Council Tax

Council Tax Benefit: the effect of a 10% cut

  • Published 1st Dec 2010
  • Authors: Dan Paskins,
  • Category: Council Tax

The Government’s plans to reduce spending on Council Tax Benefit by 10 per cent will have a disproportionate impact on local authorities which are in areas of high level of deprivation – with the most affected losing more than four times as much per dwelling as the least affected. Local authorities will have the discretion about whether to pass these cuts on to claimants, or cut other services in order to maintain current levels of payment. If local authorities pass on the cuts to claimants, recipients of the benefit in Richmond-upon-Thames will lose an average of £128 a year.

The impact of these cuts will not just be felt in deprived areas, but also amongst people living in poverty in more affluent areas. The focus of this paper is to show what an across-the-board 10 per cent cut would look like. Since nothing has so far been decided, it is possible that the Government might eventually decide instead to use a different system for distributing Council Tax Benefit – and therefore the effect of the cut – to local authorities. While that might lessen the pain for some, it could only worsen it for others. Whatever eventually is decided, any change to a benefit with some 5.8 million recipients – more than any other – is going to be widely felt indeed.