Councils have 'incentive and means to force out poor', warns IFS

2 Nov 10
The Institute for Fiscal Studies has warned MPs that changes to Council Tax Benefit, outlined in last month’s Comprehensive Spending Review, mean that local authorities have both an incentive and a means to force poor families out of their areas.

By David Williams

2 November 2010

The Institute for Fiscal Studies has warned MPs that changes to Council Tax Benefit, outlined in last month’s Comprehensive Spending Review, mean that local authorities have both an incentive and a means to force poor families out of their areas.

Giving evidence to the Treasury select committee yesterday afternoon, acting IFS director Carl Emmerson reiterated concerns about the policy, which will cut the benefit by 10% and hand it over to council control in 2013/14.

Asked if he was concerned that councils would use the benefit to encourage people to leave their area, Emmerson said: ‘There is a concern that councils will have both the financial incentive and a mechanism by which they will get low income individuals to move out of their area. That is a worry.’

He also contrasted the move, which could result in ‘over 100 Council Tax Benefit systems operating across England’, with the Department for Work and Pensions’ proposed ‘universal benefit’ system, which he said would be ‘very transparent’ and easy to understand.

Emmerson added that changes to Council Tax Benefit would make the benefit system ‘harder to work as a whole’ because it would complicate decisions about moving areas to look for work.

‘I can see that those who want greater localism will value the fact that the decisions over how Council Tax Benefit should operate will be taken at a local level, but I can just see lots of benefits from having a clear structure that can be integrated with other benefits.’

Emmerson also called for an interim Spending Review in 2012, halfway through the four-year Spending Review period, to give the government the chance to adjust its cuts programme.

He issued what appeared to be a rebuttal to Chancellor George Osborne’s comments, that he had no ‘Plan B’ on the cuts programme. Emmerson suggested that the government ‘should acknowledge that the world is uncertain, that plans might need to be revised, and that a Plan B or Plan C in its back pocket wouldn’t be a bad thing either’.

 

 

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