Government ‘passes the buck’ on funding council tax benefit

By on 17/07/2012 in Deputy Leader, News

Government cuts to funding council tax benefit leave Birmingham City Council with no choice but to reduce benefits to some of the poorest families in Birmingham, further reduce council services, or increase council tax.

The Government will require councils to administer and take up responsibility for council tax benefit as of 1 April 2013. This means that councils will have to set up new IT and administrative systems to deal with the situation, but due to the tight timescales only existing software and systems can be used.
Localising financial support for council tax will also mean that the Government will cut 10 per cent from the funding for council tax benefit, which in Birmingham will mean a loss of £11.8 million.

Birmingham City Council has already written to the Government urging a rethink 'to prevent an unnecessary upheaval of the system' and to consider deferring the 10 per cent cut for one year.

The Government now expects each council to publish a draft scheme and to consult its residents on that scheme. Councils have only known since the end of 2011 that they would need to start developing a scheme.

Birmingham City Council will evaluate all the available options, which include increasing council tax; reducing council services; reducing council tax benefit; and/or a combination of these options, for its proposed scheme. However, the scheme will support pensioners and the council will explore options to protect other vulnerable groups.

Deputy Leader, Cllr Ian Ward, will today (Tuesday 17 July 2012) give evidence to the city council's new Governance, Resources and Member Development Overview and Scrutiny Committee, where he will set out the impact of this cut on both the city council and Birmingham families. The scrutiny committee is then expected to write to ministers on the outcome of its inquiry.

Cllr Ward 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 in the Autumn.

“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.”
Cllr Carl Rice, Chair of the Governance, Resources and Member Development Overview and Scrutiny Committee, said: “These new proposals appear to give Birmingham City Council greater control over its resources. Yet research has revealed that there are some hidden dangers. Our scrutiny of the changes to council tax benefit will attempt to uncover the true impact for Birmingham City Council and help the executive to prepare for its consequences.”

Cllr Ward added: “Despite being forced to make these cuts, we will explore options to protect vulnerable groups in Birmingham, but this in turn could further impact on young, working families.”

 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 being debated in the House of Lords, 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 Governance, Resources and Member Development Overview and Scrutiny Committee will be held at the Council House and open to the public from 11:15 on Tuesday 17 July 2012 and the Deputy Leader, Cllr Ian Ward, will give evidence from 13:30 - 14:00.

For further information from the media please contact Deborah Harries on 0121 303 4777 or 07825 979046.

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