Latest Public Sector News

18.03.14

‘Bachelor discount’ costing councils £200m

A compulsory council tax discount given to people living alone in properties rated band E and above is costing local authorities more than £200m per year, new data has revealed.

Government rules stipulate that councils must give a 25% discount for all homes with only one adult liable to pay council tax. However, the Local Government Association (LGA) has stated that this discount, commonly known as the ‘bachelor discount’, is making it harder to protect discounts for struggling families on low incomes.

At the same time, one in three councils expects it will have to reduce council tax support for families on low-incomes because of a major shortfall in government funding for the subsidy.

Councils are now calling for more local flexibility over who receives the single person discount to help ensure support goes to those who need it most. Proposals have been outlined in an LGA submission to the Treasury ahead of this year's Budget.

Cllr Peter Fleming, chair of the LGA's Improvement Board, said: “This 'wealthy bachelor' discount currently costs councils £200m a year in lost council tax revenue and is subsidising individuals occupying large homes at a time when there is a dire shortage of housing.

“Giving local areas the option of removing this automatic discount would help protect discounts for struggling families and those who need it most.”

Local council tax support schemes replaced national council tax benefit in April 2013. And the shift in responsibility from national to local government was accompanied by a 10% reduction – equivalent to £410m – in government funding for council tax support. The funding gap is growing each year and is expected to reach £1 billion by 2015/16, says the LGA.

However, in response to the LGA’s argument, local government minister Brandon Lewis has called the LGA’s proposals the equivalent of a ‘Bridget Jones tax’, which would unfairly hit those who live alone.

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