Radio Sandwell News

'Millions of low-income households' face council tax rise

2013-01-31 09:40:03

Millions of the poorest households face council tax rises because most councils in England will pass on a 10% cut in funding from April, research suggests.

A typical bill will rise between £100 and £250 a year, but some could rise as much as £600, according to think tank the Resolution Foundation.

Its report coincides with the deadline for local authorities to submit their plans for changing council tax benefit.

Responsibility for the benefit is being moved from the government to councils.

At the same time, the total spent on the benefit, which is to become known as council tax support, is being cut by 10%.

In Wales, the cut is being absorbed by the government, and not passed on to local authorities.

'Poll tax'

In Scotland, the cost is being shared between councils and the Scottish government, maintaining support for low-income residents.


But the 326 councils in England could be left with a shortfall if they intend to maintain the level of existing payments.

Some are finding savings from elsewhere in their budgets, in order to protect the incomes of the poorest households.

At least 40 local authorities have decided to maintain current levels of support. Durham County Council and Tower Hamlets are amongst those which will absorb the costs of CTS into their budgets.

The government has also put forward £100m of support for those councils that limit the council tax increase for those on benefits or low pay to 8.5%.

Ministers say the total paid out in council tax benefit doubled under the last government and welfare "reform" is vital to tackle the budget deficit.

They say the changes will give councils the incentive to help people off benefits and into work.

Council tax benefit is currently claimed by about five million households in England - about half get 100% support, meaning they currently pay no council tax at all.

But the Resolution Foundation says that three-quarters of authorities in England are planning to demand a new or higher payment from the lowest income households.

This comes at a time when other benefits may also rise more slowly than the cost of living, and the government introduces an overall cap on benefits.


Because pensioners are fully protected, those of working age are, in many areas, being asked to shoulder a much greater burden.

"Millions of England's poorest households, both in and out of work, are already very close to the edge," said Gavin Kelly of the Resolution Foundation. "They are going to find it very hard to cope."

Some campaigners have likened the change to the "poll tax", in that people are asked for a contribution regardless of their ability to pay.

'Low priority'

The Labour Party says the policy is deeply unfair, and will cause havoc with hundreds of thousands of people unable to pay the bills.

Many in local government fear that councils will be left with a financial black hole, as the cost of pursuing those who do not pay through the courts could be higher than the revenue the authorities will raise from them in tax.

The Local Government Association, which represents local authorities, said: "Paying the tax will be pretty low down the priority list, when you've got to feed yourself and feed your kids.

"That could mean overall collection rates will go down, meaning less money for all council services."

Local Government Minister Brandon Lewis said: "Under the last administration, more taxpayers' money was being spent on benefits than on defence, education and health combined.

"We are cutting council tax in real terms for hard-working families and pensioners, and we are on the side of people who work hard and want to get on."

Source: bbc.co.uk

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