The country's poorest areas will bear the brunt of the Government's £500 million cut to council tax benefit funding, local government leaders warn.
New analysis from the Local Government Association (LGA) shows that the cut, which is being introduced alongside moves to pass responsibility for administering council tax benefits from Whitehall to local authorities, could see more than two million people, including the working poor and young unemployed, paying on average £247 more in council tax each year.
Under the reform, councils will be allowed to recoup some of the cut by discontinuing discounts for second homes and empty properties. However, the Government has enshrined council tax discounts for all pensioners currently eligible for benefits and those living on their own, regardless of their income.
The LGA, which represents more than 350 councils in England and Wales, is concerned that the money available from scrapping discounts for second homes and empty properties falls well short of the £500 million cut councils are required by the Government to implement.
It warns that the cut is also likely to hit hardest councils and residents in the poorest, most deprived areas of the country, where the numbers of second and holiday homes are usually low and the number of benefits claimants high. In these areas the money that can be raised by reducing the discounts on second homes will fall well short of covering the 10 per cent cut in funding, meaning benefit claimants in these areas will have to carry a higher proportion of the cut. Groups, including the working poor and the young unemployed, could see their council tax rise by on average £247 per year, and in many areas much more, unless councils take an alternative decision to either increase everyone's council tax, or cut the funding for other services to pay for ongoing support.
The LGA is calling on the Government to make the reform fairer by giving local authorities greater flexibility over all forms of council tax discount, so that help can be offered to those local people who need it most.
LGA Chairman, Sir Merrick Cockell, said:
"The £500 million cut is impossible to deliver without cutting services, increasing council tax for everyone or asking the working poor and young unemployed to pay an extra £247 a year. The Treasury has made the cut and left councils to make incredibly tough decisions and face the inevitable fallout.
"The poorest regions and the most vulnerable people will be hardest hit by this cut unless the Government offers councils more flexibility over all forms of council tax discount. It is the only way that councils can ensure that the greatly reduced funding for council tax benefit is targeted at the local people who need it most."
Author: LGA Media Office
Contact: LGA Media Office, Telephone: 020 7664 3333
Notes to editors
Reform of council tax benefit will be debated in the House of Lords when the Local Government Finance Bill receives its second reading on Tuesday 12 June.
According to the Department for Work and Pensions, there are currently 5,919,550 council tax benefit recipients in the UK, of which 2,211,870 are aged 65 or over and 1,686,170 are families with children. Under the Government's rules these two groups will see their benefit protected from the cut, leaving 2,021,510 working age recipients to share the £500 million cut, an average of £247 each.
All currently eligible pensioners and ‘vulnerable groups' will have their council tax benefit entitlement protected under the proposed reform. Government guidance on what constitutes ‘vulnerable groups' makes reference to local authorities' responsibility to mitigate child poverty. As a result the LGA analysis is based on the assumption that councils will protect benefits for families with children.
22 June 2012