LGA call for council tax support to be fully funded

Local authorities are warning that they will have to ask those earning the least to pay more council tax this year – or make even bigger cuts to already squeezed local services to meet the shortfall.
Council tax support provides those on low incomes with a discount on their council tax. Local authorities introduced council tax support schemes in April 2013 when national council tax benefit was abolished.
However, the gulf between the money government gives councils to fund these schemes and the cost of protecting discounts for those who previously qualified for council tax benefit is getting bigger every year. Local authorities would need to have found an additional £1 billion to keep discounts as they were under council tax benefit in the three years since it was scrapped.
As a result many areas have had to introduce minimum payments for the less well-off who previously would have been exempt from paying council tax.
With councils already needing to find £2.6 billion savings in 2015/16 due to a cut of 8.8 per cent in overall government funding for local services, many are struggling to find additional money to protect discounts for those on low incomes.
The Local Government Association today publishes a report – ‘Council tax support: the story continues'– which lays bare the impact of government's funding cut. It coincides 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.

The reduction in government funding has left councils with an unpalatable choice between charging council tax to the working-age poor, who in many cases may not have paid council tax before, or finding additional savings to spending on local services on top of the cuts of 40 per cent being made to council funding by government.
Some councils have been able to make up for the reduction in government support through measures like ending automatic council tax discount on second homes. But there are many areas in which this has not provided enough income to fill the gap.
Other areas have introduced hardship funds giving people affected by the cut longer to catch up with late payments.
The LGA, which represents councils in England, is urging the next government to help councils protect those on low incomes by fully funding council tax support to the same level as under council tax benefit.
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 £1 billion by 2016 to protect discounts for those on low incomes. At a time when local government is already tackling £20 billion 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.
"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.
"Councils know how tough things are, and are doing their best to protect those affected the most, whether through introducing hardships funds or changing the way we collect unpaid tax. But these measures can only go so far in alleviating the burden.
"To address this unfairness, government must give local areas the full amount of funding required to provide council tax support to those who need it. Otherwise, it is almost inevitable that further cuts to local government funding in the coming years will further force up bills for those who can least afford to pay."
- See more at: http://www.local.gov.uk/web/guest/media-releases/-/journal_content/56/10180/6860400/NEWS#sthash.S3BK26IR.dpuf

Local authorities are warning that they will have to ask those earning the least to pay more council tax this year – or make even bigger cuts to already squeezed local services to meet the shortfall.
Council tax support provides those on low incomes with a discount on their council tax. Local authorities introduced council tax support schemes in April 2013 when national council tax benefit was abolished.
However, the gulf between the money government gives councils to fund these schemes and the cost of protecting discounts for those who previously qualified for council tax benefit is getting bigger every year. Local authorities would need to have found an additional £1 billion to keep discounts as they were under council tax benefit in the three years since it was scrapped.
As a result many areas have had to introduce minimum payments for the less well-off who previously would have been exempt from paying council tax.
With councils already needing to find £2.6 billion savings in 2015/16 due to a cut of 8.8 per cent in overall government funding for local services, many are struggling to find additional money to protect discounts for those on low incomes.
The Local Government Association today publishes a report – ‘Council tax support: the story continues'– which lays bare the impact of government's funding cut. It coincides 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.

The reduction in government funding has left councils with an unpalatable choice between charging council tax to the working-age poor, who in many cases may not have paid council tax before, or finding additional savings to spending on local services on top of the cuts of 40 per cent being made to council funding by government.
Some councils have been able to make up for the reduction in government support through measures like ending automatic council tax discount on second homes. But there are many areas in which this has not provided enough income to fill the gap.
Other areas have introduced hardship funds giving people affected by the cut longer to catch up with late payments.
The LGA, which represents councils in England, is urging the next government to help councils protect those on low incomes by fully funding council tax support to the same level as under council tax benefit.
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 £1 billion by 2016 to protect discounts for those on low incomes. At a time when local government is already tackling £20 billion 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.
"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.
"Councils know how tough things are, and are doing their best to protect those affected the most, whether through introducing hardships funds or changing the way we collect unpaid tax. But these measures can only go so far in alleviating the burden.
"To address this unfairness, government must give local areas the full amount of funding required to provide council tax support to those who need it. Otherwise, it is almost inevitable that further cuts to local government funding in the coming years will further force up bills for those who can least afford to pay."
- See more at: http://www.local.gov.uk/web/guest/media-releases/-/journal_content/56/10180/6860400/NEWS#sthash.S3BK26IR.dpuf