Low-pay households face rise in council tax bill

Under the Local Government Finance Bill, Communities Secretary Eric Pickles aims to save £450m by cutting funding for council tax rebates by 10 per cent from April 2013, leaving it up to individual local authorities to decide how they make up the shortfall.

The first councils are now setting out how they plan to deal with the change, with Manchester launching a consultation last Friday on proposals to require all households except pensioners to pay at least 15 per cent of the council tax bill, while Barnet is proposing a minimum 25 per cent charge for all working-age residents.

Since the introduction of council tax in 1992, rebates of up to 100 per cent have been available to the unemployed, disabled people, full-time carers and households on low incomes, many of whom have not been required to pay the tax at all.

Shadow Local Government Secretary Hilary Benn, MP for Leeds Central, said the planned change had left councils with a “terrible dilemma”, forcing them to decide whether to impose council tax rises on the working poor, the disabled or the unemployed.

He warned of a repeat of the poll tax in the 1980s, when local authorities were forced to pursue poor people through the courts for payment of Margaret Thatcher’s community charge.

“Eric Pickles has lectured councillors that they have a moral duty not to increase council tax bills but in fact he has been planning a £450m council tax bombshell of his own by increasing the bills paid by people on low incomes,” said Mr Benn.

He went on: “Just as happened with the poll tax, councils will be forced to chase people on low incomes for money they simply don’t have.”

Local Government Minister Grant Shapps said: “Spending on council tax benefit more than doubled during Hilary Benn’s time in power and welfare reform is vital to tackle Labour’s budget deficit.”