Four out of five town halls cut back council tax support for working households, IFS finds

22 Jan 14
Four out of five local authorities reduced entitlement to help with council tax bills after responsibility for Council Tax Benefit was devolved to the local level last April, the Institute for Fiscal Studies has found.

By Vivienne Russell | 22 January 2014

Four out of five local authorities reduced entitlement to help with council tax bills after responsibility for Council Tax Benefit was devolved to the local level last April, the Institute for Fiscal Studies has found.

Research published by the IFS yesterday also revealed that, with authorities ordered to protect pensioners’ access to the benefit, entitlements were reduced for 2.5 million working-age households by an average of £160.

Of the 2 million working-age households in England that could have claimed full relief under the old system, 70% (1.4 million) are liable to pay some council tax in 2013/14. Half (1 million) are liable for at least £85, a quarter for at least £170 and 10% liable for at least £225.

The research also found that more deprived local authorities were more likely to introduce minimum council tax payments because funding cuts were bigger in those areas. Minimum payments were also more likely to feature if pensioners accounted for a larger share of council tax benefit spending.

Stuart Adam, a senior research economist at the IFS and co-author of the report, said: ‘Localising council tax support has, of course, led to considerable variation in the level of support available. Low-income working-age families are now likely to receive more help with their council tax if they live in a better-off area without too many low-income pensioners among their neighbours. Conversely, working-age people living in poorer areas and in areas containing more low-income pensioners receive less help.’

The research found that the changes had resulted in an increase in the number of people seeking advice about council tax debt. Introducing minimum payments of more than 8.5% of the gross council tax bill led to increases of 30-40% in Citizens Advice Bureaux queries between July and September.

Robert Joyce, senior research economist at the IFS and the report’s other co-author, said: ‘Introducing minimum payments has increased the number of people seeking advice about council tax debt. It remains to be seen how successfully the local authorities concerned manage to collect the council tax that they have asked for.’

Commenting on the IFS’s findings, Citizens Advice chief executive Gillian Guy said:

‘The localisation of council tax support has thrown household budgets into disarray as people try to find extra money to cover the cost of paying council tax for the first time. The impact of these changes was immediately evident as 37,000 people sought online help from Citizens Advice about council tax in April 2013 - 87% higher than the same period in 2012.

‘It’s very important local authorities understand the financial pressures many people in their area will be under and reflect on the suitability of their local support schemes accordingly.’


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