Council tax benefit changes are set to come in next year which will see rises for thousands of households. JOE NIMMO reports.
THOUSANDS of the poorest people across the area will be forced to pay more towards their council tax as local authorities struggle with cuts from central government.
In Portsmouth, the city council is planning a scheme where no working people would be able to completely avoid paying the levy, as it seeks to plug a £1.86m funding gap.
But it will also charge owners of empty properties more, in the hope of reducing the burden placed on those at the bottom of the salary scale.
The same tough decisions are being taken by councils across the country, as they wrestle with having to take over how financial support is given to poor households.
Council Tax Benefit, which lifts some people out of paying the homes levy altogether, has already been officially abolished and from April next year local authorities will have to start using their own replacement schemes.
These will differ from council to council – reflecting differences in local populations and council balance sheets – but all of them will receive at least 10 per cent less funding from central government.
In Portsmouth that leaves the city council with a huge shortfall and so their new benefit system will no longer provide a 100 per cent exemption for those who earn the least.
This means, with the exception of pensioners and the disabled, everyone will have to pay something.
From April the maximum amount of council tax that will be paid by the council, regardless of a person’s income, will be capped at 80 per cent.
This has led the council’s Tory and Labour opposition parties to brand the proposals unfair, but the Lib Dem administration insists it has no other choice.
Finance cabinet member Hugh Mason said the council had to strike a difficult balance between those who currently do and don’t pay the levy.
He said: ‘We could have put it onto other people’s council tax, but it would have been unfair to make those who don’t receive the benefit entirely pay for it.
‘But at the same time many of the beneficiaries are very poor, out of work, or have families, and it would have been unfair to put it all on them.’
To help plug the funding gap, the council will reduce the current discounts received by owners of empty properties down to 40 per cent of their council tax.
There will also be some measures introduced to increase the amount people can earn before the tax kicks in, as well as the rate it drops away for low earners.
Of the 20,000 council tax payers in Portsmouth who currently receive the benefit, around half are pensioners who do not have to pay, which leaves roughly 11,000 people who will be charged between £2.50 and £5 more per week.
This would mean for a Band A property a single person would pay a minimum of £135.68 more every year and a couple would pay an extra £180.90.
But both other parties in Portsmouth have said it is difficult to justify increasing taxes for people on low incomes at such a difficult time for the economy.
Labour leader Jim Patey said: ‘Anything which is taking money from people who don’t have money they can afford to lose is not fair.
‘Taking from the people on the lowest incomes is very difficult at the present time, because they need every penny they’ve got coming in.
‘This is just going to make life more of a struggle for them. It is a different world when you have to count every penny and save for everything.’
The city council acknowledges that it could be a struggle to collect the tax from people who haven’t paid it before.
Officers estimate that a further £85,000 to £100,000 will have to be taken from the authority’s general reserves to pay the staff who will administer the new system.
They have also factored in their prediction that 40 per cent of the new tax will go uncollected, either because people cannot pay or simply refuse to.
But to reduce the chances of people being taken by surprise by a new bill next year, it is inviting residents to give their views on the planned local scheme before November 16, 2012.
People can view the proposals online at portsmouth.gov.uk/counciltaxreform and complete a short online survey with their views.
Alternatively residents can pop into a Wednesday afternoon road show, which are being held at Co-op stores across Portsmouth from 2pm to 4pm on the following dates:
10 October – Co-op, Twyford Avenue, Stamshaw
17 October – Co-op, Sultan Road, Buckland
24 October – Co-op, The Hard, Portsea
31 October – Co-op, St James’s Road, Somers Town
7 November – Co-op, Francis Avenue, Central Southsea
Or call (023) 9283 4092 for a paper copy of the proposal and survey.
The main proposed changes in Gosport are as follows:
The total amount of benefit that a person will be entitled to will reduce and, much like in Portsmouth, every person of working age will have to pay towards their council tax bill.
In the proposals everyone will have to pay up to 20 per cent of their council tax.
Benefits for those living in more expensive properties will only be able to claim for the equivalent of a Band C house.
A discount available for ‘non-dependent’ second adults will no longer be available to working age people.
People who do not claim tax credits when entitled to do so will be encouraged to claim these benefits.
In Fareham the main changes being considered are:
That every working age claimant should pay the first 20 or 25 per cent of their council tax bill, whereas at the moment the benefit covers up to 100 per cent of some people’s council tax.
The council says this is a way of making sure that the impact is spread to all claimants and could reduce the cost of the scheme by an estimated £450,000.
Capping the council tax support to a Band C property. Under the current rules, a person can get 100 per cent Council Tax Benefit no matter how large their house is.
This could change so that a person’s support would be no higher than that given for a smaller house, which the council hopes could save an estimated £61,000.
Havant Borough Council has put together three options to choose between:
Option 1 involves meeting the whole of the funding gap by changing the council tax benefit rules so that all working age claimants pay at least 30 per cent of their council tax.
Option 2 would meet part of the funding gap by making changes to some council tax exemptions and discounts for empty properties and second homes.
The rest of the gap could be made up by changing the council tax benefit rules so that all working age claimants pay at least 20 per cent of their council tax.
Option 3 is the same as two except people receiving disability benefit would be exempt from the changes and everyone else would have to pay at least 30 per cent of their council tax.