HOPES OF COUNCIL TAX DISCOUNT FLEXIBILITY ENDED

FIRST PUBLISHED BY: LOCAL GOVERNMENT CHRONICLES

MINISTERS HAVE SLAMMED THE DOOR ON HOPES OF GREATER LOCAL DISCRETION OVER COUNCIL TAX BENEFIT DISCOUNTS AS THE LOBBYING OVER THE REFORMS STEPS UP A NOTCH.

Hopes had been growing that councils could be allowed to reduce the single person’s discount after Baroness Hanham, left, invited the LGA to outline its concerns on welfare reforms in the Local Government Finance Bill.

However, a spokesman for the Department for Communities & Local Government dismissed claims the 25% single person’s discount could be scrapped. “The government has looked at the case for ending the single person discount, and we have rejected it. It has no intention of imposing a new stealth tax on eight million single people.”  

LGA political leaders will meet local government minister Baroness Hanham this week as the bill enters the House of Lords and at a time when Conservative peers are hoping to secure “significant changes” to the legislation. Baroness Hanham, who will oversee the finance bill as it passes through the Lords, has already asked the LGA to formally set out its concerns and, although it refused to release the letter ahead of the meeting, LGC understands the objections raised were the same as at a recent meeting with peers.

They include frustration at Council Tax ‘localisation’, under which councils will be unable to amend existing discounts of pensioners and single people, concern about the short timetable and government assumptions that demand for Council Tax benefit will fall in future years.

LGA chair Sir Merrick Cockell (Con) told executive members: “Baroness Hanham requested a clear letter from us and she has had that and it is being carefully considered.” Sir Merrick said the LGA “agreed with the principles of localisation - what we disagree with is that we are hamstrung”. Gary Porter, leader of the LGA’s Conservative group, left, said nothing was assured, but said ministers “are receptive to the message”.

The LGA and individual councils have calculated that even partial flexibility over the 25% single person discount could help councils tackle next year’s 10% Council Tax benefit funding cut without reducing discounts for those on low incomes or cutting spending elsewhere. LGC understands senior finance officers intend to press the case with officials at DCLG in the coming weeks. Barnsley MBC leader Steve Houghton (Lab), whose authority would only need to reduce the discount from 25% to 20% to meet a £2.2m funding cut, said the discount “does not make any sense”.

Essex CC have similarly calculated single persons discount will cost around £50m a year, well above the £10m cut in funding which the county faces. A spokesman for Essex said: “Allowing more flexibility around single persons discount could offset some or all of the pressure being placed on the new Council Tax support scheme and its beneficiaries.”

During an initial debate in the Lords last week, Baroness Eaton (Con) called for councils to be given “as much flexibility as possible to reform Council Tax discounts so that they can manage the financial risk” while Lord Jenkin of Roding (Con) likened the bill’s centralising tendencies to the Localism Bill. “Happily on that occasion we did secure some significant changes. I hope that we may be able to do so here,” he said.

The changes to Council Tax benefit are happening alongside wider welfare reforms, including the introduction of universal credit which will cap benefits received by families. The LGA has appealed for individual authorities to share any information they have on the impact of the changes on residents and councils. Analysis by Sandwell MBC suggests one unintended consequence could be benefit cuts for families enrolled on the DCLG’s £448m troubled families programme.

Chief executive Jan Britton said there was a risk to the government’s wider strategy. “On the one hand, it’s just announced extra cash for councils to tackle the ‘problem families’ costing the public purse the most - but, on the other, these may well be hardest hit by welfare changes.”

The first in-depth academic study of the effect of capping the local housing allowances on the private rented sector, published by the Department for Work & Pensions last week, has shown that two-third of large landlords said the cap was causing their tenants to fall into arrears. The study did not, however, find strong evidence of other predicted consequences, such as migrations from high-rent areas such as London to cheaper areas.

READ WHAT: ERIC PICKLES ‘SECRETARY OF STATE’ SAYS ABOUT OVER-CHARGED COUNCIL TAX.


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