Court Rules against Town Hall on Council Tax Scheme

Councils across England may have to overhaul their procedures on reducing council tax support after a court ruled a London borough’s consultation was unlawful.  The Supreme Court has decided that Haringey Council’s 2012 consultation on the establishment of a council tax support scheme was unlawful. In April 2013, the government abolished council tax benefit. Local authorities have since consulted on and implemented replacement schemes. However, due to a 10% cut in funding, the majority of councils adopted schemes that reduced the level of support available. The Supreme Court found that Haringey Council’s consultation was unlawful because it failed to provide alternative options for meeting the funding shortfall other than a reduction in support. The court found the document misleadingly suggested that the only option available was to reduce the support available. Read more on Inside Housing.

More Than 66,000 London Homes Left Standing Empty

More than 5% of residential properties in some inner London boroughs are considered empty or second homes for council tax purposes, Inside Housing research has found. Despite decreases recently, more than 66,000 properties across 22 London boroughs remain empty, and more than a quarter of the 6,500 homes in the City of London are not in permanent use, Freedom of Information Act requests have revealed. The 66,000 empty homes is a decrease from 75,000 in the same boroughs in 2010. The figure has fallen steadily each year, while the number of second homes has remained broadly constant. Read more on Inside Housing.

Welfare Reform Puts Single People at Risk of Homelessness

Last year's big welfare reforms – the introduction of the bedroom tax, changes to council tax benefit and the localisation of the social fund – are causing severe hardship and putting single people at risk of becoming homeless. Housing professionals tackling homelessness among single people have told researchers at Northumbria University they are preparing themselves for a rise in the number of people losing their homes. Because there is no requirement to measure single homelessness in England, it is extremely hard to find direct evidence of the impact of reform. But welfare reform is leading to a rise in the number of risk factors for homelessness, and our study found these risks were escalating fast in the north east of England. Read more on the Guardian website.

Council Tax Arrears Now Biggest Debt Problem

One in five people reporting debt problems to Citizens Advice has a council tax arrears issue. New figures show that between January and March 2014 council tax debt was the number one debt problem the charity helped with. Up until this year credit card and unsecured personal loans were the most common types of debt people approached Citizens Advice about. The number of people struggling with council tax payments has rocketed since Council Tax Benefit was replaced by localised Council Tax Support schemes in April 2013. In the first three months of this year 27,000 people with a council tax arrears problem got help from Citizens Advice - a 17 per cent increase on the same period last year. Read more on the Citizens Advice website.

Bedroom Tax: The Effect of the Pre-1996 Claim ‘Exemption’.

The DWP has confirmed that 4(1)(a) of Schedule 3 of the Housing Benefit and Council Tax Benefit (Consequential Provisions) Regulations 2006 has the effect that any HB claimant who has been claiming continuously since before 1 January 1996, for the same property, should have their HB rate calculated without the ‘Spare room subsidy’ provisions. In effect these claimants are exempt from the bedroom tax under the current regulations and have been since their introduction in April 2013. So, for the full list of who is exempt, read more on the Nearly Legal website.

Summonses Rise after Council Tax Benefit Cuts

Hundreds of thousands of people have been taken to court in England for non-payment of council tax owing to benefit changes, according to the Labour Party. Labour said 112 English councils had reported issuing 156,000 court summonses since April to people paying more tax as a result of the changes. That meant 450,000 individuals may have been taken to court across the whole of England in six months, it claimed. Read more on the BBC website.

Universal Credit: Difficulties Must Be Resolved Before It Is Rolled Out

The computer system is just one problem standing in the way of getting Universal Credit right. There are five other areas that must be resolved before it is rolled out.

1.  It will make budgeting on low incomes very difficult

2. Monthly payments in arrears will risk indebtedness

3. The reform of Council Tax Benefit will play havoc with the scheme

4. Bringing part-time work into the conditionality regime will be difficult

5.  Who gets free school meals and other passported benefits?

Read more on the LSE weblog.

Majority of Benefit Claimants Concerned About Welfare Reform

Up to 85 percent of benefit claimants are concerned about the introduction of the government's Universal Credit (UC) welfare system because of a widespread lack of awareness over major changes that are happening to the system.  Over two-fifths (43 percent) of people claiming benefits that will be replaced by UC aren’t aware that their benefits will be affected.  And of those who are aware, over three-quarters (77 percent) said they are not confident that they know how or when it could affect their benefits.  Similarly, over a third (35 percent) of people in England currently receiving council tax benefit said they are not aware that they may be required to pay more or all of their council tax from this April. Over two thirds (68 percent) said that they would have to cut back on heating and food if they had to pay more toward their council tax bill. Read more on 24dash.

