A new report from the Child Poverty Action Group presents the evidence they’ve collected on the impact that the abolition of council tax benefit has had in London over the last three years, writes Alice Woudhuysen.
When the government abolished council tax benefit and replaced it with locally run council tax support schemes back in April 2013 – and slashed local authority funding for the schemes by 10 per cent – Child Poverty Action Group (CPAG) and Zacchaeus 2000 Trust (Z2K) were very concerned about the financial hardship that this would cause many of London’s poorest residents.
Through a series of reports, we set out to provide yearly data and analysis of the 33 different London council tax support schemes and to closely monitor the impact that abolishing council tax benefit was having, not just on low-income Londoners, but on local authorities too.
With our latest report, Still too poor to pay: three years of localised council tax support in London, the evidence we’ve collected from local authorities on their council tax support schemes suggests that our concerns were justified.
Three years after the policy change, the good news is that the overall numbers of claimants has fallen as London’s economy has improved. However, council tax arrears have shot up alarmingly and growing numbers of claimants are being charged court costs on top of arrears, as more and more local authorities use bailiffs and harsh enforcement tactics to go after council tax debts.
And it’s not just claimants who have been affected – localisation has also created serious administrative and financial burdens for local authorities, who tell us they are uncertain of how much funding they receive from central government and of whether it is sufficient to support their poorest residents.
So what can be done to mitigate the impact of council tax support schemes, both on low-income Londoners and on local authorities?
Our report argues that first and foremost, central government should reinstate council tax support as a national benefit, providing up to 100 per cent support for people on low incomes. However, if council tax support is to remain localised, we are calling for funding to be ring-fenced and separately identified, so that local authorities can clearly see how much funding they receive and ensure that it is all spent on council tax support.
We would also like to see London local authorities reinstating 100 per cent support for their poorest residents, following the lead of the seven boroughs that still maintain it (City of London, Hammersmith and Fulham, Kensington and Chelsea, Kingston upon Thames, Merton, Tower Hamlets and Westminster).
CPAG and Z2K appreciate that the 10 per cent cut in council tax support came at a time when local authorities were already struggling with deep cuts to their budgets, and that the requirement to exempt pensioners from any new charges has added to the burden on working age claimants. However, the falling number of council tax claimants across London has reduced the cost of most schemes and offering 100 per cent support would reduce administration costs related to recovering relatively small debts from council tax support claimants, thus freeing up authorities’ resources to pursue larger debts.
If boroughs have to maintain a minimum payment, we suggest that they should reduce it or keep it to under 10 per cent. They should also broaden exemptions to include those in receipt of benefits, or affected by other aspects of welfare reform such as the ‘bedroom tax’ or the ‘benefit cap’.
We would like to see local authorities refrain from using bailiffs and instead adopt collection practices that seek to maximise collection in a sustainable way, by engaging with debtors and understanding the difficulties they face. Many local authorities have hardship funds that they don’t actively promote – we would like to see this change.
Finally, one of our biggest discoveries during our research was that many local authorities told us that they did not collect or publish information about their council tax support schemes. We would urge councils to collect this data and present it to councillors on an annual basis, to allow for a full evaluation of their scheme, before a decision is made on the following year’s scheme. We believe this is absolutely essential to understand the impact that council tax support is having on London’s poorest residents.
Alice Woudhuysen is London Campaign Manager at Child Poverty Action Group