Cuts to council tax support – the effects

Four out of every five English local authorities have reduced entitlements to council tax support in the current financial year as council tax benefit was replaced by localised schemes, according to an analysis carried out by the Institute for Fiscal Studies.

At the same time as abolishing council tax benefit, the coalition government cut central government funding for local replacement schemes by 10 per cent.

Key findings

  • Four in five local authorities reduced entitlements to council tax support, with entitlements for 2.5 million working-age households falling by an average of £160 in 2013-14.
  • Of the 2 million working-age households in England that could have claimed full relief under the previous system, 70 per cent (1.4 million) are liable to pay some council tax in 2013-14. Half (1 million) are liable for at least £85; a quarter are liable for at least £170; and 10 per cent are liable for at least £225.
  • 70 per cent of English local authorities introduced minimum council tax payments. More deprived authorities were more likely to introduce them, because funding cuts were bigger in those areas. Local authorities were also more likely to introduce minimum payments if pensioners – whom local authorities were obliged to protect – accounted for a larger share of council tax benefit spending.
  • Conservative-majority councils were more likely than others to introduce minimum payments, after taking into account levels of local deprivation and funding cuts: they were 14 percentage points more likely to do so than Labour councils, and 25 percentage points more likely than Liberal Democrat councils.
  • Introducing substantial minimum council tax payments (more than 8.5 per cent of the gross council tax bill) led to increases of 30-40 per cent, on average, in the number of people seeking advice from citizens advice bureaux about council tax debt in the period July-September 2013.

Source: Stuart Adam, James Browne, William Jeffs and Robert Joyce, Council Tax Support Schemes in England: What Did Local Authorities Choose, and with What Effects?, Report 90, Institute for Fiscal Studies
LinksReport | IFS press release | New Statesman report

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