Latest Public Sector News

02.04.14

Council tax reforms hitting poorest families hardest – JRF

This year around 2.3 million low-income families will have to pay an extra £149 in council tax than they did under the council tax benefit scheme, as the government withdraws a benefits safety net, a report by the Joseph Rowntree Foundation has revealed.

Last April, CTB was abolished and replaced by Council Tax Support (CTS). In the wake of this, England's 326 local councils had to devise their own CTS schemes, but with 10% less funding.

However, to limit the impact in the first year, government gave a one-year transitional grant to councils whose minimum payment was 8.5% or less of a household’s normal liability.

Now, at the start of the second year of CTS, research has revealed that almost half a million (490,000) low income families – who before April 2013 paid no council tax – will now be paying more than £200 a year.

Chris Goulden, head of poverty research at JRF, said: “For a second successive year, the country’s poorest families are facing big increases in council tax. This change to the welfare system is largely below the radar but has significant impact for families already struggling to get by on a low income. Paying this tax increase will be beyond most, pushing them into deeper hardship.”

Also, from this week, 70,000 poor households will be paying council tax for the first time, facing average bills of £114.Of the 2.3 million affected families, 1.5 million are currently below the income poverty line and 1.8 million are workless and whose sole income is from means-tested benefits.

In response to the report, Cllr Sharon Taylor, chair of the Local Government Association’s Finance Panel, said:“When government handed the responsibility for administering council tax support to local authorities, it cut hundreds of millions in funding for it.

“The shortfall between the money councils receive to fund CTS and the money we would need to protect those on low incomes is getting bigger and is likely to reach £1bn by 2016. At the same time, councils are tackling the biggest cuts in living memory and cannot afford to make up the difference.”

She added that local authorities across England are facing an “impossible dilemma” between asking working-aged CTS claimants to pay more tax or take much-needed money away from other services.

But, in defence of the CTS system, local government minister Brandon Lewis has said that spending on council tax benefit doubled under the last government, costing taxpayers £4bn a year – equivalent to almost £180 a year per household.

“Welfare reform is vital to tackle the budget deficit left by the last administration,” he said. “Our reforms to localise council tax support now give councils stronger incentives to support local firms, cut fraud, promote local enterprise and get people into work. We are ending the last administration's 'something for nothing' culture and making work pay.”

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