Latest Public Sector News

05.04.16

Councils increase tax on low-income families to compensate for cuts

Councils are raising tax on low-income families as a result of central government cuts, new figures indicate.

The research, conducted by the New Policy Institute and funded by the Joseph Rowntree Foundation, shows that in 2016-17, 2.2 million families will have to pay an average of £169 additional council tax as a consequence of the end of Council Tax Benefit (CTB), a national scheme of support for council tax bills, in April 2013.

It was replaced by Council Tax Support (CTS), a scheme where councils develop their own schemes for working-age residents. Councils received a 10% funding cut in the move between schemes and funding for CTS is decreasing every year.

In April 2016, 30 councils increased the minimum payment that all working-age residents are required to pay regardless of income, nine introduced them for the first time and just three reduced them.

Low income families are disproportionately affected, with 70,000 families living in areas where a minimum payment is being introduced for the first time and 27,000 in areas where it is being increased.

The cost of CTS for council taxpayers is increasing, compared to an average of £149 in 2014.

Claire Kober, the Local Government Association’s resources portfolio holder, said: “No one wants to ask those on the lowest incomes to pay more.

“But faced with significant cuts to the money we receive to look after the elderly, protect children, repair the roads and collect the bins, many councils have had little choice but to reduce the discount.

“Councils know how tough things are, and are doing their best to protect those affected the most, whether through introducing hardships funds or changing the way we collect unpaid tax. But these measures can only go so far in alleviating the burden.”

Theo Barry-Born, the researcher behind the report, said that the tax increases for the poorest look set to increase in future years as a consequence of increased financial pressures on councils.

Figures from the Chartered Institute of Public Finance and Accountancy released last month show that this year will see the biggest rise in council tax in eight years everywhere except London.

Other changes include 12 councils that introduced a band cap (two changed existing caps and one removed a cap), 11 that reduced the amount of savings allowed (the majority from £16,000 to £6,000), and six that reduced or abolished the second adult rebate.

Special protections for vulnerable groups were introduced by six councils, removed by five and replaced with discretionary hardship funding in two cases.

To see a list of every local authority's CTS for 2016 and its impact, go here.

6 April UPDATE

A Department for Communities and Local Government spokesperson said:"This government is committed to keep council tax low for everyone. It is for councils to decide the levels of support people should receive with their council tax bills and to ensure that the effect on low-income council tax payers is proportionate and fair.”

 (Image c. Joe Giddens)

 

 

 

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