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Exclusive: Local authorities set to cut council tax support to poor by a fifth

Our research shows people on low or no incomes hit by council tax hike

Local authorities across England are preparing to slash welfare payments to some of the most vulnerable people in society by an average of 20 per cent as a result of government funding cuts to council tax support schemes, according to new research published today by False Economy.

We analysed the proposals of 65 of the first councils to publish detailed plans for consultation over the new council tax support schemes.

Under the current system, people on low or no incomes have up to 100 per cent of their council tax paid by their local authority through council tax benefit.

However under the government’s new Universal Credit, council tax benefit will be scrapped.

Instead, local authorities will need to introduce local council tax support schemes – due to come into effect next year. The government has cut the money available for these schemes by ten per cent and said that no pensioners will lose out under the changes.

Our research shows that the overwhelming majority of councils plan to reduce support for low incomes households by an average of 20 per cent in order to accommodate central government cuts.

Other key findings include:

Many councils – including Conservative-run local authorities – have already written to the government urging ministers to rethink the cuts.

In total, nearly 330 councils will be implementing their own council tax support schemes, having been forced by the government to rush through consultations and IT contracts even though the legislation for the changes has not yet gone through Parliament.

The cuts in council tax support are due to take place from April 2013, at the same time as housing benefit is reduced and child benefit frozen. This combination of cuts will be a hammer blow to millions of people either out of work or on low incomes, particularly as most people’s wages are also falling in real terms.

Many in local government fear that the changes to council tax support will cause severe administrative difficulties locally. The combination of welfare cuts targeted at the most vulnerable in society will also increase poverty and could lead to mass non-payment of council tax.

Swingeing cuts to council tax support could lead to levels of non-payment similar to that which happened under the poll tax, with taxpayers’ money spent chasing council tax payments through the courts from people with no hope of ever being able to pay up.

Consultation failure

The research has also identified 12 councils that do not appear to have provided clear information to the public on a key proposal – how cutting council tax benefit will affect all claimants who are currently receiving help with their council tax bills.

They councils are: London Borough of Bexley, Maldon District Council, Braintree District Council, Basildon District Council, Babergh District Council, Mid Suffolk District Council, Ipswich Borough Council, Stockton-on-Tees Borough Council, Colchester Borough Council, Birmingham City Council, Hull City Council and Wakefield council.

While all 12 councils mention an overall cap on benefits, none of them state that they are also proposing across-the-board cuts for all claimants. Such a major omission renders the consultation exercises flawed, and possibly challengeable under law.

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