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Council Tax Support

The National Audit Office has found that the Department for Communities and Local Government worked together effectively with local authorities to ensure Council Tax support was introduced on schedule. Not all local authorities’ support schemes, however, will achieve the expected objectives outlined by the Department before the policy was implemented.

The Department reduced the funding for Council Tax support by 10 per cent, equating to a saving for central government of £414 million in 2013-14.  Its ‘localization’ of Council Tax support required local authorities to design their own local support schemes. Most local authorities have reduced support for claimants to meet some of their funding reduction.

Seventy-one per cent of local authorities have introduced schemes that require working age claimants to pay at least some council tax regardless of income. Most local authorities also used new powers to charge more Council Tax on some properties, such as second and short-term empty homes, to help offset the funding reduction for Council Tax support. The National Audit Office found that all of a sample of 207 local authorities had taken advantage of these additional powers, raising an estimated additional income of £178 million.

The Department expects local authorities to implement schemes which protect vulnerable people and improve work incentives. The task for local authorities to meet these different objectives whilst managing their funding reduction is complex, and may require trade-offs. Today’s report found, for example, that 41 per cent of local authorities have introduced minimum payments of Council Tax with no protections for vulnerable groups, other than those mandated for pensioners and war pensioners. The Department takes the view that scheme designs are local decisions and it does not plan to intervene in local authorities’ scheme choices.

The financial impact of the localization of Council Tax support will vary between local authorities and depends on a range of factors.  For many local authorities, the reduction in funding for Council Tax support combines with other funding and welfare changes to put extra pressure on their budgets. According to the NAO, the Department must do more to satisfy itself that local authorities can manage the cumulative impact of funding and welfare changes.

“Given the demanding timescales faced by local authorities, introducing Council Tax support on time was a considerable achievement, though it is unclear whether some of the longer-term objectives of the policy will be achieved. The central government reduction in funding for Council Tax support contributes to the overall pressure on local authorities’ finances. The Department must improve its understanding of how funding changes and wider welfare reform will combine to affect local authorities.”

Amyas Morse, head of the National Audit Office

Notes for Editors

  1. Since Council Tax was introduced in 1993, people on low incomes have been able to claim support to pay their Council Tax bills. Until 2013-14, this was through Council Tax Benefit. On 1 April 2013, the Department transferred responsibility for Council Tax support to local authorities. Local authorities now have a duty to provide local Council Tax support schemes.
  2. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained from The Stationery Office on 0845 702 3474.
  3. The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Amyas Morse, is an Officer of the House of Commons and leads the NAO, which employs some 860 staff. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services, and our work led to audited savings of almost £1.2 billion in 2012.

PN: 75/13