London borough's £1m hole in council tax fund prompts Universal Credit plea

Published by 24publishing for 24dash.com in Housing and also in Central Government, Communities, Local Government

The London borough of Richmond says it is facing a £1m cut in the funding it receives to help low-income families with their council tax and is calling on the Government to integrate the benefit into Universal Credit.

Town halls across the country are facing the challenge of taking on the responsibility for devising new council tax benefit schemes whilst managing the Government’s decision to cut the funding provided for such schemes by 10%.

The benefit - which is claimed by nearly 6 million people - is currently administered by local authorities and is 100 percent funded by the Department for Work and Pensions.

However, under new proposals, the Government plans to abolish council tax benefit across Britain from 2013–14 and give local authorities in England, and the Scottish and Welsh governments, grants to create their own systems for rebating council tax to low-income families – though pensioners in England will have to be fully protected. It wants the locally run schemes to support work incentives and, in particular, avoid disincentives to move into work.

Earlier this month, a report by the Institute for Fiscal Studies warned that the requirement to protect pensioners in England will imply a 19% cut in support for working-age claimants, on average.

For Richmond, protecting pensioners means that the real cut in funding is nearer 18%. Councils are also required to pay due regard to the disabled and to vulnerable children, whilst at the same time introducing incentives to work.

The council's Finance Overview and Scrutiny Committee is meeting next week to consider all the options available and offer their comments to Cabinet.

Cllr Geoffrey Samuel, Richmond Council Cabinet Member for Finances and Resources, said: “At a time when the Government is redesigning the welfare state system to simplify benefits, it would make more sense if council tax benefit were incorporated into Universal Credit. In common with most other councils, I have urged the Government to reconsider these proposals and review their plans for Universal Credit, the single benefits system, which is due to launch next year and does not include council tax benefit.

“The Bill introducing council tax support will not reach the statute book until the Autumn so there is plenty of time for the Government to amend the scheme.

“However, in the meantime we face the challenge to devise a new scheme. If we simply pass on all the cuts, it will make a huge difference to many benefit-recipients who may also be experiencing a reduction in their housing benefit. But, if we maintain the present system we shall have to find an additional £1m – which will obviously have an impact on both services and the level of council tax.

“I can assure residents that we shall work hard to produce a scheme that is fair – fair to existing benefit recipients, but fair also to all our residents.”

Communities secretary Eric Pickles insists councils will have a much greater stake in the economic future of their area and greater incentives to support local residents back into work.

He said last year: “The new system will be a fairer one, where hard working families and pensioners are not left to pick up a spiralling benefits bill and where hard work always pays.

 “Councils will be much better placed to attract new business and industry, better placed to help their residents get off welfare and reap the benefits of work instead. They will directly benefit from improving the prosperity of the local area that will in turn drive down their benefit bill.

“Local authorities will have much greater freedom to administer rebates in a way that best meets local needs and best supports local people whilst safeguards will be put in place to protect the most vulnerable, including pensioners, from any reduction in the support that is on offer.”

The council says it will carry out a consultation on a proposed scheme later this summer.