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UK's poorest families hit by removal of council tax benefit - JRF

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UK's poorest families hit by removal of council tax benefit - JRF

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Published by Jon Land for 24dash.com in Local Government and also in Bill Payments, Central Government, Housing

Nearly 600,000 poor families hit by removal of council tax benefit - JRF Nearly 600,000 poor families hit by removal of council tax benefit - JRF

Nearly 600,000 poor families in England are facing a second successive year of above average council tax rises, according to research for the Joseph Rowntree Foundation.

A total of 2.3 million low income families will pay an average £149 a year more in council tax than they were paying before April 2013. This includes 580,000 families paying £54 more this year on top of the £97 rise they faced last year. This is in contrast to the UK government’s determination to limit overall council tax increases to 2%.

The findings are detailed in a New Policy Institute (NPI) report for JRF. The report is the first, full assessment of council tax support (CTS) 12 months on from its introduction.

Last April, council tax benefit was abolished and replaced by CTS. England's 326 local councils had to devise their own CTS schemes, but with 10% less funding. Pensioners remained fully protected as before.

To limit the impact in the first year, government gave a one-year transitional grant to councils whose minimum payment was 8.5% or less of a household’s normal liability. Today’s research analyses the choices made by councils after that grant had come to an end.

At the start of the second year of CTS, the analysis finds:

  • Almost half a million (490,000) low income families who before April 2013 paid no council tax will now be paying more than £200 a year. From this week, 70,000 poor households are paying council tax for the first time, facing average bills of £114.
  • Of the 2.3 million affected families, 1.5 million are below the income poverty line and 1.8 million are workless and whose sole income is from means-tested benefits.
  • 244 out of 326 councils have introduced minimum payments – up from 229 last year - for poor families regardless of their income. 45 have retained previous levels of support, 13 fewer than last year.
  • There is significant variation in the level of the minimum payment increases - 69 councils require 8.5% or less, while 47 have charges of 20% or more.
  • The end of the transitional grant to protect against larger increases is behind the rise in local authorities introducing minimum charges or increasing the charges from last year. Arrears have increased where minimum charges have been introduced - while the collection rate of council tax fell.

Chris Goulden, head of poverty research at JRF, said: “For a second successive year, the country’s poorest families are facing big increases in council tax. This change to the welfare system is largely below the radar but has significant impact for families already struggling to get by on a low income. Paying this tax increase will be beyond most, pushing them into deeper hardship.”

Sabrina Bushe, co-author of the report at NPI, said: “People previously deemed too poor to pay anything now face a hefty council tax bill. English councils have to hold a referendum if they want to put council tax up by more than 2%. This government policy, aimed at keeping rises down, has been a success. Now the transitional grant has gone, it is time that government offered the same protection to the poorest households.”

Respondiong to the report, Cllr Sharon Taylor, chair of the Local Government Association's finance panel, said: "When government handed the responsibility for administering council tax support to local authorities, it cut hundreds of millions in funding for it.

"The shortfall between the money councils receive to fund council tax support and the money we would need to protect those on low incomes is getting bigger and is likely to reach £1 billion by 2016. At the same time, councils are tackling the biggest cuts in living memory and cannot afford to make up the difference.

"Local authorities are facing an impossible dilemma between asking working-aged claimants to pay more tax or taking much-needed money away from other services. Councils want to protect those on low incomes but this is being made increasingly difficult by government cutting funding and taking some of the decisions about who receives this benefit out of our hands.

"Government should consider giving local authorities the full amount of funding needed to provide council tax support and ensure that decisions over council tax and discounts are fully localised."

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