Institute for Fiscal Studies backs Scotland’s council tax reduction scheme


  By a Newsnet reporter  

The Scottish Government’s efforts to reduce the impact of Westminster’s welfare reforms have been acknowledged by Paul Johnson, Director of the Institute for Fiscal Studies (IFS).

Speaking at the Finance Committee on Wednesday March 6, Mr Johnson said that the Council Tax Reduction Scheme “will clearly make things work a bit better here than in some areas of England”.

His comments come on the back of cuts in the Council Tax benefit scheme in some parts of England.

Council tax benefit is the most widely claimed benefit in the UK, with 5.9 million households receiving assistance with their council tax bills.  Under the reforms introduced by the Conservative Lib Dem coalition, Westminster’s contribution to the benefit will be slashed by 10% and local authorities in England are to be given the power to make their own decision about who qualifies for the benefit.

As a result of the changes a majority of local authorities in England will cut council tax benefit meaning that many of the poorest households will face rises in their bills.  Pensioners are to be exempted from the cuts, which will be borne by 3.2 million households where the claimant is of working age.

In 700,000 households receiving council tax benefit, the claimant is working in a low-paid job. Many of these households will now face increased costs on already tight family budgets.  Despite this, the Westminster government claims that the cuts are necessary in order to give councils an incentive to “get people into work”.

In Scotland and Wales, the devolved governments have announced that they will absorb the 10% cut imposed by Westminster in order to protect existing levels of benefit.  51 local authorities in England have also taken the same step.  In the remaining 125 local authorities in England, council tax bills for the poorest households will increase. In some areas, claimants will face council tax bill increases of 20%.

Jamie Hepburn MSP, Deputy Convener of the Welfare Reform Committee, said:

“This is an important contribution by the Institute for Fiscal Studies Director, confirming that Scottish Government scheme will mitigate the worst of the Westminster council tax benefit cut, whereas south of the border people will have little protection in certain areas.

“Mr Johnson’s comments follow that of Citizens Advice Scotland who earlier in the year said that the welfare system is being ‘ripped asunder’ following Westminster’s welfare cuts.

“Never has it been clearer that a Yes vote in next year’s referendum is vital to the future of Scotland and its people.

“As the official figures show, public spending on key provisions such as benefits and pensions is a LOWER share of Scotland’s GDP than it is for the UK as a whole – 42.7% of GDP in Scotland, compared to UK’s 45.5% – which means that welfare spending is MORE affordable for Scotland.

“To keep the benefits of the welfare state, Scotland needs to have the powers of an independent country with a Yes vote in the referendum – not be governed by the Tory Bullingdon Club.”