Two years on from the abolition of national council tax benefit, tens of thousands of low-income Londoners are still reeling in the face of local payment demands, a report from Child Poverty Action Group (CPAG) and Z2K reveals.
Too poor to pay tracks the impact of the second year (2014-15) of localised council tax support schemes which replaced national council tax benefit in April 2013. Council tax support is for people on low incomes, in or out-of-work, and reduces the amount of their council tax bill they are liable for.
When the local schemes started up, funding was cut by 10 per cent. To plug the gap, many councils began demanding minimum payments of up to £380 per year from working age residents who had been deemed too poor to pay anything under the previous national scheme.
In 2014/15, 24 of 33 London boroughs continued to levy a minimum council tax charge on residents who had not been required to pay before localisation. Charges vary from 5 to 30 per cent of the full annual bill.
Today’s report finds:
• Councils report that almost 123,000 (122,749) low-income Londoners are currently in arrears on their council tax – (1)
• More than 100,000 low-income Londoners (102,204) receiving council tax support were issued with a court summons in 2014/15 because they fell behind on payments (2)
• More than 12,000 council tax support claimants in the capital were referred to bailiffs in 2014/15.
• More than 71,000 council tax support claimants were charged £8.5 million in court costs on top of their arrears.
While the number of Londoners summonsed to court for non-payment has fallen slightly since 2013/14, across the four London boroughs which in 2014-15 increased their minimum charges, the total number of defaults rocketed. In these areas:
• Court summonses for non-payment have doubled - rising to 15,509 in 2014/15 and
• Referrals to bailiffs increased by 50% – rising to 3,193 in 2013/14
Despite this, councils are looking to increase charges to their poorest residents. Six London councils either introduced a minimum payment for the first time or increased the minimum payment they will require in 2015/16.
CPAG and Z2K are calling for the reinstatement of a national, fully funded system of council tax benefit so that the lowest-income households are not liable for the tax. While a localised system still exists, they ask that all local authorities should either follow the example of the six London boroughs who have continued to cover council tax in full for their poorest residents or – at the very least – cut minimum payment to more affordable levels. They should also improve their collection procedures to protect their poorest residents from court costs and bailiffs.
Child Poverty Action Group Chief Executive Alison Garnham said:
“This research shows the hit that Londoners previously deemed too poor to pay are taking as a result of council tax localisation. Families are saying their budgets just won’t stretch to cover the tax. Worse, many are facing court costs piled on top of a debt they couldn’t meet in the first place. Central government and local authorities must face the fact that the new scheme isn’t working. They need to play fair and stop charging council tax to people who haven’t got the money to pay it.
Joanna Kennedy, Chief Executive of Z2K said:
“At the same time as the government is making great efforts to lift low income households out of income tax it is perverse that local authorities should start to charge them council tax. Although it may not seem much to some people, those families we support simply can’t afford the £5 or £10 a week these councils are charging. The end result is either cutting down on essentials and going hungry or fail to pay and risk having an aggressive bailiff knocking on your door. That’s not a choice any family should face.”
The total amount of Council Tax charged to London council tax support claimants in 2014/15 was more than £260 million.
The report includes details of each borough’s schemes including claimants in arrears, issued with court summons, charged costs or referred to bailiffs (see attached report).
Note to Editors:
(1) The number of claimants in arrears as reported by local authorities in 2014/15 (123,000) is more than twice as many as in 2013/14 (60,000). Some of this increase is likely to be down to the fact that more local authorities provided information on this question than did last year, (23 boroughs provided information for 2014/15 compared to 17 in 2013/14). In addition it is likely that the higher reported number for 2014/15 is also due to arrears for 2013/14 remaining outstanding - so the 123,000 includes claimants that are in arrears for 2013/14 and/or 2014/15.
(2) This is a fall on 2013/14 when 118,000 were summons issued. Possible explanations for the fall are: higher employment has reduced the number of council tax support claimants overall; some of those who struggled to pay last year have adjusted and are now managing better; and some councils have stepped up efforts to engage late payers to arrange payment plans in order to avert the need to issue summonses
(3) The Zacchaeus 2000 Trust (Z2K) is a London-based charity addressing poverty issues caused by unfairness in the law, legal and benefits system. We help vulnerable debtors to gain justice against these unfair systems. For more information see http://z2k.org/
(4) CPAG is the leading charity campaigning for the abolition of child poverty in the UK and for a better deal for low-income families and children. CPAG is the host organisation for the Campaign to End Child Poverty coalition, which has members from across civil society including children’s charities, faith groups, unions and other civic sector organisation, united in their campaigning for public and political commitment to ensure the goal of ending child poverty by 2020 is met.
For further information please contact:
CPAG Press and Campaigns Officer
Tel. 020 7812 5216 or 07816 909302