Town halls cut council tax support for third year, report finds

2 Apr 15

A quarter of a million low-income households in England will pay more in council tax from this month following cuts in the support schemes run by town halls, a report has concluded.

Council Tax - Akin Falope

Research by the New Policy Institute think-tank found 250 councils in England will require all residents to pay some council tax this year regardless of income, up from 229 in 2013/14. The range of these ‘minimum payments’ is between 5% and 30% of household liabilities, the report stated.

According to the NPI, the council-run schemes – which replaced Council Tax Benefit in April 2013 when funding was devolved to councils and cut by 10% – mean the poorest families pay £167 more in 2015/16 than they did under the former system.

Under the localisation rules, councils were not able to reduce the level of support offered to pensioners, which has led a majority of authorities to now require all working-age residents to pay a proportion of their council tax liability regardless of income, according to the council tax support update report.

It stated that: ‘250,000 low income families will see their council tax payments increase substantially because they live in one of the 27 areas that are increasing or introducing the minimum payment. One of the councils reducing its payment cited increasing council tax arrears a major concern.’

Hannah Aldridge, senior researcher at NPI, said the discounts available to those of working age on low income had been eroded for a third year in a row, despite the government capping overall council tax increases at 2% and offering a grant to freeze rates.

‘Now 2.3 million of the poorest families pay on average £167 per year more in council tax than they would have at the beginning of this parliament,’ she said. ‘By abolishing Council Tax Benefit but capping council tax rises, the government has left the poorest families exposed to the sharpest rises in council tax.’

  • Judith Ugwumadu

    Judith Ugwumadu joined Public Finance International and Public Finance online as a reporter after stints at Financial Adviser, Global Security Finance and The Sunday Express. Currently, she writes about public finance, public services and economics.

    Follow her on @JudithUgwumadu_

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