The current system of Council Tax Benefit (CTB), which is claimed by 5.9 million low income families in the UK, is to be abolished from April 2013. Millions of the poorest households face council tax rises because most councils in England will pass on a 10% benefit funding cut, research suggests. Now known as Council Tax Support, the Government will provide funding to local authorities in England and to the Scottish and Welsh governments to design their own systems of Council Tax support, but this funding will only be 90% of this year’s budget for Council Tax Benefit (CTB) in each local authority area. This means that local councils will be expected to find 10% savings in the design and administration of their replacement schemes.
The Government believes this new system will:
give local councils increased financial independence and a greater stake in the economic future of their local area
establish stronger incentives for councils to get people back into work
simplify the complex system of current criteriaq and allowances
save up to £480 million a year.
It is likely that many people who currently receive 100% CTB may have to pay a proportion of their Council Tax bill in the future, but how much they pay will be different in different areas – which in turn may hinder people moving to a different area.
The government has also published guidance indicating some of the factors that would be present in a ‘well-designed’ scheme, such as:
People currently entitled to 100% support under CTB arrangements pay no more than 8.5% of their net Council Tax liability
The taper rate does not increase above 25% (the current CTB taper rate is 20%)
There is no sharp reduction in support for those entering work
There should be no large additional increases in non-dependant deductions.
Most people of working age and out of work WILL have to contribute – but it is going to depend on where you live. 82% of councils will be reducing the level of support for council tax benefit recipients. Only 18% will be making no change, thus absorbing the entire funding cut into their council budget.
The Government say the changes will give councils the incentive to help people off benefits and into work but the fact of the matter is there will be many people who literally will not be able to pay their council tax.