Still too poor to pay: good and bad “Hardship Funds” for Council Tax Support claimants

Last week, Z2K and CPAG held a briefing for MPs and Peers to set out the findings in our new report, Still Too Poor To Pay, which details impact of the abolition of Council Tax Benefit over the past three years.   The revelation that hundreds of thousands of London’s poorest households have been summonsed to court after falling into arrears with their new Council Tax bills and that nearly 50,000 households have now had bailiffs instructed against them to recover these debts is a terrible indictment of the policy and its architects.  And so we were delighted several MPs and Peers agreed to raise these issues in Parliament.

Z2K is against the imposition of minimum payments on CTS claimants on a point of principle. In our view, the most effective mitigation of the impact of “localisation” on the poorest residents is for authorities not to charge a minimum payment.  However, we recognise that even several of those boroughs who started charging have at least tried to mitigate its impact either by exempting certain “vulnerable” claimants or establishing a Hardship Fund for claimants in financial difficulty.

Last year, we noted that eleven boroughs had established Hardship Funds to help those claimants in financial difficulty. Of those eleven, however, only Ealing had spent its budget in full.  Redbridge and Southwark had spent more than half their fund, but most of the others were far short of that, suggesting that these boroughs needed to be much more pro-active in making claimants aware of their existence and also much-less restrictive in making awards. We had hoped that this trend would show further improvement in the third year of localised CTS.  As the table below shows, however, things have gone into reverse.

Hardship funds 2015/16

Borough BudgetSpendApplicationsSuccessful applications
Barking & Dagenham£50,000No responseNo responseNo response
Waltham Forest£750,000£13,865102434

For example, Bexley’s Hardship Fund was cut from £100,000 to £50,000 in 2015/16 at the same time its minimum payment was increased by 5 per cent.  Disappointingly, the number of claimants made an award fell too and the fund remained significantly underspent. Worse still, despite awards having been made to 368 claimants in 2014/15, Southwark cut its Hardship Fund altogether in 2015/16 as did Sutton, whose scheme had helped 234 households the year previously. As the table shows, Waltham Forest made 34 awards, but this still left more than 98 per cent of its £750,000 Hardship Fund unspent.  Nearly 1,000 applicants were refused.

Of those boroughs who responded, only Barnet, Ealing, Enfield and Redbridge, seem to be doing an effective job of promoting their schemes to claimants.  However, Ealing appears to have awarded an average of £863 to each of the 436 successful applicants.  Similarly, Barnet appears to have awarded an average of £902 to its 109 successful applicants.  Both figures are far in excess of the average minimum payment in these boroughs, and so there must be doubt as to their accuracy.  We are working with councillors in both those boroughs to get to the bottom of this issue.

These issues with Hardship Funds were raised by the Local Government Association (LGA) and in Citizens Advice’s submission to the three-year review of LCTS, as well as in our own evidence.  Disappointingly, while Mr Ollerenshaw’s final report noted that “there is sometimes little awareness amongst those who may be in need”, it simply concluded that “it would be helpful if councils monitored the situation”.  Our research shows this “monitoring” is unlikely to make any meaningful difference to those claimants’ whose borough either doesn’t tell them about its Hardship Fund or doesn’t even have one in the first place.

We hope councillors in those boroughs with Hardship Funds will do more to ensure they provide genuine protection to CTS claimants.

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