over will have to pay £205 more in council tax per year. 

The reform has been promoted as an important step for local democracy and one that allows for policy design that more effectively reflects local needs or priorities. A variety of different schemes may also help to determine the optimum combination of work incentives and protection of the poor. The multiplicity of different schemes will, however, add complexity and reduce the transparency of the council tax benefit system. The localisation of CTB also has serious implications for fairness as claimants with the same needs and incomes are entitled to different amounts of support based on where they live.

View the research findings here
View local level analysis here