London councils propose further cuts to Council Tax Support in 2016/17

liability-orderSeveral London local authorities are in the process of, or have recently finished, consulting on further cuts to their Council Tax Support (CTS) schemes. Bexley, Bromley, Ealing, Enfield, Hounslow, Kingston and Redbridge have all published proposals that amount to reducing the amount of support available in one way or another.

A common thread among the authorities is the assumption that the funding they receive for CTS has been cut further. As we explained in our report Too Poor to Pay, this is because the funding authorities receive for CTS has now been rolled into their Revenue Support Grant without being separately identified, meaning authorities have no idea how much funding they receive for CTS. Several have therefore assumed that because their RSG has been cut by a certain percentage the amount they receive for CTS has been reduced by the same amount. The government however does not agree with his assumption:

“We provided £3.7 billion for localised council tax support in 2013/14 and 2014/15, and will be providing the same amount in 2015/16.” (House of Lords, Hansard, 14 January 2015, col WA247)

In any case the most common proposal put forth by councils is to increase their minimum payment, the amount working age claimants are expected to pay regardless of their circumstances. Bexley is proposing to increase theirs from 15% to 20% or 25%, Bromley from 19% to 25% or 30%, Hounslow from 8.5% to 15% or 20% and Redbridge from 5% to 15% or 20%. Meanwhile Enfiled have put forward proposals to increase their 19.5% payment to 23%, 30% or an eye watering 43%, which would make it the largest minimum payment in the country.

Ealing however has adopted a slightly different approach. They have a 25% minimum payment but exempt disabled claimants and lone parents with children under 5 from it. Instead of increasing the minimum payment as whole they are proposing to abolish this exemption and introduce a lower minimum payment of 8.5% for these vulnerable groups.

Kingston on the other hand plans to retain 100% support for working age claimants but has put forward a number of proposals that would reduce support for low income workers. Mirroring the Government’s forthcoming Tax Credit cuts they are proposing to increase the taper rate, cut the income disregard, abolish the family premium and remove the higher applicable amounts for families with third and fourth children. Although not as bad as the proposals to increase minimum payments in other boroughs these changes will nevertheless have a severe impact on low income workers, particularly as they come on top of the cuts to Tax Credits.

Interestingly these same cuts to Tax Credits are being highlighted by several councils as a reason why they need to cut CTS. These authorities argue that when families have their Tax Credits cut their income will go down and therefore they will be entitled to more CTS, thus increasing the cost of the scheme to the council.

The question this poses is where do these cuts to CTS end? Every year more and more authorities across the country are increasing their minimum payment. If Bexley goes ahead with its proposed increase their minimum payment will have quadrupled from 5% to 20% over three years. Government ministers may like to brag that they are reducing the tax burden for societies poorest but the inevitable result of their abolition of Council Tax Benefit is precisely the opposite: a massive tax increase for those least able to afford it.

Although local authorities across the board are facing similar cuts some not all have responded in the same way. Some authorities recognise the impact that taxing their poorest residents would have and have sought to minimise it or avoid it all together. In London boroughs as diverse as Westminster have Tower Hamlets have continued to provide 100% support while others, such as Islington and Camden, have managed to consistently keep their minimum payment under 10%.

What is most striking about many of these proposed increases is the accompanying consultation documents completely lack any information on the actual impact they will have on residents. It’s as if they are considered purely from a financial stand point. As far as Z2K is concerned this simply isn’t good enough. We will continue to campaign to highlight the terrible impact these cuts will have, we just hope councillors will listen.

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