The document summarizes the cumulative effects of four welfare changes introduced in April: the replacement of Council Tax Benefit with locally designed Council Tax Support schemes, the under-occupation penalty (bedroom tax), the household benefit cap, and the 1% uprating restriction on working-age benefits. It finds that over 2.4 million people will be negatively affected by changes to Council Tax Support alone, with average weekly losses of £2.60. Combined impacts are estimated to total £4.40 per week on average for those affected by multiple changes. The document raises questions about whether the goals of some reforms are primarily to cut spending rather than achieve social aims, and the risks of a centrally driven "localism" approach that
2. The April welfare changes
Three absolute benefit cuts introduced this April:
•Council tax benefit (CTB) replaced by council tax
support (CTS)
•Under-occupation penalty: the “bedroom tax”
•Household benefit cap
One uprating restriction
•Working-age benefits restricted to 1%
Official impact assessments
•Where they do exist official impact assessments
consider one change at a time only
•None exist for the 326 local council tax support
schemes
3. Scope of presentation
Findings:
•The localisation of CTS: main findings from our
recent study for the Joseph Rowntree Foundation
•Combined impacts of the four changes: read our full
report here
Thoughts:
•The ‘bedroom tax’ – cuts as “reform”?
•The household benefit cap – reform as “politics”?
•The localisation of CTS – shifting risk as “localism”?
•The1% uprating – expediency as “principle”?
Conclusions
4. Council Tax Benefit (CTB) to Council Tax
Support (CTS): background
What was CTB?
•Emerged alongside the creation of council tax (1993)
•CTB was in effect a tax rebate not a benefit:
•“Full”/“Partial” CTB = pay no/some council tax
The 2010 spending review
•GB-wide CTB to be replaced by locally designed CTS schemes
•From 2013, central government funding to be cut by 10% +
pensioners to be fully protected from the changes.
Our research on the localisation of CTS
•We documented the new support schemes of all 326 lower tier
and unitary local authorities in England
•We estimated of the numbers affected by the changes and the
average hit.
5. CTB to CTS: an overview of English local
authority schemes
6. CTB to CTS: spread in the size of the weekly “hit”
7. The combined impacts of April’s welfare
changes: background
The poverty threshold compared with benefits
•Poverty threshold: 60% of median income:
•After housing costs the threshold is £125 p.w. for singles, and
£215p.w. for couples
•Income support/Job Seekers Allowance is £71p.w. for singles
(aged 25+), and £112p.w. for couples
•There has been no real increase in these benefits for 40+ years
How many will be affected by single cuts introduced this
April:
•Household benefit cap – 56,000 (£93p.w.)
•Bedroom tax – 660,000 (£14p.w)
•CTB to CTS – 2.4m, (average £2.60p.w.)
•Uprating restriction – 9.6m (1.2%)
9. The bedroom tax – cuts as “reform”?
To change behaviour or save money?
•The advertised aim: to better use social rented stock
•Impact assessment: control spending on HB
•These are broadly exclusive
The feasibility of moving is a vital issue here:
•If not feasible, it suggests saving money is real goal
•However, the “better use” argument is a less
contentious reason to make cuts
Question/s raised
•When is it right to use financial penalties to achieve
socially desirable ends?
10. Household cap – reform as “politics”?
What is the household benefit cap really doing?
•It saves money for Treasury but maybe not for local authorities
•It caps amount payable for rent (as with Local Housing
Allowance)
•It caps the amount of payable for child support
Principles at stake
•Personal allowance
•Support related to family size
Question/s raised
•Should there be transitional support available and if so, in what
form?
•Shouldn’t deep reforms that are targeting specific groups be
presented as such?
•Is this just a first step?
11. CTS – shedding risk as “localism”?
What is the localisation of CTS really doing?
•It shifts responsibility for design of system to local authorities
•It saves money for the Treasury but maybe not for local
authorities
•It is a tax increase for low income households
What are the principles at stake
•A national system of benefits
•That risk (e.g. factory closure) is borne nationally
Question/s raised
•What’s the case for local variation in benefits?
•Do local authorities have the legitimacy to design benefits?
•Is this just a first step: will other benefits be localised too?
12. 1% uprating – expediency as “principle”?
What is it really doing?
•It links rises in benefits to rises in wages
•It is a “real” income squeeze, but not a reform
•It hits lots of people by a small amount
•It Saves lots of money for Treasury
Principles at stake
•Link between incomes in work and out of work
Question/s raised:
•Why restrict to working-age?
•Why restrict to the bad times?
13. Pre 2008, the “welfare” spending share was stable
Source: Monitoring Poverty and Social Exclusion 2012
14. Conclusions
“Welfare” spending does exceed past cyclical highs
•UK’s deep economic problems date from 2002
•Several other factors are heavily implicated: eg. housing problems, job
shortages, low pay, demographics (an aging working-age population)
and social change (long term trends towards two adult working families).
•Nevertheless, it is at the governments discretion whether less must be
spent
Are cuts to benefits an effective solution?:
•Change is needed, but real and lasting change will require time and
money
•If cuts need to be made, they should be broad but shallow; spreading
the hit
•Rhetoric that the reforms will protect the most vulnerable, while hitting
those who are less so, is misleading: serious savings will inevitably hit
the ‘blameless’
Centrally driven “localism” is a danger to England
•Resources, capability, legitimacy, risk, cohesion