Family Finances Hit By £2.3 Billion Bombshell

Low income families will be £2.3 billion worse off as a result of the government’s welfare reforms. The new rules, to be phased in throughout April, include a cut in housing benefit for social housing tenants deemed to be underoccupying their homes - the bedroom tax - the introduction of a household benefit cap and the end of the council tax benefit system. Benefit increases are also to be capped at 1 per cent for the next three years.  The charity Child Poverty Action Group (CPAG) has estimated that the cuts will take £2.3 billion away from the poorest households compared to last year, with the government spending £16.5 billion less on social security than it did as recently as 2010/11.  Read more on the CPAG website.

Changes to Council Tax on Empty Homes Introduced

Until recently, there was a series of discounts and exemptions that meant that the council tax charged on most empty homes was less than for occupied homes. The situation has now reversed meaning that council tax on most empty homes will be the same or even more than on occupied homes. The purpose of these changes is two-fold, firstly they are intended to give a financial incentive for owners to get empty homes back into use, but they are also intended to increase the overall council tax take so that councils are able to continue to provide support for those who previously received council tax benefit. Read more on the Empty Homes website.

Welfare Cuts Mean a Dramatic Rise in Council Tax for the Poorest

The decision to reduce the budget for council tax support by 10 per cent means low-income households face a tax increase of up to £600. Council Tax Benefit, the most widely claimed benefit in the UK, which provides 5.9 million low-income families with help paying their council tax will soon be abolished. From 1 April, responsibility for council tax support will transfer from Whitehall to local authorities in England. Few have yet grasped the full implications.  Three-quarters of English councils are set to introduce less generous systems of council tax support. Over a third are set to introduce schemes that severely reduce support. Only around a quarter of councils feel they are able to absorb the funding shortfall and maintain current levels of support.  What does this mean for low income households? The answer is set out in a report – No Clear Benefit - from the Resolution Foundation. It shows that while the government talks up its decision to "freeze" council tax, millions of households – both in and out of work –in fact face swingeing increases.  Download a copy of the report from the Resolution Foundation website.

Government Denies Further Council Tax Benefit Cuts

The CLG has denied there will be further cuts to council tax benefit next year. The department described reports that a further 8.5 per cent cut will be brought in from 2014/15, on top of a confirmed 10 per cent reduction this year, as ‘totally untrue’ and ‘without foundation’.  According to reports, members of the Local Government Association were told by CLG ministers this week that the grant would be cut by 8.5 per cent in 2014/15, amounting to a £280 million reduction.  Officials from the department have denied this, saying the funding will remain at £3.3 billion in 2013/14 and 2014/15. Read more on Inside Housing.

Inactive Residents Could Have Benefits Docked

Councils could dock benefit payments if residents do not exercise enough in a bid to improve public health, a report has suggested.  Local authorities could monitor people’s use of leisure facilities with smart cards, and housing and council tax benefit could be varied to reward or incentivise residents accordingly.  This is the suggestion in a report from Westminster Council and think tank the Local Government Information Unit (LGIU), A dose of localism: the role of council in public health, which argues councils should incorporate improving public health into existing services.  It also says housing departments should use public space to alleviate health and social issues caused by overcrowding.  Download a copy of the report from the LGIU website.

Late Changes to Council Tax Benefit Reforms

In a ministerial statement recently the government announced a significant change to its policy to localise Council Tax Benefit (CTB) from next April. The government is proposing to localise support for council tax from 2013–14, abolishing CTB across Britain and giving grants to local to design their own systems for providing support for council tax to low-income families. On top of this, the government planned to cut by 10 per cent the funding it provides for council tax support. This would save around £500 million a year.  The effect is that localisation would create considerable complexity just as Universal Credit is being rolled out with the intention of simplifying things.  Now, new proposals have been announced.  A £100 million package will be available to councils whose schemes meet a particular set of criteria that the government considers “best practice”. It will, apparently, be available for one year only. Councils will be eligible for the money if nobody currently on full CTB ends up paying more than 8.5% of their council tax liability (the costs of collecting such small amounts from very low income households who are not used to paying council tax mean that councils may well prefer to give a full rebate to such households); if the rate at which the benefit is withdrawn as income rises is no higher than 25% (compared with 20% at the moment); and if there are no “cliff edges” in the system.  Read more on the Institute for Fiscal Studies website.

