Councils issue tax bills warning

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Published: Tuesday 6th January 2015 by The News Editor

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Dozens more local authorities in England are set to send council-tax bills to low-income households for the first time because of a £1 billion-plus shortfall in Whitehall funding, town-hall bosses warned.

The Local Government Association (LGA) said a squeeze on budgets had landed councils with an “unpalatable choice” of ending discounts for the worst-off families or making further deep cuts to vital services.

It said even more would start receiving bills or face larger demands unless ministers restored funding levels.

But the switch away from a national assistance scheme was defended by the Government, which said it had increased incentives on authorities to become more efficient.

Responsibility for council-tax benefit was switched to 326 individual authorities in April 2013, with the central funding provided to support it cut by 10% as ministers sought to cut the annual £4.3 million bill to the taxpayer.

The LGA said that with councils already being asked to find £2.6 billion savings in 2015/16 due to a cut of 8.8% in overall government funding, they were left with “little choice” but to recover more cash from poor families.

Only 45 still offer the same discounts as they did before 2013 – 13 fewer now than last year – with the number now billing every household for at least some tax rising 15 to 244.

In total, 14% planned changes this year.

Pensioners are protected from the changes.

The LGA also linked the reforms to a rare drop in collection rates last year.

LGA chair David Sparks said: “Government reduced funding for council tax support by hundreds of millions of pounds when it handed the responsibility for administering it to councils.

“As a result, councils would need to find £1 billion by 2016 to protect discounts for those on low incomes. At a time when local government is already tackling £20 billion worth of cuts, this is a stretch too far.

“Many councils have been put in an impossible position. This cut has taken millions of pounds out of funding for local services and increased the cost of living for some of society’s poorest.

“No-one wants to ask those on the lowest incomes to pay more. But faced with significant cuts to the money we receive to look after the elderly, protect children, repair the roads and collect the bins, many councils have had little choice but to reduce the discount.

“Councils know how tough things are and are doing their best to protect those affected the most, whether through introducing hardships funds or changing the way we collect unpaid tax. But these measures can only go so far in alleviating the burden.

“To address this unfairness, government must give local areas the full amount of funding required to provide council-tax support to those who need it.

“Otherwise, it is almost inevitable that further cuts to local government funding in the coming years will further force up bills for those who can least afford to pay.”

Local Government Minister Kris Hopkins said: “Spending on council tax benefit doubled during the last decade, costing taxpayers more than £4 billion a year – equivalent to almost £180 a year per household.

“Welfare reform is vital to tackle the budget deficit this Government inherited and our reforms to localise council-tax support now give councils stronger incentives to support local firms, cut fraud, promote enterprise and get people into work.

“We are returning fairness to the system and making work pay.”

Jonathan Isaby, chief executive of the TaxPayers’ Alliance pressure group, said: “Council tax has nearly doubled in the last 10 years, so it isn’t fair for local authorities to ask residents to plug the gaps in their finances.

“What’s more, council tax already hits the poorest hardest and a tax will only make matters worse for families struggling to make ends meet. Instead, local authorities must wage a war on wasteful spending and prioritise essential services.”

Published: Tuesday 6th January 2015 by The News Editor

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