LGA wants council tax benefit reform

13 Jan 05
Town hall leaders are demanding urgent reform of the 'out of date and failing' council tax benefit regime, which they say penalises the very people it is supposed to help.

14 January 2005

Town hall leaders are demanding urgent reform of the 'out of date and failing' council tax benefit regime, which they say penalises the very people it is supposed to help.

The Local Government Association said the savings limits, which determine eligibility for help with council tax bills, were now so low that only those most in need received benefit.

It criticised the government for allowing the limits to remain frozen for 15 years: pensioners with more than £6,000 saved have their benefits reduced, and receive nothing if they have more than £16,000.

LGA vice chair Sir Jeremy Beecham said reform of the benefit regime was central to tackling the unfairness of the tax, which places a disproportionate burden on those with low fixed incomes.

'Council tax benefit is failing those it is designed to help. We believe the government could make a massive difference by implementing some simple and quick reforms,' he said.

'Had thresholds increased in line with wages, prices and, vitally, council tax itself, the limits would have been up to 100% higher, making all the difference to so many people on low incomes.'

The LGA made its call as ministers launched a campaign to encourage the estimated 2.3 million people who are eligible for council tax benefit but do not claim it to apply.

It published research on January 11 that showed a 100% rise in the savings limits would cost £160m a year, while abolishing them altogether and considering only income would cost £510m. The government saves an estimated £1.2bn annually from unclaimed benefit.

Council tax benefit reform is being considered as part of Sir Michael Lyons' local government finance review. 'It would be a simple and low-cost route to helping people, especially pensioners, without waiting for full council tax reform,' Beecham said.

The demands for reform come as the government prepares to launch its consultation on the future of local government later this month.

Its confirmation last week that this could include structural reorganisation has triggered a spat among town hall chiefs.

Ken Cleary, chair of the National Association of Local Councils, took the LGA to task for criticising government plans to give parish and town councils powers to run some services.

He said: 'Empowerment of local communities is central to achieving modern and effective local government. People want greater control over the local decisions that affect them. Too often people feel they do not have the power to exercise that control.'

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