Cuts to council tax benefits have gone largely unreported – but the consequences are big news for Britain’s poorest

The axe has been devolved, with big consequences for Britain’s poorest families.

Next to headline- grabbing cuts like the ‘bedroom tax’ and the ‘benefit cap’, council tax benefit cuts have gone largely unnoticed.  But the 2.3 million people paying on average £167 per year more as a result of the cuts have noticed.   Big time – as new research published this week by Child Poverty Action Group and Z2K finds.

Just over £3 per week might not seem like a lot to most people, but for households on the very lowest incomes, it’s enough to bust already-stretched budgets.  Families are going to great lengths to make sure they keep up to date with their council tax payments. Stringent collection procedures mean that council tax is viewed as a priority debt and families would prefer to borrow money than fall behind on payments.

It used to be the case that council tax benefit protected people too poor to pay from council tax.  But in 2013 this changed. Out went this fully-funded national benefit. In its place came hundreds of local authority-run council tax support schemes (CTS). Worse, lower central government funding for these schemes amounted to a 10 per cent overall funding cut. Pensioners have been protected from this cut, meaning greater losses for the working age population.

Most councils, already reeling from cuts to their own core grant, felt they had no choice but to seek to plug this gap by levying minimum charges on residents previously deemed too poor to pay anything.

No surprise, then, that the change  has left people struggling with a bill that, until recently, everyone accepted they cannot pay. Our research finds that In London alone in 2013/14, 123,000 low-income households fell into arrears, 100,000 were summonsed to court and 12,000 dealt with the stress of bailiffs collecting their debt.  On top of these debts, London councils piled at least £8.5 million in court costs on households in arrears.

With one hand the Government is spending billions on raising  the personal tax allowance  – with  the stated aim of  taking low income workers out of tax (though the main effect is helping better off taxpayers) –  but with the other it’s increasing the tax burden on them through  council tax support cuts.   And most of the low income households affected by the latter earn far too little to gain from the former.


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