The government should think again on plans to localise council tax administration, says Clive Betts MP: benefits claimants are set to see their slender incomes dwindle.

The communities and local government select committee has recently investigated the likely impact of the government’s proposed changes to the administration of council tax and housing benefits.

The government proposes that council tax benefits will continue to be processed by councils and not be part of the Universal Credit, but from April 2013 councils will be able to design their own schemes. At present the government pays 100 per cent of the cost of these benefits, but in future it will only pay 90 per cent of the existing funding requirement, with the additional 10 per cent – and any extra costs as unemployment rises or take-up increases – paid for by local authorities themselves.

We are still awaiting the government’s precise proposals but, as they have indicated that benefits for pensioners will be maintained and the work incentives of the Universal Credit will be protected, it seems likely that councils will have a choice of either cutting council tax benefits to the unemployed by around £6 per week, or reducing funding for other services in order to make up the shortfall.

A further problem with the delay in the government producing its proposals is that councils will now have less than 18 months to write new schemes, consult with their residents, and design and implement IT systems. There is a real risk with such a compressed timeframe that things can go wrong and some of the poorest households could be left without their benefits.

Government intends for council tax benefits to be administered by local councils, but proposes that housing benefits be included in the Universal Credit and administered by the Department for Work and Pensions. Therefore from 2013 many people who claim both council tax and housing benefit will find that if, for example, their income changes, they will have to deal with two completely different organisations. No longer will a phone call or visit to their local council office suffice.

We have asked the government to think again about their proposals because of our concerns.

Clive Betts MP is chairman of the communities and local government select committee.

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Written by Clive Betts