LGA briefing on the localisation of council tax support

LGA briefing – localisation of council tax support (PDF, 3 pages, 439KB)

Key messages

  • The localisation of council tax benefit (CTB) has left councils facing the unpalatable choice of either charging council tax to the working age poor, who in many cases had not paid council tax before, or finding savings or extra income from elsewhere. To make matters worse, this change has been introduced at a time when financial sustainability is the greatest challenge facing local public services with councils' core funding reducing by 40 per cent over the course of this Parliament.
  • The localisation of council tax support was widely presented as being accompanied by a 10 per cent cut in funding, which amounts to £410 million for councils in England. However, because of the way in which funding was transferred, the actual cut in funding to April 2016 could be as much as £1 billion.
  • Despite an extensive debate when the proposals were agreed by Parliament, the Government did not allow any variation of the 25 per cent Single Person Discount which is the largest single council tax discount granted. LGA analysis shows that it is costing councils more than £200 million a year to give a compulsory single person discount to people living in properties rated band E and above where there is only one council taxpayer.
  • Council tax has become more regressive because of the reform to council tax benefit, a point demonstrated by LGA analysis in the report 'The story so far: council tax support'.1 Any further reductions in funding will lead to a position where those on low incomes are dedicating a higher percentage of their earnings to the paying of council tax.
  • An increase in the taper (the rate at which support is withdrawn for each additional pound of income) is permissible under local schemes and will act as a disincentive to those on low incomes seeking to increase their earnings.

3 July 2014