News story

Government gives out transition funding for Council Tax support

All 195 billing authorities that bid for transition funding to help them in the first year of running Council Tax support will receive money.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Money

Council Tax benefit spending doubled from £2 billion in 1997 to 1998 to £4.3 billion in 2010 to 2011, which is one of the reasons the government has made welfare reform a vital part of how it tackles the deficit.

The localisation of Council Tax support will help tackle the deficit, delivering savings of £470 million a year of taxpayers’ money, and it will give all councils stronger incentives to cut fraud, promote local enterprise and get people back into work.

From April 2013 under the new localised system, councils are legally responsible for drawing up their schemes. Government has allocated £3.7 billion to councils for council tax support this year, which is the same amount spent on council tax benefit in 2008 to 2009. The government made transitional funding available to help councils develop well-designed schemes that maintain positive incentives to work. 195 billing authorities, 60% of the councils responsible for agreeing local schemes, submitted claims totalling over £50 million.

Local Government Minister Brandon Lewis said:

“Localising Council Tax ensures councils have greater financial freedoms and encourages them to take a stake in their local economies - ending the ‘something for nothing’ culture - and gets people back into work.

“There is a real incentive for councils to make savings in the new localised system by cutting fraud and error. These savings may not be delivered immediately so this funding helps councils whilst they design more sophisticated local schemes.

“We have cut Council Tax in real terms for the third year running because we are on the side of people who work hard and want to get on.”

The criteria set out that the voluntary grant was made available to councils (billing and major precepting authorities) who choose to design their local schemes so that:

  • those who would be on 100% support under current Council Tax benefit arrangements pay between 0 and no more than 8.5% of their Council Tax liability
  • the taper rate does not increase above 25%
  • there is no sharp reduction in support for those entering work - for claimants currently entitled to less than 100% support, the taper will be applied to an amount at least equal to their maximum eligible award

Further information

For the full list of councils and grants, see ‘Actual allocations of the transition grant for Council Tax reduction schemes’ on the localising support for Council Tax: transitional grant scheme page.

The government introduced plans to localise Council Tax benefit through the Local Government Finance Act. From April 2013, Council Tax benefit will be replaced by local Council Tax support schemes. There will be no change to the level of support provided to pensioners, and councils will become responsible for designing and administering schemes for working age claimants.

More information can be found on the localising Council Tax support page.

Published 5 March 2013