Jobless better off on benefits in Yorkshire town say MPs

Margaret Hodge, chairman of the Commons Public Accounts Committee.
Margaret Hodge, chairman of the Commons Public Accounts Committee.
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Ministers’ promises to reform benefits and “make work pay” have had precisely the opposite effect in parts of Yorkshire by giving people more incentive to stay on the dole, a damning report finds today.

The Commons Public Accounts Committee (PAC) found claimants in Doncaster would stand to lose 97p for every extra £1 they earned following changes to council tax benefit last year.

PAC chairman Margaret Hodge said the outcome was “fundamentally perverse” when the Government is publicly committed to getting people off benefits and into work.

“For some, work simply doesn’t pay under the new scheme,” Mrs Hodge said. “For them, work incentives have actually weakened – the opposite of what the Government intended.”

Ministers transferred control of council tax benefit to local authorities last April. As they did so, they cut the amount of funding available, leaving it to local authorities to decide how to administer the reduced funds.

The PAC found that in more than a dozen local authority areas across England – including Doncaster – the new systems set up by town halls had actually made it less likely people would come off benefits and into work.

“We found in 19 areas, up to 225,000 people could lose more of their earnings than under the national scheme,” Mrs Hodge said. “Some of those stand to lose 97p for every extra £1 earned – a fundamentally perverse result.”

Doncaster Council defended its approach, insisting it has protected the most vulnerable claimants in a way many town halls – which simply cut council tax benefit for everyone – had not.

Director of finance Simon Wiles said: “Doncaster has been forced to manage the impact of savage Government cuts.

“In this case, Doncaster decided not to go for a scheme where everyone formerly entitled to council tax benefits would have had to contribute.

“Since the Government cut funding for the scheme, this has meant that Doncaster had to target the savings at those claimants who had most resources.”