Eric, What Makes A Benefits Postcode Lottery Fair?

by Jackie_South on August 2, 2011

Communities and Local Government Secretary Eric Pickles has a very odd definition of ‘fair’. Today, he unveiled plans to cap the total Council Tax Benefit that can be paid out to residents in any borough. He described the policy thus:

“Plans to put councils in charge of providing support for council tax go hand in hand with wider economic reforms… That means in future councils will have a much greater stake in the economic future of their area and greater incentives to support local residents back into work. The new system will be a fairer one, where hard working families and pensioners are not left to pick up a spiralling benefits bill and where hard work always pays.”

Not, you will note, one which is fair to anyone receiving benefits but fairer in a more amorphous way to “hard working families and pensioners” who pay tax.

Let’s unpick this a bit.  Local councils have the duty to administer two benefits to people in receipt of income-related benefits such as Job Seekers Allowance and Income Support: Housing Benefit and Council Tax Benefit.  Currently, councils claim the benefits they pay out back from central government and so the budget lies at Whitehall.

The government’s proposal is to give each council a capped amount for Council Tax Benefit, and reducing the amount available overall by 10%.  It will be up to councils to balance the books and they will be given discretion to change the eligibility rules to achieve this. 

This means that a council could end up running out of benefit to give out in a year, leaving someone made unemployed late in the financial year without the money to cover their council tax bill through no fault of their own. 

Or it could mean that councils have to cut back on services because they are hit with an unexpectedly large level of people claiming benefits, perhaps through the closure of a large factory.

It is also likely to mean that how much of your council tax bill is paid will depend on where you live.  It might mean, for example, that if you live in a Labour borough you will have your council tax bill paid through benefit whereas you will not in the neighbouring hard-right Tory council who use their right to adjust the eligibility criteria.  This in turn has implications for where people on benefit choose to live, potentially creating ghettoisation.

Pickles logic is deeply flawed.  He justifies this local capping (as opposed to just reducing it across the board) on two grounds: firstly that councils can create jobs for those on benefits to fill and secondly that they can cover shortfalls through administrative costcutting.  This is of course against the backdrop of the largest cuts to local government in history that took place this year, with further cuts to come.  Councils will not be able to employ increased numbers and their scope to assist increases in private sector employment for their residents is both limited and only realistic in the long term.

The other flaw in the logic, of course, is that there will be some “hard working families and pensioners” on low incomes that will be directly affected by the change.  And even if they do not receive the benefit, they could lose out as their local council has to scale back services to foot the benefit bill.

There are some Coalition policies that I would oppose on political grounds or because I disagree with the economic thought that lies behind them.  This proposal however is fundamentally wrong even if you buy into the government’s political ideas.  It could leave people destitute through no fault of their own other than when they are unfortunate enough to lose their job or what their postcode is.

It’s a policy that strikes me of being both evil and stupid.

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