Council Tax: Support Schemes

Lord McKenzie of Luton Excerpts

Monday 4th March 2013 Lords Chamber

Asked By

[Lord McKenzie of Luton]

To ask Her Majesty’s Government what assessment they have made of the effects of local council tax support schemes on poverty.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)]

My Lords, localising council tax support reduces the cost of council tax benefit by 10%. That contributes to our deficit reduction programme, makes councils responsible for support and creates incentives to get people into work. In designing schemes, local authorities should take into account the impact on low-income families. On 16 October, the Government announced a £100 million transitional grant to assist development of local schemes. Some 195 billing authorities have adopted schemes that are compliant with the criteria for the grant.

[Lord McKenzie of Luton]

In thanking the noble Baroness for that reply, I must say that it is somewhat complacent and out of touch. The Resolution Foundation estimates that three-quarters of the 326 local authorities responsible for council tax support schemes will be forced by government cuts to adopt schemes giving less support than the current national scheme. That will see working families losing £165 a year on average and non-working families even more. Taken together with all the other cuts about to hit low-income families, including the bedroom tax that we have just discussed, the 1% capping of benefits and other tax credits, is this not going to lead to increased personal debt, more food banks, lower collection rates for local authorities, more bailiffs knocking on the door and all the misery that that entails? Why do the Government find this acceptable?

[Baroness Hanham]

Well my Lords, a little of what the noble Lord has said is probably overblown. We are well aware that local councils are creating their council tax support schemes. In particular, at the moment, they have been offered transitional relief, as I have already said, to help them with that. Local authorities and the Department for Work and Pensions will be working together to ensure that the worst examples of what the noble Lord has put forward do not occur.