Late Changes to Council Tax Benefit Reforms

In a ministerial statement recently the government announced a significant change to its policy to localise Council Tax Benefit (CTB) from next April. The government is proposing to localise support for council tax from 2013–14, abolishing CTB across Britain and giving grants to local to design their own systems for providing support for council tax to low-income families. On top of this, the government planned to cut by 10 per cent the funding it provides for council tax support. This would save around £500 million a year.  The effect is that localisation would create considerable complexity just as Universal Credit is being rolled out with the intention of simplifying things.  Now, new proposals have been announced.  A £100 million package will be available to councils whose schemes meet a particular set of criteria that the government considers “best practice”. It will, apparently, be available for one year only. Councils will be eligible for the money if nobody currently on full CTB ends up paying more than 8.5% of their council tax liability (the costs of collecting such small amounts from very low income households who are not used to paying council tax mean that councils may well prefer to give a full rebate to such households); if the rate at which the benefit is withdrawn as income rises is no higher than 25% (compared with 20% at the moment); and if there are no “cliff edges” in the system.  Read more on the Institute for Fiscal Studies website.