Architect of Poll Tax Warns Of Similar Chaos with Council Tax Shake-Up

One of the main architects of the poll tax has warned ministers they are in line for similar chaos over controversial plans to impose council tax on thousands for the first time. Tory peer Lord Jenkin, who helped design Thatcher’s doomed community charge, said plans to cut council tax benefit would hit the pockets of the working poor – just the sort of people for whom the Coalition has pledged to make work pay.  Experts said last night that cuts to the benefit meant that up to 750,000 people could be forced to pay council tax for the first time, or will have to pay more.  In addition, thousands of middle class people could lose out because some local authorities are scrapping discounts on second homes in response to the reforms, which come into effect next April. Lord Jenkin told the BBC that the government needed to be braced for a ‘backlash’ over the complicated changes to council tax benefit, which is paid to 5.9million people.  The warning comes just a day after accountants said another set of changes – this time to child benefit – could also lead to chaos because the reforms are too complex for parents to understand.  Read more on the Daily Mail website.

Peers Win Council Tax Benefit Review

Peers have defeated the government on an amendment to the Local Government Finance Bill.  The bill will abolish council tax benefit and replace it with a grant which only covers 90 per cent of the cost in order to save £500 million.  Now peers have voted to accept an amendment which would force the communities secretary to commission an independent review of council tax benefit reduction schemes within three years. The amendment, tabled by Labour peer Baroness Patricia Hollis, Liberal Democrat Lord John Shipley and crossbencher Lord Richard Best, was passed by 203 votes to 165. Baroness Hollis warned that the council tax localisation policy risks ‘poll tax mark two’. Read more on Inside Housing.

Labour Blocks Move to Limit Council Tax Benefit Cuts

Labour peers have come under fire for refusing to back an amendment which would have spared thousands of benefit claimants from welfare cuts. The Local Government Finance Bill, currently going through parliament, will see council tax benefit scrapped and replaced with grants which only cover 90 per cent of the cost.  Councils will be able to choose how to make up the 10 per cent cut but cannot reduce benefit for pensioners. This means in some areas councils will have to cut benefit for working age council tax claimants by as much as 20 per cent.  Crossbench peer Lord Richard Best has tabled an amendment to the bill which would allow councils to cut the single person’s discount, currently set at 25 per cent. This, argued Lord Best, would enable the Treasury to receive its £500 million savings without hitting the poorest people.  Lord Best said a cut in the discount from 25 to 20 per cent would equate to an 85 pence per week reduction in discount for single people living in the lowest council tax band and £2 per week in the highest band. Read more on Inside Housing.

Call for Housing Associations to Collect Council Tax

A West Midlands-based housing association says it’s worth exploring the idea of social landlords collecting council tax on behalf of local authorities as a result of the Government’s reform of the council tax benefit system.  This has seen local authorities consult on schemes requiring all working age residents who qualify for council tax support to pay a minimum contribution to their council tax.  Councils have raised concern over the aggressive timescales for implementation, the challenge of prioritising support and fear low collection rates.  Helen Shields who is business manager at Bromford Support's Moneymates service said there is scope for registered providers to offer and charge local authorities for a service collecting council tax and for the two to work a lot closer on rent and housing support. She said the idea would especially apply to LSVTs whose stock is condensed into one local authority area.  Read more on 24dash.

Collection Rate of 35p Feared For Every £1 of Council Tax Levied

One local authority is forecasting a collection rate of just 35p for every £1 of council tax that will be levied on new payers as a result of the Government's welfare reforms.   The Government is abolishing the current council tax benefit scheme – claimed by nearly 6 million people – where councils receive rebates on the financial support they provide. Instead, it has told them to come up with their own schemes from next April, cutting expenditure by 10% and handing them the money to administer it. However, it is the order to protect pensioners from cuts that will force some local authorities to seek minimum contributions from working-age households. This could see those who have never paid council tax previously asked to pay close to £200 a year. Read more on 24dash.

Row over Council Tax Benefit Risks Derailing Universal Credit Mantra

The “lunacy” of leaving council tax benefit out of the Government’s flagship Universal Credit came out in the wash during an opposition day debate on the Government’s benefit reform.  Universal Credit will replace six income-based benefits, including housing benefit, but not council tax benefit which gave some Labour MPs serious concern that the “making work pay mantra” of Universal Credit could be rendered inaccurate.  The debate was opened by shadow work and pensions secretary Liam Byrne who said that whether someone is better off in work or on benefits will depend on where they live. East Ham MP Stephen Timms then dealt the hammer blow when he revealed that some local authorities were proposing to add a 40p in the pound taper on council tax benefit on top of the 65p taper for Universal Credit.  “Under that approach, people who earn more would get less because they would lose more benefit than they would gain in income,” he said.  Read more of the debate on the Parliament website.