The localisation of Council Tax Support: autonomy constrained
In April 2013, Council Tax Benefit (CTB) will be replaced with Council Tax Support (CTS). This marks one of the most significant reforms of the welfare system for sixty years. Unlike CTB which was a national system, CTS will operate locally: all 326 local authorities across England will have to devise and implement their own schemes.
The money provided by central government to fund the new schemes will be 10% less than under the former CTB system. Each local authority is responsible for devising its own scheme within the reduced budget. They are also responsible for any shortfall or surplus in the CTS budget.
Apart from one major requirement – that pensioners receive the same amount as they do now – councils were told they would have near full autonomy to create the new schemes. However, recent research by the New Policy Institute and False Economy, detailing what councils have been proposing since August 2012, calls into question how much autonomy councils actually have.
A sample of the proposed local schemes indicated that of 200 councils, only 20% intended to replicate the former system and make savings elsewhere in their budgets. The vast majority intended to make the savings by reducing the amount of claimants and/or cutting the amount of support they receive. By far the most common measure considered was to introduce a minimum payment of typically between 15-20% of council tax liability (proposed by 70% of sample councils). Other popular measures included removing the second adult rebate (50%) and lowering the maximum savings limit (35%).
However, within a remarkably short space of time much of these findings are now obsolete.
The amendment to the local government finance bill, which sets out that the reforms to council tax benefit will be subject to review after three years, has played no small part in this development as has the announcement by the Department for Communities and Local Government (DCLG) that an additional £100m of funding would be made available to councils to develop schemes that meet certain criteria of "best practice".
Although more than 200 local authorities had already drafted individual schemes, many are now amending their plans in order to qualify for the grant, are reopening consultations or extending their consultation periods. Additionally, it is plausible that councils will opt to "wait and see", absorb the cut and reappraise next year, going through the process all over again.
Despite the council tax benefit reform being heralded as an important step towards localism, the promise of autonomy that it offered seems unlikely to be realised. Furthermore, it is deeply worrying that with a mere 7 weeks remaining for councils to decide on the new schemes the future of council tax benefit in England remains highly uncertain.