£600 extra council tax bill for low-income households

Low-income families in England will see their council tax bills rise by up to £600 a year from April 2013 as a result of council tax benefit 'reform', according to a think-tank analysis.
From April 2013 the government is handing responsibility for council tax support to English local authorities, at the same time as imposing a 10 per cent cut in funding for it. It is insisting that pensioners are fully protected from any rises under the new localised system, with the result that the changes will hit working-age households disproportionately. The Resolution Foundation study incorporates details of the reported intentions of 184 of England’s 326 local authorities.
Key points
Some local authorities will meet the funding shortfall by cutting other parts of their budget: but 74 per cent of them plan to demand a new or higher payment from the lowest-income households. This will directly hit the 2.5 million working-age households receiving council tax benefit and with no one in work, who have previously paid either no council tax or a reduced charge.
As well as hitting workless households, the changes will greatly increase bills for many of the 670,000 households who have at least one person in work but are on incomes low enough to receive some support under the current system.
Councils are adopting a variety of schemes of differing severity. At the higher end, a third have opted to charge affected households an extra 20 per cent of the full council tax bill. In some cases councils are taking even more stringent measures such as including child benefit in the calculation of a family’s income.
Families are facing increased charges of more than 330 per cent in the most severe cases.

Source: Matthew Pennycook and Alex Hurrell, No Clear Benefit: The Financial Impact of Council Tax Benefit Reform on Low Income Households, Resolution Foundation
Links: Report | Resolution press release | Citizens Advice press release | Gingerbread press release | LGA press release | BBC report | Guardian report | Inside Housing report | Public Finance report | Telegraph report

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