cttfMillions of the poorest households face council tax rises because most councils in England will pass on a 10% benefit funding cut, research suggests. A typical bill will rise from April by between £100 and £250 a year, but some could rise as much as £600, the Resolution Foundation think tank says.

Its report coincides with the deadline for local authorities to submit their plans for changing council tax benefit. Councils say they have not been given enough freedom to manage the changes. 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. 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.

Council tax support changes

 

  • Council tax support (CTS) will replace council tax benefit (CTB) in April.
  • Councils will decide who qualifies for CTS, rather than the government, as under CTB.
  • Councils will have 10% less money to fund CTS, changes that will save £500m a year.
  • Pensioners will be protected and households in Wales and Scotland are unaffected. It is English Districts that will be principally affected.

 

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.”

Source: BBC NEWS

Link: http://www.bbc.co.uk/news/business-21264773

31st January 2013

 

 

Follow

Get every new post on this blog delivered to your Inbox.

Join other followers: