Thu, 31 Jan 2013 15:22 CST

© Reuters / Darren Staples

Under the UK government’s austerity program millions of low income households are facing a hike in their council tax bills of up to 333% a year. New changes are to be introduced this April, while Scotland and Wales chose not to implement the cuts.

The UK benefits system is about to undergo it’s most radical restructuring since the introduction of the welfare state after the Second World War and many families will be pushed further into poverty, a new report by the Resolution Foundation think tank reveals.

The biggest shakeup will be in Council Tax, a tax paid by households to local councils, which is not decided by income. Currently people on low paid jobs or the unemployed can apply for Council Tax Benefit (CTB), effectively exempting them from paying the tax.

All other means tested benefits will be streamlined into one national system, which will be called Universal Credit (UC), a move welcomed by the report’s authors.

CTB is a national scheme and provides assistance to nearly 6 million low income families in the UK; but as of the 1st April 2013 CTB will cease to exist.
Instead a new system will be introduced called Council Tax Support Schemes. Those who require assistance with their council tax bill will have to apply to whichever of the 326 local authorities they live in, who will make their own independent decision on whether to grant support.

However, central government has introduced a 10% cut in its subsidy budget – which local authorities would use to help people with their council tax – which effectively confronts local authorities with a choice. Either introduce less generous schemes, thereby forcing low income families to pay more council tax, or find savings elsewhere.

But council tax payers in Scotland and Wales will not be affected because their devolved governments will cover the 10% shortfall in funding from central government.

The CTB reform is expected to annually save £480 million, of which £410 million would come from England.


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