Local authorities to seek minimum council tax payments

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

More than 100 councils fear they cannot plug the funding cuts in council tax benefit by hiking up rates on empty and second homes – with the “vast majority” set to introduce minimum council tax payments for working-age claimants.

The figure was revealed by Lib Dem peer Lord Shipley in the House of Lords on Tuesday during Lord Best’s unsuccessful attempt to spare low income households from new charges. He proposed an amendment – later withdrawn because of a lack of Labour Party support – which would allow councils to cut the single person’s discount, currently set at 25 per cent.

He said the amendment “would enable local authorities to raise the funds to bridge the gap in their funding without having to pursue those on the very lowest incomes”.

From next April, councils will be given 10% less to hand out to those struggling with housing costs and will be ordered to protect pensioners, meaning the cuts will fall on low-income working age claimants.

This could see those who have never paid council tax previously asked to pay close to £200 a year.

Lord Shipley – who supported Lord Best’s amendment – is a vice-president of the Local Government Association. He warned that despite the Government arguing councils could plug the gap in funding by charging a 100% levy on empty and second homes, many local authorities simply don’t have enough of the homes to make up the loss.

He said: “More than 100 councils are now in this position and the vast majority of schemes propose to introduce a minimum payment for working-age claimants. Half propose to set the minimum payment at 20% or more, about another quarter propose to set it between 10% and 20%, and the £100 million announced will make little practical difference because of rising demand.”

He added: "Today, around 750,000 people work but get council tax benefit. They get it because their income is low. However, in future a very large number of them could have to pay between £3 and £5 a week because of benefit loss, while higher earners will have no increase at all. As proposed, this will be a regressive step on the working-age poor and it has to be wrong. The amendment of the noble Lord, Lord Best, provides a solution.”

Tory peer Lord Jenkin of Roding – who also backed Lord Best’s amendment – was the Secretary of State who along with colleages devised the poll tax which “asked councils to collect very small sums from large numbers of people who had never before paid a local tax.”

He said: “We all know how that ended – with riots across the major cities and particularly here in London. I am in no doubt whatever that one of the major causes of the distress that provoked the riots was councils trying to collect what were inevitably small sums of money from large numbers of very poor families who had never before paid rates. I think that my noble friends in government are running the same risk with the current situation.”

Crossbench peer Lord Best warned that a number of the households affected were already facing reductions in the support that they receive for their housing costs; and many hundreds of thousands will be charged the new bedroom tax – averaging £14 per week for those deemed to have one spare bedroom and £25 per week for those deemed to have two-from the same day, 1 April 2013, on which they could have to start to pay council tax for the first time.

Baroness Hanham, parliamentary under secretary of state for the Department for Communities and Local Government, said dropping the single persons discount to 20% as suggested by Lord Best, “would be a potential tax increase for over 8 million people who at present receive the single person discount”.

She said: “The noble Lord [Best] suggests that that could go down to 20%. As has been pointed out, that is not what the amendment says. It says that you could remove the discount. Local authorities could be left going from 25% to 0% on the back of it. There is nothing in it at all to limit this to a reduction to 20%. If the noble Lord did that, I am absolutely certain that there would be objections from all around that that was not localism, it was restrictive, and that if we wanted to go further down this discount route the right thing would be to have the full range.”

The Government announced a further £100m of transition funding to help councils launch their own council tax support schemes by next April, however the fund - which adds to the £30m already announced - is only avilable for one year.