Peers yesterday voted for the impact of Council Tax Benefit cuts to be reviewed within three years of the funding devolving to town halls.
They backed an amendment to the Local Government Finance Bill tabled by Labour Baroness Hollis by 203 votes to 165.
Funding for Council Tax Benefit is to be localised in England from next April, but only after it has been cut by 10%. Town halls have been instructed not to cut the benefit for pensioners, so are designing new eligibility criteria for working-age people.
Last week, the government announced extra funding would be available to authorities that ensure residents currently receiving 100% of the benefit pay no more than 8.5% of their liability after the localisation. This comes after some town halls had proposed charging everyone at least 25% of their bills. Authorities need to finalise their schemes by January.
Hollis’s amendment during the third reading of the Bill called on Local Government Secretary Eric Pickles to ‘make provision for an independent review of all council tax reduction schemes’ within three years of localisation. This would consider the ‘effectiveness, efficiency, fairness and transparency’ of the local schemes, and also examine whether they should be brought within the Universal Credit.
However, another amendment, which proposed giving councils flexibility to vary the 25% single person council tax discount to help fill the funding gap, fell by 299 votes to 64. This amendment had been backed by the Local Government Association.
Responding to the Lords’ call for a review, a Department for Communities and Local Government spokeswoman said it would ‘consider carefully’ the amendment. The Bill returns to the House of Commons on October 31. ‘Spending on council tax benefit doubled under the last administration and welfare reform is vital to tackle the budget deficit we have inherited,’ the spokeswoman added.
However, the LGA warned that the amendment’s call for the Council Tax Benefit scheme to be rolled into the single Universal Credit would take ‘a bad situation and made it worse’.
Chair Sir Merrick Cockell said this ‘would likely have a huge impact on councils’ ability to collect the tax, which would have a knock-on effect on public services’.
He added: ‘As it stands the legislation places councils in a difficult position and many will have little option but to ask people on low incomes to pay more council tax in future.
‘It is disappointing that a common sense compromise was not reached to give local areas greater control over all types of council tax discount. This would have given councils greater flexibility in managing the 10% cut to council tax support funding and the means to set sensible discounts for the less well-off.’
