Labour has warned that millions of poorer people across England will have to pay more council tax from next April following devolution of the benefit to local authorities.
Shadow local government secretary Hilary Benn said localisation of the Council Tax Benefit, along with a 10% cut in funding, would force authorities ‘to chase people on low incomes for money they simply don't have’.However, the Department for Communities and Local Government said the move, included in theLocal Government Finance Bill currently before Parliament,would increase councils’ incentives to support local firms and to cut fraud.
Benn was speaking after a number of authorities published details of their proposed new eligibility criteria for consultation. Town halls have been instructed not to cut the benefit for pensioners, and are unable to reduce the separate single person’s discount. This leaves them with the option of reducing eligibility criteria for working-age people or filling the funding gap themselves.
Currently six million people have some or all of their tax paid through the benefit.
Manchester City Council plans to make all non-pensioner residents pay something towards their council tax bill. Its consultation, launched on August 3, includes a proposal to cap Council Tax Benefit at 85% of the total, meaning everyone would have to pay a minimum of 15% of the tax.
The London Borough of Barnet, which launched its consultation on the same day, could charge working age residents even more – 10% to 25%.
In May, the Institute for Fiscal Studies warned that local authorities faced a ‘tough challenge' in taking control of council tax support as funds have been cut by 10%.Benn said the rebate system was introduced in 1992 following ‘widespread and serious problems’ in collecting the Community Charge – or “poll tax” – from unemployed people.
‘Local authorities face a terrible dilemma,’ he added. ‘Do they increase council taxes on the working poor – over 760,000 people nationally work but have lower council tax because their income is low – or the disabled or families with young children?
‘Just as happened with the poll tax, councils will be forced to chase people on low incomes for money they simply don't have.’
Responding to the comments, local government minister Grant Shapps said: ‘Spending on Council Tax Benefit more than doubled during Hilary Benn's time in power and welfare reform is vital to tackle Labour's budget deficit. Under Labour more taxpayers' money was being spent on benefits than on defence, education and health combined.
‘Our reforms will localise council tax support and give councils stronger incentives to support local firms, cut fraud, promote local enterprise and get people off the dole. We are ending Labour's something-for-nothing culture, which Hilary Benn is so keen to promote, and making work pay.’
