At present councils have no financial interest in reducing the number of people on Council Tax Benefit. They adminster the process but it is central Government that pays the bill.At present £4.2 billion is paid in Council Tax Benefit. (The DWP cautiously estimates that £200 million goes on fraudulent payments.)
From April 2013 this will change. The 2.7 million pensioners will not be affected – the same national criteria will apply. But the total funding for Council Tax Benefit will fall by 10%. That means that for non pensioners there will be a strong incentive for councils to encourage people off benefits and into work. Also to reduce fraud. If councils just shrug and carry on as they are they will have to find extra money from elsewhere to make up the shortfall. Labour MP Clive Betts says it is a "significant financial risk" for councils. Spot on. At present there is no financial risk in leaving fraud and welfare dependency to become endemic – the Government just pays. The Labour-run London Councils are also whining.
In contrast Westminster City Council is looking at the opportunity the greater flexibility will bring to improve their community. They are consulting on whether future payments of council tax benefit should be tied to certain levels of behaviour or other conditions around a person’s individual circumstances.
Under their Civic Contract they are looking at qualifying criteria that could mean, for example, that a persistant offender could see a reduction or termination in their benefit or that a payment could be made only to those actively seeking a job if out of employment but fit to work.
Cllr Philippa Roe, Westminster City Council’s Cabinet Member for Strategy Finance says:
“We believe strongly that the days of something for nothing are over. Therefore, we believe that potentially linking Council Tax benefit to certain levels of behaviour is a sensible and fair way forward that rewards those that play an active part in their community whilst cracking down on those that misbehave or break the law."
The Government's changes should reduce admin costs as councils will be able to make the process less bureaucratic. The Royal British Legion has suggested that Council Tax Benefit be renamed Council Tax Rebate. This would reflect the right attitude. Why not, for instance, provide a Council Tax Rebate to all Special Constables?