London’s poorest families are struggling to pay Council Tax
bills from their limited benefit income following cuts to council
tax support, according to new figures published in a joint report
by two leading London anti-poverty charities, the Child Poverty
Action Group (CPAG) and Zacchaeus 2K (Z2K).
‘A New Poll Tax?’ finds that nearly four in 10 Londoners
affected by the replacement of Council Tax Benefit by local schemes
have been unable to meet these payments and have received a court
The report also reveals how these changes mean overstretched
London boroughs have been saddled with falling collection rates and
rising collection costs.
First comprehensive study of the impact on Londoners of the
abolition of Council Tax Benefit
'A New Poll Tax?' of the impact on Londoners of the
abolition of Council Tax Benefit and the accompanying 10 per cent
funding cut to the replacement schemes. The report evaluates the
first year in operation of the new council tax reduction schemes
since the changes in April 2013.
The report reveals the changes have caused widespread hardship
for individuals and families already struggling on low wages or
reliant on benefits and made it more complicated for councils to
collect council tax payments – many resorting to the use of private
bailiffs to make collection on their behalf.
- Low income Londoners are facing higher council tax bills: At
least 313,519 Londoners were expected to pay more council tax under
their local Council Tax Reduction Scheme (CTS) in 2013/14 than they
would have under the old Council Tax Benefit. On average they were
charged £151 more per annum – the equivalent of two weeks
Jobseekers Allowance. These claimants are now liable for over £91.5
million in Council Tax annually.
- 39% of affected Londoners have been sent a court summons for
non-payment. 118,027 people who are paying more Council Tax under
the new CTS schemes have been issued with a court summons because
they have fallen behind on payments.
- Court costs have added £10m to the amount owed by Londoners: In
2013/14 almost 93,000 CTS claimants were charged over £10 million
in court costs.
- Nearly 16,000 cases have been referred to bailiffs. 15,944
cases were referred to bailiffs in 2013/14.
- Local authorities are facing lower collection rates. The
collection rate for Council Tax owed by CTS claimants with an
increased liability in 2013/14 was on average 81 per cent, compared
to average collection rates of 97.4 per cent in 2012/13.
Call to action
In response to these findings, Z2K and CPAG are calling on the
Government to scrap this policy and return to a national, fully
funded system of Council Tax Benefit. It concludes that requiring
individuals and families living on very low incomes to pay council
tax will inevitably impoverish many – according to the IFS, child
poverty is projected to rise by nearly one million by 2020 due
largely to changes to tax and benefits.
In the meantime, the report urges the Government to restore 100
per cent subsidy for local Council Tax Support schemes in 2015/16
and for London boroughs to protect their poorest residents,
following the example of the seven London boroughs who have
continued to pay full subsidy to their poorest residents.
Child Poverty Action Group's Chief Executive's comment
Alison Garnham, Chief Executive of Child Poverty Action Group,
“This research shows the direct impact that changes to council
tax funding are having on the poorest families. Families tell us
that it is simply not possible for them to make these make payments
from household budgets already stretched to breaking point.
“Problems are being exacerbated for residents by councils
increasing the debt owed by adding additional charges to a bill
they are already struggling to pay.
“We call on Central Government and local authorities to stop
taxing households that are too poor to pay.”
Zacchaeus 2K's Chief Executive's, Joanna Kennedy comment
“Although the responsibility for this policy clearly lies with
the coalition Government this report demonstrates that many London
local authorities have adopted policies that are pushing thousands
of low income Londoners further into poverty.
“Any policy that results in nearly 40 per cent of those affected
being sent a court summons clearly isn’t working.”
“While it is vital that the Government restores the funding cut
in the meantime local authorities have an opportunity to do more
for their residents.”
Read the Child
Poverty Action Group/Z2K 'A New Poll Tax?' report
Read the Turn2us Council Tax support
Child Poverty Action Group (CPAG) press release about the report 'A
New Poll Tax?'
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Date of publication: 21 July 2014