21 May 2004
Council tax benefit should be replaced with a 'liability cap' as a way of overcoming its stigma and improving low take-up rates, according to an influential think-tank.
The New Policy Institute, which was commissioned by the government to undertake research for the Balance of Funding review, says the benefit should be scrapped and replaced by a system that works out the maximum liability of each household for council tax.
This would be based on household income: those under a certain income level would pay no council tax and thereafter liability would be calculated on a sliding scale.
The NPI says the system, which would be administered by the Inland Revenue or the Pension Service, would transform the discount from a 'benefit' to an 'allowance' and therefore tackle the reluctance of many to claim what they consider to be charity.
NPI director Peter Kenway, addressing CIPFA's BoF conference on May 17, said the proposal, which has been submitted to ministers, would particularly help to address low take-up rates among the elderly.
Pensioners have been at the forefront of recent protests against big council tax increases, but official figures show that just 65% of those entitled to council tax benefit claim it.
'This can be presented as something very different to council tax benefit, which is a key part of getting take-up up,' Kenway said. 'Once you've hit your income cap, you're not going to be exposed to 13% increases.'
On May 18, benefits minister Chris Pond told the Commons' work and pensions select committee that the government was considering the NPI's proposals as a way of increasing take-up rates.
'It's an interesting proposal, but it's not one I can say we can adopt wholesale, certainly not in the short term. But we are looking at it,' he said.