Announcement

Supporting more people back into work - councils to take the lead in boosting local economic prosperity

Plans to put councils in charge of providing financial support for council tax which are designed to help more people back into work, maintain…

Plans to put councils in charge of providing financial support for council tax which are designed to help more people back into work, maintain protections for pensioners and save the taxpayer up to £480 million a year have been published for consultation by Local Government Secretary Eric Pickles today.

Under the existing system local authorities are responsible for council tax rates and collection but do not control the policy on council tax benefit, which is run centrally from Whitehall.

Ministers are proposing to bring all aspects of the council tax system together at local level, freeing billing authorities how best to support working age households and establish stronger incentives for councils to get people back into work.

The changes to these benefits sit alongside the Government’s wider welfare reforms that are focused on ending a culture of benefit dependency and on making sure that it always pays to work.

Pensioners will be protected against any reduction in support. Today’s consultation considers how best to protect other vulnerable groups.

The cost of council tax benefit to taxpayers is equivalent to almost £200 per household a year. The changes will help to deliver a 10 per cent reduction in the current £4.8 billion annual council tax benefit bill across Great Britain, resulting in significant savings for the taxpayer.

The proposals to put councils in charge of providing support for council tax are part of a wider decentralisation policy that will give local authorities increased financial freedoms and a greater stake in the economic future of their local area. The reforms will align benefits with the wider council tax system creating a simpler, streamlined system, reducing bureaucratic burdens and costs. The Royal British Legion has previously called for Council Tax Benefit to be re-labelled a council tax ‘rebate’.

The reforms will also give councils stronger incentives to tackle benefit error and fraud which are currently estimated to cost councils around £200 million a year.

Communities and Local Government Secretary Eric Pickles said:

Plans to put councils in charge of providing support for council tax go hand in hand with wider economic reforms - such as the New Homes Bonus and our proposals for the local retention of business rates. In future, councils will have a much greater stake in the economic future of their area and greater incentives to support local residents back into work.

The new system will be a fairer one, where hard-working families and pensioners are not left to pick up a spiralling benefits bill and where work always pays.

Councils will be much better placed to attract new business and industry, better placed to help their residents get off welfare and reap the benefits of work instead. They will directly benefit from improving the prosperity of the local area that will in turn drive down their benefit bill.

Local authorities will have much greater freedom to administer rebates in a way that best meets local needs and best supports local people whilst safeguards will be put in place to protect the most vulnerable, including pensioners, from any reduction in the support that is on offer.

The changes to the system will be introduced in 2013-14.

Plans to localise council tax benefit are intended to:

  • give councils increased financial freedom and a greater stake in the economic future of their local area - supporting the Government’s wider agenda to enable stronger, balanced economic growth across the country.
  • reduce expenditure on support for council by 10 per cent - the reforms will create stronger incentives for councils to get people back into work and save taxpayers money - reducing the cost of benefits to hard-working families and pensioners.
  • protect the most vulnerable in society, particularly pensioners from any change in their level of support.
  • enable councils to simplify the complex system of criteria and allowances by aligning the support scheme more closely with the council tax system and so help reduce administrative costs.

Promoting work incentives is at the heart of the Government’s programme of welfare reform. Ministers are clear that localised schemes should be delivered while supporting work incentives. One of the aims of localisation is to create stronger incentives for local authorities to get people back into work and support the positive work incentives that will be introduced through the Government’s plans for Universal Credit.

Notes to editors

  1. Localising Support for Council Tax in England: Consultation has been published today: www.communities.gov.uk/publications/localgovernment/localisingcounciltaxconsult.

  2. Council tax benefit is an income-related social security benefit which may be claimed by an eligible individual who is liable to pay council tax in respect of their sole or main residence and who has submitted a claim to the relevant local authority.

In 2011 £4.8 billion was spent on council tax benefit in Great Britain and claimed by 5.8 million people.

Although council tax benefit is a national benefit with policy and rules set by central Government, it is administered by local authorities in England, Scotland and Wales.

The costs of council tax benefit are currently met by DWP from Annually Managed Expenditure.

  1. In 2009/10 fraud and error overpayments in council tax benefit stood at 4.2 per cent of overall expenditure (about £200 million). (Source: National Fraud and Error Statistics 2009/10 http://statistics.dwp.gov.uk/asd/asd2/fem/fem_apr09_mar10.pdf (external link)).

  2. Further detail on the current eligibility criteria for council tax benefit can be found here: [www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/On_a_low_income/DG10018923](http://www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/On_a_low_income/DG10018923) (external link).

  3. Household equivalent figures are calculated using Household figures from the English Housing Survey for 2009-10 and council tax benefit figures from Single Housing Benefit Extract, January 2011.

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