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Braced for a council tax bombshell

Braced for a council tax bombshell

🕔29.Aug 2012

About 70,000 low-income Birmingham households will have to pay council tax for the first time following Government changes to the way benefits are administered, it has been revealed.

The maximum rebate that most people will be able to receive is likely to be set at 76 per cent.

Only claimants with children under six, or who are disabled, and pensioners, will be able to continue claiming 100 per cent council tax benefit from April 2013.

The changes, which have been condemned as an attack on the poor by the city council’s Labour leadership, arise from a Government decision to hand the administration of council tax benefit to local authorities and at the same time to cut by £11 million the amount Birmingham gets to run the scheme.

Council leader Sir Albert Bore claimed he had no alternative but to pass on the funding cut in the form of lower rebates. He warned that the additional cost to the council when provision for bad debts and extra administrative costs are taken into account could be £15 million a year.

Sir Albert added:  “The city council cannot afford to make good this cut in Government funding without increasing the already severe savings it is making in all other service areas. This means that we face the hard choice of how we pass on this funding shortfall and we will be consulting with residents on this over the next three months.

“There are 135,000 Birmingham households which already receive council tax benefit because they are living on low incomes and need this help to meet their council tax bills. Many of those families are working but are still on low incomes, trying to make ends meet.

“The Government has simply passed the buck, knowing full well that councils cannot afford to absorb the shortfall and that we have no option but to pass the impact on to hard working families in our cities.”

Some Labour-led councils have accused the Government of bringing back the poll tax through the back door by making sure that even the poorest families will have to make a contribution to council tax for the first time since the early 1990s.

However, Local Government Secretary Eric Pickles insists that cities like Birmingham wouldn’t have to cut rebates if they were more efficient about administering benefits and collecting council tax.

Figures provided by the Department for Communities and Local Government suggest that Birmingham could save £4 million a year by eliminating fraud and error from the benefits system.

Mr Pickles said: “When councils take over the benefit with their local schemes there is lots of money to claw back from wasteful mistakes and fraudsters cheating the system.

“Town halls are already the ones who set and collect council tax so it makes senses that they are the ones who give out the support too. Our reforms will restore the confidence of hard-working taxpayers that the benefits bill is under control and that work pays.”

As well as limiting most rebate claims to 76 per cent Birmingham is planning to scrap council tax relief on empty properties, in a move expected to raise £4.4 million a year. In addition, backdated council tax benefits will be reduced from six months to one month.

The changes mean that about 70,000 households will have to start paying 24 per cent of their council tax bill, an amount that is likely to range from £260 to £350 in most cases.

A £1 million hardship fund is expected to be set up by the council to help families in the greatest need.

 

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