Friday, 29 June 2012

Working Poor will suffer from localised Council Tax benefit scheme

This week I secured a debate in Parliament on Government plans to change the council tax benefit regime in England.

A damning assessment by the Institute for Fiscal Studies of the proposed council tax benefit changes, which starts next April, says that although the reform's £480m-a-year savings equate to an average £19 per household, the working poor would be hit hardest.

The government proposes to allow councils to design a local benefit system but in return says it will cut funding for it by 10%. With 5.9 million recipients, it is more widely claimed than any other means-tested benefit or tax credit.

The cut in funding will be larger, says Yvonne Fovargue MP, in areas where council tax benefit spending is highest – the more deprived areas of Britain. The requirement to protect pensioners in England means that the cut in funding of a tenth translates into a 20% cut in support for working-age claimants in Wigan.
Shocking statistics underline the impact that the changes will have in the Wigan Borough;

• Funding will be reduced by £2.6million (10% cut)
• As existing and future pensioners are protected from the changes the effect of this is to shift the 10% (£2.6m) reduction in funding solely to working age households – 18,000 in Wigan creating a reduction of approx 20% for this group.

I look at the cumulative effect of the Welfare Benefit changes disproportionately impacting upon people in low paid work and frankly I despair at the options the Government are forcing our local council to consider.
If anybody believed that David Cameron was a compassionate Conservative, then this issue confirms that the ‘nasty party’ is back – indeed it never went away.

I understand that Wigan Council is now working towards developing a scheme for implementation to meet the legal requirements of the Local Government Finance Bill as it makes its parliamentary passage. At the same time other changes in the welfare system, including the introduction of Universal Credit and the ‘Bedroom tax’ will also hit the working poor.

Singly, any one of these changes will affect people on a low wage extremely hard, cumulatively they could well deliver a fatal blow.  It is well reported that only a small decrease in income will push a struggling family from the position of just about managing to that of not coping and sinking into unmanageable debt and the advice agencies who have hitherto been there to help and rescue these individuals are also struggling with the legal aid cuts removing support on Welfare Benefits and most debt cases.

These hard working families are already squeezed, councils are squeezed and it is inevitable that, yet again, the poor and vulnerable will suffer.

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