Government cuts council tax benefit funding

By on 28/08/2012 in Cabinet, Leader, News

Government cuts to funding council tax benefit have left Birmingham City Council with no alternative but to reduce benefits to some of the poorest families in Birmingham, the Cabinet will be told on Monday (3 September).

Councils will be required by Government to administer and take up responsibility for council tax benefit as of 1 April 2013; and the funding to councils will be cut by 10 per cent, which will mean a £10.9million shortfall in Birmingham.

A report to the council's Cabinet will recommend abolishing the current exemptions for council tax on empty properties, which will raise £4.4million of the funding shortfall. And that the remaining £6.5million will need to be raised by the residents of many other households having their council tax benefit assessed upon 76% of their charge, unless they have a child under 6 or are disabled, or are pensioners.

The Council Tax Benefit of pensioners is protected under Government legislation, and the city council plans to extend protection so that those claimants with a disability or with children under six years will also not pay any council tax.

And it is also anticipated that the implementation of a support scheme to administer the new arrangements, when taking into consideration the additional costs of collection and a bad debt provision to cover non-collected debts could cost the city a further £10-£15million on a recurring annual basis.

The Cabinet will be asked to approve these proposals on Monday to enable the council to consult citizens formally, as required by the Government, on the new plans throughout September, October and November.

Sir Albert Bore, Leader of Birmingham City Council, said: “Government is imposing this change, which will hit Birmingham citizens, and all to replace a council tax benefit system that is already working well.

“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.”

Sir Albert added that a hardship fund of £1million was also being considered to help those in greatest need.

Notes to editors

1. The Government first announced its plans to abolish council tax benefit and replace it with a local scheme to be administered by local authorities in the Comprehensive Spending Review 2010. But it is the Local Government Finance Bill, currently before Parliament, which sets out the requirements for local authorities to introduce a local scheme from 1 April 2013.

2. Birmingham City Council currently administers council tax benefit on behalf of the Government's Department for Work and Pensions and receives funding for the benefit it allows. Council tax benefit is means tested and is paid to low income households to help them meet their council tax liability. In 2011/12 the council awarded approximately £100 million of council tax benefit to around 135,000 council tax payers.

3. The anticipated financial pressure in 2012/13, as a result of the cut in funding for the city council is £10.9 million, with a further impact of around £1.4 million for the preceptors e.g. fire, police as 11.7% of the council tax charge partially funds, via a precept payment, these two organisations.

4. If approved by Cabinet, the three-month consultation with residents on the proposals will include letters to every household in the city; posters on some bus routes; and leaflets in neighbourhood offices; directing residents to a web page on www.birmingham.gov.uk and an online questionnaire. There are also five public meetings planned in the north, south, east, west and centre of the city; and anyone with any queries can email council officers at ctsconsultation@birmingham.gov.uk.

For further information from the media please contact the press office on 0121 303 3287

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