Local authorities must get to grips with the £200m of Council Tax Benefit lost each year through fraud and error so they can fully support hard working families and genuinely vulnerable people, Local Government Secretary Eric Pickles said today.
Spending on council tax benefit has more than doubled since 1997. Figures revealled today show that since 2006 council tax benefit fraud and error has cost the taxpayer an estimated £1.1bn, an average of around £3m per council.
Welfare reform is an important part of the Government’s strategy to repair the national deficit. Giving councils a stake in providing council tax support will assist local job creation, promote enterprise and reduce welfare dependency.
Government reforms will localise council tax support putting councils, who already raise and collect the tax, in charge of the discount. This will give councils a stronger incentive to support local firms, cut fraud, promote local enterprise, end the something for nothing culture and get people into work.
As part of that deficit reduction strategy councils will be expected to save over £400m a year when they begin running local council tax support schemes next year. Councils will keep all savings they can make from reducing fraud and error.
Between 1997 and 2010 council tax bills more than doubled. The Coalition Government has worked with councils to freeze council tax for two years, cutting council tax in real terms.
Eric Pickles said:
It is not right that over a billion pounds of taxpayers’ money has been lost through council tax benefit fraud and error when there are hard working families and genuinely vulnerable people out there who deserve help with their cost of living expenses.
Today’s figures show that when councils take over the benefit with their local schemes there is lots of money to claw back from wasteful mistakes and fraudsters cheating the system.
Town halls are already the ones who set and collect council tax so it makes senses that they are the ones who give out the support too. Our reforms will restore the confidence of hard-working taxpayers that the benefits bill is under control and that work pays.
Notes to editors
The Local Government Finance Bill was introduced in December 2011 and paves the way for the implementation of localised council tax support schemes in England from April 2013. Royal Assent is expected later this year. The Bill will see council tax support determined by local authorities. This will give local authorities the flexibility to design schemes which reflect local priorities, giving them a greater financial stake in the economic future of their area and enabling them to deliver a saving of 10 per cent on the current council tax benefit expenditure bill.
Council tax bills were £1,439 on the average Band D property in England in 2010-11, an increase of 109 per cent - or an extra £751 a year on a Band D home. The Coalition Government has worked with councils to freeze council tax for two years - cutting council tax in real terms.
Council tax benefit expenditure in England increased from £2.0 billion to £4.3 billion from 1997-98 to 2010-11 (DCLG, Local Government Finance Bill: Localising support for council tax - Updated Impact Assessment, p.5, www.communities.gov.uk/publications/localgovernment/lgfblocalisingcounciltax).
The figures on council tax benefit fraud and error are available here: http://statistics.dwp.gov.uk/asd/asd2/index.php?page=fraud_error_arc (external link).