31 January 2013 | By Carl Brown, Inside Housing
Three-quarters of councils in England will demand increased council tax payments from the poorest households from 1 April.
Research by think tank the Resolution Foundation shows 3.2 million low-income households who currently pay no council tax or a reduced charge will be hit by higher bills as a result of councils’ response to the government’s policy of localising council tax support.
Under the policy, which the government says will reduce the welfare bill by £420 million a year in England, council tax benefit will be scrapped. It will be replaced with grants to councils covering 90 per cent of the cost.
Councils have to decide whether to pass on the 10 per cent cut, but cannot reduce support for pensioners, meaning households in areas with large numbers of older people are facing disproportionately high cuts.
The Resolution Foundation surveyed 326 councils and of the 184 to respond, 72 per cent are planning to pass some or all of the cut on to council tax benefit claimants.
A total of 60 councils are planning to ask claimants to pay 8.5 per cent of their council tax bill and 65 are looking at higher cuts of up to 20 per cent. A total of 51 councils are not planning cash cuts and are absorbing the cut elsewhere.
The findings suggest one in three councils will seek to charge claimants around £255 a year extra on average, while another third of councils are looking at charges of £96 a year.
The Resolution Foundation report warns that the increase in council tax bills will be ‘substantial’, particularly for single parent or one-income families.
It said: ‘There is not only a very real possibility that large numbers of council tax benefit recipients currently receiving maximum support will struggle to pay small amounts of monthly council tax, but also that some of the poorest households in England, who rely on partial support to help them meet their council tax liabilities, will see their hard-pressed household budgets squeezed even further and, in future years, their work incentives undermined.’