Localisation of Council Tax Benefit an 'illusion', say MPs

13 Oct 11
Proposals to hand control of Council Tax Benefit to local authorities will provide 'only the illusion of local discretion', MPs said today.

By Vivienne Russell | 13 October 2011

Proposals to hand control of Council Tax Benefit to local authorities will provide ‘only the illusion of local discretion’, MPs said today.

Clive Betts

A report from the communities and local government select committee also finds that the accompanying 10% cut in the benefit’s total budget will fall hard on a small proportion of claimants.

At present, councils administer the benefit but rates and eligibility are set nationally. The proposed changes would allow them to vary these.

While the committee welcomes the localisation move, it warns that councils will face problems meeting a demand-led benefit from a fixed budget of £4.3bn. The present national budget is not capped.

‘This will constitute a significant financial risk for councils and a disincentive to improving take-up of the benefit,’ the MPs say in their report, Localisationissues in welfare reform.

Regulations are also expected to stipulate that benefits to some council tax payers must be protected – pensioners and vulnerable people – the latter not yet precisely defined.

Taken with the government’s intention to cut the overall Council Tax Benefit budget by 10%, the committee said this would leave remaining claimants shouldering a cut of at least 16% in their benefit payments.

This is further complicated by a government requirement on local authorities to preserve incentives for claimants to take work.

Committee chair Clive Betts said: ‘The government does not always recognise that giving local authorities greater control but over less resources puts councils in a very difficult position. 

‘Taking over responsibility for council tax support schemes consequently imposes a significant financial risk on councils at a time when budgets are already extremely tight.’

Betts also expressed concern that councils would have too little time to devise local benefit schemes by the intended April 2013 start date.

The committee also wants councils to continue to administer Housing Benefit alongside Council Tax Benefit. The government intends to remove Housing Benefit from councils and put it into the Universal Credit.

This step would ‘remove from local government a function which it is discharging well’, and would confuse claimants and cause potential problems for social housing finance, the MPs say.

‘We recommend that local authorities should retain administrative responsibility for housing costs support,’ the report says.

Housing and local government minister Grant Shapps said the government’s plans to make local authorities responsible for Council Tax Benefit within a capped £4.3bn budget would help ‘save the public purse around £480m and ensure taxpayers are not left to pick up a spiralling benefits bill’.

He added: ‘By bringing all aspects of the council tax system together at a local level, councils will have much greater freedom to administer support in a way that best meets local needs and supports local people.’

Shapps said there would be no local discretion over Housing Benefit and so ‘it is right that it is included in the new Universal Credit, which will be administered nationally’.

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