Latest Public Sector News

21.01.14

Poorer areas receive less support with council tax – IFS

Families in deprived areas have been hit hardest by cuts in council tax benefit, new research from the Institute of Fiscal Studies (IFS) suggests.

Last April, council tax benefit was scrapped, with local authorities now responsible for designing their own schemes.

The IFS found that this resulted in reduced entitlement for 2.5 million working households, by an average of £160 in the current financial year. Only 20% of councils maintained the previous level of support, and authorities in deprived areas were more likely to bring in minimum payments for council tax, as their funding cuts were greater.

Stuart Adam, a senior research economist at the IFS, said: “Localising council tax support has led to considerable variation in the level of support available. Low income working age families are now more likely to receive more help with their council tax if they live in a better off area without too many low income pensioners among their neighbours. Conversely, working age people living in poorer areas and in areas containing more low income pensioners receive less help.”

Local government minister Brandon Lewis said: “Spending on council tax benefit doubled under Labour and is costing taxpayers £4bn a year – equivalent to almost £180 a year per household. 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 Labour's something for nothing culture and making work pay.”

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