NAO urges DCLG to measure impact of council cuts

12 Dec 13
The Department for Communities and Local Government must do more to measure the cumulative impact of cuts on councils to ensure that town halls are able to manage the reductions, the National Audit Office has said.

By Richard Johnstone | 13 December 2013 

The Department for Communities and Local Government must do more to measure the cumulative impact of cuts on councils to ensure that town halls are able to manage the reductions, the National Audit Office has said.

Spreadsheet

In a report examining the impact of the localisation of Council Tax Benefit from April, the NAO said the department had worked effectively with local authorities to ensure that local support schemes were introduced on schedule.

As part of the controversial reform, funding for Council Tax Benefit was cut by 10%, with local authorities required to set up their own eligibility criteria for claimants or make up the difference themselves. They were required to maintain support to pensioners.

Examining schemes across England, auditors said 71% of local authorities have required working-age claimants to pay at least some council tax, regardless of income.

In addition, 41% of local authorities have introduced minimum payments of council tax with no protections for vulnerable groups, other than those mandated for pensioners.

This means that some support schemes will not achieve the objectives for protection of the vulnerable outlined by DCLG before the policy was implemented, the NAO warned.

For many local authorities, the reduction in funding for council tax support has combined with other cuts – and the knock-on effect of other welfare changes – to put extra pressure on their budgets. According to the NAO, the department must do more to satisfy itself that local authorities can manage the cumulative impact of funding and welfare changes.

‘The central government reduction in funding for council tax support contributes to the overall pressure on local authorities’ finances,’ auditor general Amyas Morse said.

‘The department must improve its understanding of how funding changes and wider welfare reform will combine to affect local authorities.’

The Local Government Association said the NAO report showed that localisation had left councils in an impossible position.

Sharon Taylor, chair of the LGA’s finance panel, said that the NAO recognised that introducing the new council tax support schemes on time was a considerable achievement.

‘But, as this report recognises, councils have been pushed into an impossible position by the government’s 10% cut in funding for council tax support. This comes on top of the 43% cut to local government funding and as a result many local authorities have been left unable to protect those who can least afford to pay.

‘Because of government’s stipulation that pensioners have their council tax benefit protected, councils have been forced to choose between asking working-aged claimants to pay more tax or taking much-needed money away from other services.’

However, local government minister Brandon Lewis insisted the policy was working.

‘Localised council tax support has also given councils stronger incentives to support local firms, cut fraud, promote local enterprise, get people into work and end the “something-for-nothing” culture,’ he said.

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