Low income families likely to be hit by council tax shortfall

A report published today (January 6th) has revealed many low income families look set to be hit hardest by the council tax funding shortfall. Our feature writer Suzanne Danon explains more about the new report...

The Local Government Association (LGA) warned that some councils were being left with no choice but to end discounts for some residents or face cutting other services further.

Cllr David Sparks, Chair of the LGA 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 £1bn by 2016 to protect discounts for those on low incomes. At a time when local government is already tackling £20bn 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.”

He added: “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.”

The report Council tax support: the story continues has been published to coincide with the LGA’s annual finance conference.

The report shows:

  • A total of 45 councils out of 326 continue to provide the same level of discount available under the old council tax benefit regime – 13 fewer than in 2013/14.
  • In 244 council areas, all householders have to pay at least some council tax regardless of income – 15 more than in 2013/14.
  • For 2015/16, one in seven councils (14 per cent) said they definitely plan to change their discount scheme. 83 per cent said they would not change their existing discount scheme, despite funding reductions.
  • Beyond 2015/16, only 27 per cent of councils said they would maintain their current scheme. Most were unable to say. This is likely to be due to uncertainties over future funding for local government.
  • Last year's decline in council tax collection rates – only the second since 1993 – was bigger in areas where newly introduced minimum payments were higher.

Read the full report on the LGA website.

What are your council's plans? How will this affect you - either as a council employee, or a local resident? We'd be interested to hear your views.

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