Employment, income and council tax during the COVID-19 crisis

This report from UK think tank the Institute for Fiscal Studies provides a geographical analysis and implications for councils.

The decline in economic activity that has resulted from the COVID-19 crisis and associated public health restrictions have had a significant effect on the finances of households. Employment has fallen, the number of people in receipt of unemployment and means-tested benefits has risen, and a significant number of people have stopped paying large and important bills such as mortgages and council tax, whether on an agreed basis (such as via a mortgage holiday or council tax deferrals) or otherwise. Falls in council tax revenues have, alongside falls in other income streams and increases in spending, contributed to a ‘perfect storm’ for local authorities’ (LAs’) finances as well. In this briefing note, we update and extend previous IFS analysis, to consider how employment, incomes, benefit claims and council tax payments have evolved over a longer period and have varied geographically, and draw out key implications for local government. This includes a particular look at the characteristics of households that have stopped paying council tax during the COVID-19 crisis – including how their characteristics differ from those of households that stopped paying council tax prior to the COVID-19 crisis, and how their income and spending changes compare with those of households that have continued paying council tax.

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