Two million poor families facing tax hike, new JRF report finds

28 March 2013

More than two million poor families face significant increases in their council tax bills from next week, a report for the Joseph Rowntree Foundation (JRF) has found.

The research shows 2.4 million low-income families will pay on average £138 more in council tax in the new financial year (2013/14).

The findings from the New Policy Institute (NPI) are the first, full assessment of Council Tax Benefit (CTB) reform. From next Monday (April 1), CTB will be abolished and replaced by Council Tax Support.

England's 326 local councils have had to devise their own local CTS schemes, but with 10% less funding. Pensioners are protected - meaning larger proportional cuts are passed onto working-age recipients.

Fifty-eight councils have decided on schemes that will retain current levels of support for families, but the majority (232) will demand council tax from everyone regardless of income. In-work families will pay £132 more on average compared to £140 for those not working.

150,000 families will pay on average £300 more a year; one million will pay less than £100 on average. 1.9 million claimants who currently do not pay any council tax will have to start paying on average £140 per year.

Two-thirds of families receiving CTB are already in poverty, so the change risks worsening their circumstances into deeper poverty. The research finds 300,000 just above the breadline are at risk of falling into hardship.

Disabled families face having less income following the change: 730,000 families claiming of CTB are also in receipt of Disability Living Allowance.

Chris Goulden, Head of Poverty at JRF, said: "Some of the country's poorest families must find £140 extra from their strained household budgets to pay council tax for the first time. Making up the shortfall will be beyond most, with working hours under pressure and benefits falling behind inflation. This tax hike will push people into poverty or cause more hardship for already very poor households, taking money from families who had little to start with."

Sabrina Bushe, Researcher at NPI, said: "From Monday over two million households that were previously deemed too poor to pay council tax will find hefty bills landing on their doormats. Hitting only the poorest and most vulnerable, this tax increase - which won't raise much more money than it costs - is both unjust and unwise."

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