28 September 2007
One third of households could have their bills reduced if the council tax benefit system were reformed, the Local Government Association has said.
One in three households is entitled to council tax reductions but many are unaware of this. A study commissioned by the LGA from the New Policy Institute highlighted failings in the present system which mean that many people are unable to claim as much as they could.
For example, people who claim Working Tax Credit almost always lose council tax benefit, and people start to lose out on council tax reductions even before they start paying income tax.
Sir Jeremy Beecham, vice-chair of the LGA, said: 'The system has been failing society's most vulnerable for too long. Root and branch reform is sorely needed.
'An eye-watering £1.8bn goes unclaimed every year. Part of the problem with take-up is the benefit is wrongly seen as something only for the very poor... Council tax benefit should be seen as a tax allowance, not a handout.'
The report, published on September 21, called for the level of income at which people start to miss out on council tax savings to be reduced, and for people with greater savings to be able to claim reductions.
More measures are also needed to stimulate a take-up of benefit, including a publicity campaign aimed at pensioners in particular, it said.
But Beecham said that physically going into people's homes and helping them to apply was just as important as publicity campaigns. Poor take-up was only one aspect of the problem, he said, pointing to serious structural shortcomings in financial limits and eligibility.
'It is wholly unjustifiable for people to lose council tax benefit even before they begin paying income tax. The system stops people with even modest savings from claiming reductions. These thresholds must be changed to provide greater help to more people,' he said.
PFsep2007
