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The Council Tax Benefit debate...

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Council Tax Benefit currently provides 5.9 million low-income families (more than any other means-tested benefit or tax credit) with support towards their Council Tax liability. From April this year however, the full refund of council tax support will no longer be administered from Westminster.

Council Tax Benefit will be abolished as the Government has instead proposed to localise support across Britain through the provision of a grant to each local authority. Since 85% of Council Tax Benefit is received by the lower-income half of households, any cuts to it will predominantly effect poorer families.

However, unlike the ‘bedroom tax’ which only affects tenants of councils and housing associations, changes to Council Tax Benefit from April will also affect owner-occupiers and private tenants.

Protecting pensioners

While a great deal of autonomy has been transferred to the respective local authorities in the way they can deliver their preferred schemes, the Government has asserted that the new schemes must protect existing and new qualifying pensioners from any changes to the level of support that the local authority may wish to make. Entitlement rates for pensioners in England will be set nationally and therefore maintained at their existing level. Consequently these changes are expected to result in significant decreases in the amount of support available for working age claimants.

Protecting the vulnerable

Local authorities may also choose to protect other ‘vulnerable’ groups such as people with disabilities, children, homeless people and the armed forces. However, as with its policy on the ‘bedroom tax’, the Coalition continues to be vague with its propensity to define key terms since the eligibility criteria for vulnerability will no longer be defined by Government but by the local authorities themselves.

Poll Tax revival?

The Grant is expected to leave local authorities with a 10% funding gap in comparison to the current system, which in the current financial climate may prove difficult to mitigate for many local authorities already under pressure to deliver services with limited resources. According to the Joseph Rowntree Foundation, unless councils find additional money from elsewhere, the requirement to protect pensioners in England will imply a 19% cut in support for working-age claimants on average. The potential impacts for owner-occupiers, housing associations, private landlords and their tenants are indeed significant:

  • As low-income working and non-working household budgets are pressurised, any reduction in Council Tax Benefit could have a consequential negative impact on rent arrears. The additional payments that have been made to the discretionary housing fund (primarily aimed at those suffering exceptional hardship) will be unable to comprehensively support all claimants incapable of meeting the costs of both housing and council tax benefit cuts. The poll tax experience illustrated how difficult it can be to collect small amounts of tax from low-income households. Many in local government understandably 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 exclusion of Council Tax Benefit from Universal Credit means that families in identical circumstances but living in different areas will face varying work incentives, with some facing little incentive to take work. Housing associations with stock in more than one local authority may find that tenants with similar circumstances that are located within different local authority areas may be entitled to varying levels of support due to the different schemes in place.
  • Working age people living in areas with large numbers of people over pension credit age and other identified ‘vulnerable’ groups are likely to face the greatest cuts given that there will be less support available to assist them once the Government’s criteria of age and vulnerability is initially met.

The Government has effectively required councils to decide to choose between three unpalatable options: to ask for a minimum payment from families who currently receive a full or partial rebate; to spread the burden across all households; or to keep the current system and find the savings in other parts of their budget. Reforms that would save councils the full 10% inevitably involve reducing support for the poorest claimants.

So what can be done if you disagree with a Council Tax decision?

When you receive your Council Tax bill this month, it will show you how much Council Tax you will have to pay from April 2013 onwards.

Make sure that you read your bill carefully to find out how the changes affect you. If you disagree with some aspect of a council tax bill because you do not think you are liable for the council tax for that property, or you think an exemption or a discount should be applied, you need to appeal first to your local council.

Local authorities will be required to inform recipients of how to appeal if they disagree with the council tax bill amount.

Unresolved appeals will no longer be dealt with by the independent Social Security and Child Support Tribunal. It has been reported that appeals against council tax reduction decisions will be heard by the Valuation Agency, a body with no experience of dealing with means-tested benefits.

In the case of people claiming housing benefit and council tax reduction, any appeals they might make would be heard by two separate bodies which could in theory arrive at two conflicting decisions on the same issue. 

If you want to know how these changes may affect you, contact our Welfare Team or visit helpwithcounciltax.org.uk. Alternatively, if you are unsure which Local Authority area you are in you can check on the Government's Local Authority Finder.

By Kelly Faulkner