Monday, 26 November 2012

Council Tax Benefits Crisis

Council tax benefit is changing and we have been consulting with local people about just what those changes may be. Currently Hastings Borough Council pays out over £11million per year in Council Tax Benefit to those people who are eligible and the government reimburses us. The system is demand led and therefore the more people who qualify, the more subsidy the government gives us.

Starting from next April, this is going to change. The government will give the council a fixed amount based on this year’s spend less 10%. If more residents become eligible for support there is no additional money to help them – we will have to find it ourselves. Also the 10% cut – around £1 million – will have to be found locally just as mainstream council budgets are being cut back with government grants reducing.

So we have been working hard to look at every council tax discount (except the single persons discount which the government has ruled must not be touched) to see if that can help bridge the 10% benefit gap.

We have consulted on scrapping the 10% discount on second homes (71% agreed), charging owners of properties left empty for two years or more an extra 50% (71% agreed), cut the exemption for empty properties under repair from 12 to six months ((79% agreed), reduce the discount on empty unfurnished properties from 6 months to one month (67% agreed)

But changing these exemptions and discounts will only close half the financial gap. So unfortunately we have had to propose changes to how people’s benefits are calculated.The changes we consulted on included a maximum payment of £20 per week, a minimum of £5, changes to how we treat other people in the household and the removal of second adult rebate. We also considered cutting the savings someone may have in the bank and still be eligible to council tax benefit from £16,000 to £6,000 (50% agreed).

Potentially all this would affect the ordinary lower income person. And if their benefit goes down and they have to pay some more council tax it could affect the council’s total council tax income meaning we might have less to spend on services.

Now at the eleventh hour the government has offered local councils £100 million back from the £400 million it will save from cutting the total council tax benefit payments by 10%. Hastings is being offered £278,000.

The offer is only for one year and is given with certain conditions, particularly that no claimant who currently has nothing to pay should have any more than 8.5% of their council tax bill to pay. Well just the reduction in the maximum of £20 per week would have affected some claimants by more than 8.5%.

Although the council may have to find some money itself to balance the figures, my view is we should take the government’s offer. We will still make all the discount and exemption changes but we will only need to implement the more limited impact benefit changes like the £5 minimum. Then we will have to see where we are again in 12 months time.

The council will take the final decision early in the New Year – but at least for this year many of our local claimants can enjoy a less worried Xmas break.