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Millions of people 'face council tax rise' 'Millions of low-income households' face council tax rise
(about 3 hours later)
Up to two million of the poorest households in England face higher council tax bills this year, the Local Government Association (LGA) says. Millions of the poorest households face council tax rises because most councils in England will pass on a 10% cut in funding from April, research suggests.
From 1 April the government will cut by 10% the funds available to help reduce the council tax of people on low incomes. A typical bill will rise between £100 and £250 a year, but some could rise as much as £600, according to think tank the Resolution Foundation.
The government argues that such welfare reform is vital to tackle the budget deficit. Its report coincides with the deadline for local authorities to submit their plans for changing council tax benefit.
Debt charity StepChange said some homes would be unable to afford the change. Responsibility for the benefit is being moved from the government to councils.
At present, 3.7 million people in England claim council tax benefit, in full or partial payment of their council tax. At the same time, the total spent on the benefit, which is to become known as council tax support, is being cut by 10%.
But in England from April, local authorities will become responsible for administering a new scheme, called council tax support (CTS), with the money they receive from central government to pay for it cut by 10%. In Wales, the cut is being absorbed by the government, and not passed on to local authorities.
Devolved issue 'Poll tax'
Pensioners will be protected under the new scheme, so will continue to receive the same level of help with paying council tax as they did previously. In Scotland, the cost is being shared between councils and the Scottish government, maintaining support for low-income residents.
There may also be limited protection for "vulnerable" households, particularly where children are involved. There is a wider, highly charged, political context to this issue.
People living in Scotland and Wales will also be unaffected, as the devolved administrations have decided to find the money elsewhere. Ministers present themselves as being on the side of those who want to "work hard and get on". They say they are ending the "something-for-nothing culture".
All of which means that English councils are likely to target people of working age, but who are amongst the poorest in society. Some will be out of work. They emphasise that more money is currently spent on benefits than on defence, education and health combined.
The Local Government Association says this will affect two million people, who on average will have to pay almost £350 a year more. Some will be paying a proportion of council tax for the first time. While delivering their tough - and they believe popular - rhetoric, ministers do not accept any blame if the poorest are hit the hardest.
A StepChange spokesman said: "We're worried they will be forced to choose between eating, heating or taking out credit in order to pay council tax demands." The view from government is that there is no need for councils to ask the lowest income households for money. Instead they should find more efficient ways of operating, protect the vulnerable and deliver better value for money for all council tax payers.
'Close to edge' Many councils accuse ministers of devolving responsibility for a hugely controversial cut.
At least 40 local authorities in England have decided to maintain current levels of support. Durham County Council and Tower Hamlets are amongst those which will absorb the costs of CTS into their budgets. The political heat on this has been rising in recent days in council chambers across England.
But according to a new survey, three-quarters of English councils have voted to place the extra burden on households which currently claim council tax benefit. What seems at first to be an obscure, rather technical, debate about how a benefit is distributed, could soon emerge as a critical issue in the battle over welfare.
The study, by the Resolution Foundation, says that some people could face increases in their bills of £600 a year. But the 326 councils in England could be left with a shortfall if they intend to maintain the level of existing payments.
"Millions of England's poorest households, both in and out of work, are already very close to the edge," says Gavin Kelly of the Resolution Foundation. "They are going to find it very hard to cope." Some are finding savings from elsewhere in their budgets, in order to protect the incomes of the poorest households.
Tax freeze At least 40 local authorities have decided to maintain current levels of support. Durham County Council and Tower Hamlets are amongst those which will absorb the costs of CTS into their budgets.
By Thursday evening, all 353 local authorities in England must decide how they are going to pay for the new council tax support. The government has also put forward £100m of support for those councils that limit the council tax increase for those on benefits or low pay to 8.5%.
Apart from increasing charges to householders, many are also reducing or removing a rebate available for a second adult living in the house. Ministers say the total paid out in council tax benefit doubled under the last government and welfare "reform" is vital to tackle the budget deficit.
Two-thirds of councils are expected to introduce a minimum payment. For example, many people will now be asked to pay a minimum of 8.5% of the council tax, regardless of their income. They say the changes will give councils the incentive to help people off benefits and into work.
Others will also lower the amount householders are allowed to save while still qualifying for support. Council tax benefit is currently claimed by about five million households in England - about half get 100% support, meaning they currently pay no council tax at all.
At the moment most people are allowed to save £16,000 and still claim. According to the think tank the New Policy Institute, a fifth of councils will now reduce that threshold to £6,000. But the Resolution Foundation says that three-quarters of authorities in England are planning to demand a new or higher payment from the lowest income households.
The Local Government Association fears that for many people, paying the council tax may become extremely difficult. This comes at a time when other benefits may also rise more slowly than the cost of living, and the government introduces an overall cap on benefits.
"Paying the tax will be pretty low down the priority list, when you've got to feed yourself and feed your kids," said a spokesman. Because pensioners are fully protected, those of working age are, in many areas, being asked to shoulder a much greater burden.
"Millions of England's poorest households, both in and out of work, are already very close to the edge," said Gavin Kelly of the Resolution Foundation. "They are going to find it very hard to cope."
Some campaigners have likened the change to the "poll tax", in that people are asked for a contribution regardless of their ability to pay.
'Low priority'
The Labour Party says the policy is deeply unfair, and will cause havoc with hundreds of thousands of people unable to pay the bills.
Many in local government fear that councils will be left with a financial black hole, as the cost of pursuing those who do not pay through the courts could be higher than the revenue the authorities will raise from them in tax.
The Local Government Association, which represents local authorities, said: "Paying the tax will be pretty low down the priority list, when you've got to feed yourself and feed your kids.
"That could mean overall collection rates will go down, meaning less money for all council services.""That could mean overall collection rates will go down, meaning less money for all council services."
The Department for Communities and Local Government said it had introduced a two-year freeze on council tax, with a further year to follow.
Local Government Minister Brandon Lewis said: "Under the last administration, more taxpayers' money was being spent on benefits than on defence, education and health combined.Local Government Minister Brandon Lewis said: "Under the last administration, more taxpayers' money was being spent on benefits than on defence, education and health combined.
"We are cutting council tax in real terms for hard-working families and pensioners, and we are on the side of people who work hard and want to get on.""We are cutting council tax in real terms for hard-working families and pensioners, and we are on the side of people who work hard and want to get on."