Benefit cuts hit 300,000 of the poorest households with hefty council tax hikes

  • Cuts to local benefit schemes mean big council tax rises for low income households
  • 39 councils will impose tax hikes on nearly all poor working age residents
  • Court summonses and bailiff action likely to ensue, with picture worsening in coming years

By Chaminda Jayanetti

Up to 300,000 households on the lowest incomes face inflation-busting council tax rises from next month after one in five councils across England cut local benefit schemes.

Sentinel News has found that 58 out of 304 councils are making cuts from this April to their local Council Tax Support (CTS) schemes, which cover the council tax bills of the poorest residents.

Council tax is one of the most regressive taxes, as it eats further into poorer households’ budgets than those of rich households. This has been compounded by CTS cuts.

Across England, 39 councils are cutting CTS for almost all working age claimants, thereby imposing much higher council tax bills across the board. Nineteen other councils stopped short of this and are cutting other aspects of their CTS schemes. Pension age claimants are protected from CTS cuts by law.

The data is sourced from Freedom of Information requests and council reports. The policies of 22 councils are not known.

Don’t know how Council Tax Support works? Read our explainer here

Benefit cuts that bite

Using figures from the New Policy Institute think tank (link to spreadsheet here), 328,400 working age households claimed CTS in 2015/16 from the 39 councils that are imposing across-the-board cuts in 2016/17.

Falling unemployment means the number of people claiming CTS falls slightly every year, and some claimants fall into locally defined “protected groups” that are shielded from cuts – but as many as 300,000 households will nevertheless be hit by much higher council tax bills from April.

The poorest working age claimants in Bracknell Forest, Coventry, Eastbourne, Lewes, Luton, Richmond-upon-Thames, Rother, Wandsworth, Wealden and Wokingham will have to pay part of their council tax bill for the first time on low incomes, as these councils ditch their 100 percent protection for CTS claimants.

Cuts to CTS since 2013 have seen hundreds of thousands of people summoned to court over unpaid council tax bills, with councils hiring bailiffs to chase benefit claimants for money they don’t have. In 2013/14, the first year of the cuts, the number of households summoned to court over council tax arrears shot up by a quarter.

Cuts in all corners of the country

The biggest cut anywhere in England is in the Conservative-run London borough of Wandsworth, which is cutting its maximum CTS payment from 100 percent of a council tax bill to 70 percent – meaning that working age claimants will have to pay at least 30 percent of their council tax bill from April.

In 2015/16, there were 13,300 working age CTS claimants in Wandsworth. The annual council tax bill for a Band A property – the lowest value – in Wandsworth will be £449.48 in 2016/17, leaving the poorest CTS claimants having to find an extra £134.84 during the next twelve months. Those living in a mid-level Band D property will have to pay more than £200 next year.

The other councils making cuts to all “non-protected” working age claimants are: Bexley, Braintree, Brighton, Bromley, Burnley, Cheshire East, East Northamptonshire, Enfield, Epping Forest, Hillingdon, Horsham, Hyndburn, Kettering, Medway, North Kesteven, North Lincolnshire, North Tyneside, Northampton, Poole, Redbridge, Richmondshire, Rochford, Rushmoor, Scarborough, Tameside, Waltham Forest, West Berkshire, West Lindsey and Wyre Forest.

These councils had already made cuts to their schemes in previous years. The average cut across these councils is 10 percent. In addition, members of defined protected groups in Newcastle and Ealing will have to pay council tax for the first time.

Trimmings on the side

Other councils are cutting different aspects of their CTS schemes which affect some claimants but not others, such as withdrawing benefit from people with at least £6,000 in savings, or capping benefit for people living in larger homes – including those with larger families.

Many councils are scrapping the Family Premium payment for new claims, in line with government policy on Housing Benefit. Sentinel News identified 14 councils where this was the only cut being made; these are excluded from the figure of 58 councils making cuts because other councils did not disclose their Family Premium cuts in responding to our FOI request. Were all these councils to be identified and included, the total number of councils making cuts would be higher.

In 2013/14, the first year of the CTS system, 229 councils imposed cuts on all working age claimants. 76 councils made across-the-board cuts in 2014/15, as a one-year “transitional grant” from central government ran out. 25 councils made across-the-board cuts in 2015/16, so this year’s 39 councils represent a rise of more than half on last year.

The grant provided by central government to councils to fund CTS has now been merged into the broader Revenue Support Grant, and this will reduce to zero over the coming years. As a result, CTS cuts are likely to accelerate in the years to the next general election, at a time when council tax rates for all residents are rising again after a five-year freeze.

Council Tax Support – an explainer

CTS is the benefit scheme that protects people on very low incomes from having to pay their full council tax bill.

It was introduced in 2013 after the coalition government scrapped the old Council Tax Benefit system, which was set nationally and ensured that the poorest people didn’t pay any council tax at all.

However, unlike Council Tax Benefit, CTS was localised – each council creates and runs its own scheme – and funding from central government for the schemes has fallen each year. By law, pension age claimants are protected from any cuts, so working age households have taken the hit.

CTS works like this:

  • each council sets the maximum proportion (or “cap”) of a council tax bill that the local CTS scheme will cover – for example, 100% of a bill, or 90%, or 70% etc
  • each claimant is means tested according to their income, and then receives benefit assessed against that cap
  • so, if the local CTS cap is 100% of a council tax bill, a claimant with no income will have 100% of their bill covered, whilst someone with a slightly higher income might be means tested and have 90% of their bill covered
  • however, if the CTS cap is cut to 80% of a council tax bill, the claimant with no money will only have 100% of 80% of their bill covered – meaning they have to pay the other 20% – and the means tested claimant will have 90% of 80% of their bill covered (72% of the total bill)

Certain defined vulnerable groups – such as severely disabled people or military veterans – are protected from cuts in each area, depending on local council policies.

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