Add council_tax_benefit to net income tree (matches HBAI methodology)

changelog.d/fix-abolish-council-tax-net.fixed.md

@@ -0,0 +1 @@
+- Include `council_tax_benefit` in `household_benefits`, `gov_spending`, `hbai_household_net_income`, and `pre_budget_change_household_benefits`. Previously CTR was absent from these aggregates, so abolishing council tax via `gov.contrib.abolish_council_tax` refunded the gross billed amount to households (and removed gross revenue from the government balance) rather than the net out-of-pocket amount, overstating household savings by about £4 billion in aggregate.

policyengine_uk/tests/microsimulation/test_abolish_council_tax_reform.py

@@ -37,3 +37,48 @@ def test_abolish_council_tax_removes_budget_impact():
     assert reform_household_tax == baseline_household_tax - 2000
     assert reform_gov_balance == baseline_gov_balance - 2000
     assert reform_hbai == baseline_hbai + 2000
+
+
+CTR_SITUATION = {
+    "people": {
+        "person": {
+            "age": {YEAR: 40},
+            "employment_income": {YEAR: 8000},
+            "council_tax_benefit_reported": {YEAR: 800},
+        }
+    },
+    "benunits": {"benunit": {"members": ["person"]}},
+    "households": {
+        "household": {
+            "members": ["person"],
+            "council_tax": {YEAR: 2000},
+            "council_tax_band": {YEAR: "C"},
+        }
+    },
+}
+
+
+@pytest.mark.microsimulation
+def test_abolish_council_tax_nets_out_council_tax_benefit():
+    """CTR recipient should see net-CT saving, not gross-CT saving.
+
+    Pre-reform: household pays £2,000 gross council tax and receives £800
+    CTR, so out-of-pocket is £1,200 (the net bill). Abolishing council
+    tax saves them the £1,200, not the £2,000 — because the £800 CTR
+    rebate disappears alongside the council tax it was rebating.
+    """
+    baseline = Microsimulation(situation=CTR_SITUATION)
+    reform = Microsimulation(
+        situation=CTR_SITUATION,
+        reform={"gov.contrib.abolish_council_tax": True},
+    )
+
+    baseline_hbai = baseline.calculate("hbai_household_net_income", YEAR).sum()
+    reform_hbai = reform.calculate("hbai_household_net_income", YEAR).sum()
+    baseline_gov_balance = baseline.calculate("gov_balance", YEAR).sum()
+    reform_gov_balance = reform.calculate("gov_balance", YEAR).sum()
+
+    # Net council tax = £2,000 - £800 CTR = £1,200 saving.
+    assert reform_hbai == pytest.approx(baseline_hbai + 1200, abs=1)
+    # Government loses net council tax revenue (gross - CTR forgone).
+    assert reform_gov_balance == pytest.approx(baseline_gov_balance - 1200, abs=1)

policyengine_uk/variables/contrib/policyengine/pre_budget_change_household_benefits.py

@@ -10,6 +10,7 @@ class pre_budget_change_household_benefits(Variable):
     unit = GBP
     adds = [
         "child_benefit",
+        "council_tax_benefit",
         "esa_income",
         "housing_benefit",
         "income_support",

policyengine_uk/variables/gov/gov_spending.py

@@ -10,6 +10,7 @@ class gov_spending(Variable):
     unit = GBP
     adds = [
         "child_benefit",
+        "council_tax_benefit",
         "esa_income",
         "esa_contrib",
         "housing_benefit",
@@ -57,3 +58,10 @@ class gov_spending(Variable):
         "nhs_spending",
         "carer_support_payment",
     ]
+
+    def formula(household, period, parameters):
+        variables = list(gov_spending.adds)
+        abolish_council_tax = parameters.gov.contrib.abolish_council_tax(period)
+        if abolish_council_tax:
+            variables = [v for v in variables if v != "council_tax_benefit"]
+        return add(household, period, variables)

policyengine_uk/variables/household/income/hbai_household_net_income.py

@@ -26,6 +26,7 @@ class hbai_household_net_income(Variable):
         "free_school_milk",
         "free_tv_licence_value",
         "child_benefit",
+        "council_tax_benefit",
         "esa_income",
         "esa_contrib",
         "housing_benefit",
@@ -74,15 +75,13 @@ class hbai_household_net_income(Variable):
     def formula(household, period, parameters):
         abolish_council_tax = parameters.gov.contrib.abolish_council_tax(period)
         if abolish_council_tax:
-            return add(
-                household,
-                period,
-                hbai_household_net_income.adds,
-            ) - add(
-                household,
-                period,
-                [s for s in hbai_household_net_income.subtracts if s != "council_tax"],
-            )
+            adds = [
+                a for a in hbai_household_net_income.adds if a != "council_tax_benefit"
+            ]
+            subtracts = [
+                s for s in hbai_household_net_income.subtracts if s != "council_tax"
+            ]
+            return add(household, period, adds) - add(household, period, subtracts)
         return add(household, period, hbai_household_net_income.adds) - add(
             household, period, hbai_household_net_income.subtracts
         )

policyengine_uk/variables/household/income/household_benefits.py

@@ -10,6 +10,7 @@ class household_benefits(Variable):
     unit = GBP
     adds = [
         "child_benefit",
+        "council_tax_benefit",
         "esa_income",
         "esa_contrib",
         "housing_benefit",