Latest Public Sector News

16.10.12

‘Uneconomic’ to try to collect all new council tax

Local authorities have resigned themselves to the fact that up to half of people on low incomes will refuse to pay council tax after benefit changes, new research shows.

Under government plans, two million low-income workers will have to start paying £247 a year from April. But the weekly sums are so low that many councils believe it will be uneconomic to recover the costs.

A series of freedom of information requests by TUC-aligned think tank False Economy demonstrate that many councils will not try to collect all the new council tax, and some have decided to keep the old system.

Ministers are offering a £100m transitional relief fund for councils with low-income workers who may otherwise be unable to pay the tax, and communities secretary Eric Pickles is said to be looking to cap council tax payable by the poor to 8.5% of the full charge for ordinary households.

A False Economy spokesperson said: “This latest assault will force people to choose between paying council tax and feeding their families, while councils chase them for money they simply do not have … Councils have a responsibility to mitigate and counter these cuts, but ultimate blame rests with the Conservative-led government that is slashing funding from on high.”

Chair of the LGA, Sir Merrick Cockell, added: “Councils are being put in a very difficult position … under the proposed scheme most councils will have to ask people on lower incomes, including the working poor, to pay more council tax than they currently do.

“Collection rates overall are very high. But there is clear evidence that, for a range of reasons including financial difficulties, the poorer people are the less likely they are to pay council tax. In their current form these changes are a significant concern.”

In a statement the local government minister, Brandon Lewis, said: “It is right that our reforms help reduce the deficit by giving councils a financial stake in getting spending on council tax support back under control and helping people back to work and off benefits.”

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