Welfare Reforms putting people in debt for council tax they cannot afford

13 March 2014 Last updated at 00:35

StepChange: ‘Huge’ rise in help for council tax arrears

A major debt charity has reported a “huge” increase in the number of people seeking help for council tax arrears.

The charity StepChange said there had been a 77% rise in the number of households needing advice over the last year.

It said one reason was the changes to council tax benefit, introduced as part of the government’s welfare reforms in April 2013.

The government said the benefit had been costing taxpayers £4bn a year.

In 2012 StepChange said it helped 25,500 people who had fallen behind with their council tax.

But in 2013 it said that number rose to 45,561.

On average, clients in arrears with council tax were £102 short of the money they needed.

“Stagnating incomes, changing work patterns, rising living costs and changes in welfare benefits are a toxic combination,” said StepChange’s chief executive, Mike O’Connor.

£160 a year
In April 2013, the government devolved responsibility for council tax benefit from Whitehall to 326 individual local authorities in England.

At the same time it also cut the budget by 10%, or £414m.

Using that reduced pot of money, local authorities have had to set up their own council tax support schemes.

Pensioners were protected from having to pay any more in council tax, but about 2.5 million people of working age have had to do so, according to the Institute for Fiscal Studies (IFS).

In January 2014, the Institute for Fiscal Studies, a think tank, estimated that the average eligible household had to find an extra £160 a year as a result of the changes.

It also reported that four out of five English local authorities had reduced the council tax support given to local residents.

However the government did provide transitional relief of £100m to local authorities in the year to March 2014, in order to alleviate cases of hardship.

It also said that spending on council tax benefit had doubled under the last government, costing tax-payers £4bn a year.

That, it said, was equivalent to £180 a year per household.

“Localised council tax support has also given councils stronger incentives to support local firms, cut fraud, promote local enterprise, get people into work and end the ‘something for nothing’ culture,” said Local Government Minister Brandon Lewis.

‘Reasonable offers’
Earlier this week, a group of MPs severely criticised the changes to council tax benefit.

The Public Accounts Committee said that up to 225,000 people had had their incentive to work weakened as a result.

It said some people stood to lose as much as 97p from every extra pound they earn, because of their liability for council tax.

The StepChange charity is now concerned that the situation will worsen from 1 April, when fees for bailiffs go up.

Anyone facing enforcement action for non-payment of council tax could see £310 added to their bills.

The charity wants councils to give local taxpayers more of a breathing space if they cannot pay.

It said that local authorities should also accept “reasonable offers of repayment” in cases where people cannot afford the full amount.

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