COMMONS

Localisation of Council Tax Benefit is a risk and ‘an illusion’, say MPs

13 October 2011

Restrictions placed on local authorities in designing their own schemes for council tax support will produce “only the illusion of local discretion” says the Communities and Local Government Committee in a report published on 13 October 2011.

Combined with a planned 10% cut in spending on support for council tax, the MPs argue these restrictions are likely to squeeze the funds available to support working-age unemployed people.

The report examines the implications of the Government’s welfare reform plans for the localism agenda. Under these plans, Council Tax Benefit and elements of the discretionary Social Fund will be abolished and replaced by localised schemes run by councils.

Launching the report, CLG Committee Chair Clive Betts MP said,

“The Government does not always recognise that giving local authorities greater control but over less resources puts councils in a very difficult position. Ministers have put their faith in incentives for councils to boost economic growth and off-set the reduction in funding from central government, but this ignores the excellent work many local authorities are already doing to support their local economies.

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.”

The Committee also expresses concerns about the timetable for change, with local authorities having little time to design their council tax support schemes before they are due to be introduced in 2013.

Clive Betts adds,

“It is unfortunate the Government has planned so much major change to the welfare reform system, affecting so many people, to coincide. We recommend that the Government reconsiders its timetable so that local authorities can have time to do the job properly.”

The Committee welcomes plans to localise the discretionary Social Fund, but warns ministers they need to fund the new schemes adequately. MPs also suggest that collecting information about how these funds are used would allow residents to hold local authorities to account for how effective their local schemes are.

Housing Benefit, which is currently administered by local authorities, is to be incorporated into the centralised Universal Credit system under the Government’s plans. The Committee described this as an “incongruous” move for an administration committed to decentralisation.

Clive Betts adds “Councils are the experts in administering Housing Benefit, and they are also able to link it to their other responsibilities for housing policy and homelessness. Centralisation threatens those links.”

Finally, the Committee urges the Government to think carefully about the proposed system of paying housing costs support directly to tenants under Universal Credit. Witnesses told us that this system could seriously hamper the ability of social landlords to borrow to invest in their current or new properties,” Mr Betts said. “We recommend that the Government investigate this risk in detail before they take any final decisions.”

Further information

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