Research by False Economy shows councils are cutting welfare to recoup money lost from government

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Local authorities across England are preparing to slash welfare payments to some of the most vulnerable people in society by an average of 20 per cent as a result of government funding cuts to council tax support schemes, according to new research published today by False Economy.

False Economy – the TUC-backed anti-cuts campaign website – has analysed the proposals of 65 of the first councils to publish detailed plans for consultation over the new council tax support schemes.

Under the current system, people on low or no incomes have up to 100 per cent of their council tax paid by their local authority through council tax benefit.

However under the government’s new Universal Credit, council tax benefit will be scrapped. Instead, local authorities will need to introduce local council tax support schemes – due to come into effect next year. The government has cut the money available for these schemes by ten per cent and said that no pensioners will lose out under the changes.

The False Economy research shows that the overwhelming majority of councils plan to reduce support for low incomes households by an average of 20 per cent in order to accommodate central government cuts.

Other key findings from the False Economy research include:

  • Most councils will not be able to protect disabled people, lone parents with young children, or other vulnerable groups from the impact of the cuts.
  • Eight councils are targeting parents for specific cuts by including income from child benefit and child maintenance when considering who is eligible for council tax support.
  • South Cambridgeshire District Council is considering halving payments to all its unemployed working age residents, while Brentwood Borough Council plans to axe all council tax support to people under 25.
  • Councils are predicting that many claimants will find their council tax bills rocketing by hundreds of pounds.

Many councils – including Conservative-run local authorities – have already written to the government urging ministers to rethink the cuts.

In total, nearly 330 councils will be implementing their own council tax support schemes, having been forced by the government to rush through consultations and IT contracts even though the legislation for the changes has not yet gone through Parliament.

The cuts in council tax support are due to take place from April 2013, at the same time as housing benefit is reduced and child benefit frozen. This combination of cuts will be a hammer blow to millions of people either out of work or on low incomes, particularly as most people’s wages are also falling in real terms.

Many in local government fear that the changes to council tax support will cause severe administrative difficulties locally. The combination of welfare cuts targeted at the most vulnerable in society will also increase poverty and could lead to mass non-payment of council tax, False Economy warns.

Swingeing cuts to council tax support could lead to levels of non-payment similar to that which happened under the poll tax, with taxpayers’ money spent chasing council tax payments through the courts from people with no hope of ever being able to pay up, says False Economy.

The research has also identified 12 councils that do not appear to have provided clear information to the public on a key proposal – how cutting council tax benefit will affect all claimants who are currently receiving help with their council tax bills.

While all 12 councils mention an overall cap on benefits, none of them state that they are also proposing across-the-board cuts for all claimants. Such a major omission renders the consultation exercises flawed, and possibly challengeable under law, False Economy warns.

False Economy campaign director Clifford Singer said: “Having cut taxes for the rich and driven the economy back into recession, the government’s latest assault on the welfare safety net, coming at the same time as housing benefit cuts, will see people forced to choose between paying their council tax and feeding their families.

“There is a real risk that many of these new schemes will prove unmanageable, with any savings to the taxpayer likely to be spent chasing up poor people who have no hope of paying their council tax.”

TUC general secretary Brendan Barber said: “Swingeing cuts in council tax support will cause further misery for some of the poorest people in society.

“Low-paid workers will be further impoverished at a time when their wages are already falling in real terms. Any tiny gains from the increase in their personal allowances will be of little comfort as they see other forms of financial support slashed.

“The government must realise that it isn’t possible to build a recovery off the back of making already poor people poorer.”


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