By Vivienne Russell | 21 June 2012
Welsh people on low incomes are set to be £74 a year worse off following the government’s localisation of Council Tax Benefit, the Institute for Fiscal Studies has found.
From 2013/14, local authorities will be given grants equivalent to 90% of what would have been spent on the benefit in their areas. Councils will determine the local allocation criteria for this reduced pot.Welsh councils have more options to spread the cuts evenly than their English counterparts, as they are not required to protect pensioners’ entitlement. However, lower-income households would still be hit by the cuts, the IFS said.
Its research found that 80% of the benefit spending went on the lower-income half of households and almost half (43%) on the lowest-income fifth.
If Welsh councils are to save the full 10%, even very aggressive means-testing would not leave the poorest families unaffected, the IFS found.
It said the 10% cut amounted to £24m in total. Spread evenly among the 328,000 claimants this would add up to £74 per household.
The think-tank suggested that a fairer option would be to reduce the single-person discount. Lowering it from 25% to 20% would raise an amount equal to 10% of spending on the benefit, and the money would come predominantly from better-off households.
Stuart Adam, a senior researcher at the IFS, said: ‘It will be hard for the Welsh Government to design a replacement scheme that costs 10% less but protects the vulnerable and maintains work incentives. The fact that it also needs to make the scheme work alongside Universal Credit, which is being introduced from October 2013, makes an already difficult challenge truly formidable.’
