Major changes to welfare benefits are being introduced by the Welfare Reform Bill. However one that has had little publicity is the abolition of council tax benefit which is to be replaced by a new localised system of support due to start in 2013. Council tax benefit currently provides means-tested support with council tax bills for about 5.9 million people in Great Britain including around 2.7 million aged 60 over. Instead of a national system of entitlement, local authorities will be expected to design their own scheme. This fits in with the Government’s localism agenda but is also intended to reduce central government spending. The money provided to local authorities will be 10 per cent less than current expenditure on the benefit.
The good news for pensioners is that the Government plans to protect older people by requiring local authorities to provide the same the amount of support as under the current system. This will apply both to for those receiving benefit in 2013 when changes are due to start, and for those who claim in the future. This is set out on a consultation paper which covers England (there will need to be separate proposals covering Wales and Scotland). The consultation paper argues that the system for people of working age will support incentives to work although notes there may be other vulnerable groups who cannot be expected to work who could be protected.
Age UK is very relieved that older people with low and modest incomes will not lose vital support. However a cash limited system where local authorities are required to provide a certain level of support for pensioners, will increase pressure on funds available for younger people. One consequence could be that local authorities will have little incentive to encourage older people to claim. (Currently up to 2 million older people miss out on council tax benefit due to them). It is right that low income older people can expect a certain level of help wherever they live but we question whether this should this affect the help that others receive. Our systems of support should be based on needs and circumstances and encourage social cohesion by ensuring that low income people of all ages are treated fairly.