2.3 million low income families will pay an average £149 a year more in council tax than they were paying before April 2013. This includes 580,000 families paying £54 more this year on top of the £97 rise they faced last year. This is in contrast to the UK government’s determination to limit overall council tax increases to 2%.
The findings are detailed in a New Policy Institute (NPI) report for JRF. The report is the first, full assessment of Council Tax Support (CTS) 12 months on from its introduction.
Last April, Council Tax Benefit was abolished and replaced by CTS. England's 326 local councils had to devise their own CTS schemes, but with 10% less funding. Pensioners remained fully protected as before.
To limit the impact in the first year, government gave a one-year transitional grant to councils whose minimum payment was 8.5% or less of a household’s normal liability. Today’s research analyses the choices made by councils after that grant had come to an end.
At the start of the second year of CTS, the analysis finds:
- Almost half a million (490,000) low income families who before April 2013 paid no council tax will now be paying more than £200 a year. From this week, 70,000 poor households are paying council tax for the first time, facing average bills of £114.
- Of the 2.3 million affected families, 1.5 million are below the income poverty line and 1.8 million are workless and whose sole income is from means-tested benefits.
- 244 out of 326 councils have introduced minimum payments – up from 229 last year - for poor families regardless of their income. 45 have retained previous levels of support, 13 fewer than last year.
- There is significant variation in the level of the minimum payment increases - 69 councils require 8.5% or less, while 47 have charges of 20% or more.
- The end of the transitional grant to protect against larger increases is behind the rise in local authorities introducing minimum charges or increasing the charges from last year. Arrears have increased where minimum charges have been introduced - while the collection rate of council tax fell.
Chris Goulden, Head of Poverty Research at JRF, said: “For a second successive year, the country’s poorest families are facing big increases in council tax. This change to the welfare system is largely below the radar but has significant impact for families already struggling to get by on a low income. Paying this tax increase will be beyond most, pushing them into deeper hardship.”
Sabrina Bushe, co-author of the report at NPI, said: “People previously deemed too poor to pay anything now face a hefty council tax bill. English councils have to hold a referendum if they want to put council tax up by more than 2%. This government policy, aimed at keeping rises down, has been a success. Now the transitional grant has gone, it is time that government offered the same protection to the poorest households.”
Find out more about our work on Council Tax