Local authorities face a ‘tough challenge’ in taking control of council tax benefit at the same time as it is being cut by 10 per cent, the Institute for Fiscal Studies has warned.

An IFS paper examines the likely effects of the policy of localising support for council tax payers in England from 2013/14, together with the options available to councils.

Key points

• Local councils will have an incentive to discourage low-income families from living in their area, and a disincentive to encourage take-up of support.
• The cash funding cut will be greatest in more deprived areas, where spending on council tax benefit is currently highest.
• Any cuts to council tax support are bound to hit lower-income households, as 85 per cent of council tax benefit goes to households in the bottom half of the income distribution.
• Unless councils find additional money from elsewhere, the requirement to protect pensioners’ entitlements implies an average 19 per cent cut in support for working-age claimants.
• Excluding council tax benefit from the new universal credit ‘severely undermines’ the attempt to simplify the benefits system.

Source: Stuart Adam and James Browne, Reforming Council Tax Benefit, Commentary C123, Institute for Fiscal Studies

Links: Paper | IFS press release | Guardian report