Still too poor to pay

Marc Francis, Z2K

5 September 2016

Amidst the flood of cuts to Social Security benefits brought in after 2010, the abolition of the national system of Council Tax Benefit (CTB) went under most people’s radar. However, for many claimants themselves, this cut caused serious financial hardship.

From April 2013, responsibility for providing financial support to these claimants was “devolved” to local government, along with a 10 per cent cut in funding. While a minority of authorities established local Council Tax Support schemes based under the old CTB scheme, most introduced charges requiring those disabled and unemployed residents who had not previously been liable to make a “Minimum Payment”. Tens of thousands of lone parents on Income Support because they have small children have also been hit.

Zacchaeus 2000 Trust (Z2K) was founded to help those hit by Margaret Thatcher’s “Poll Tax”, and so we opposed the abolition of CTB and have also done our best to show local councillors how wrong it is to tax claimants’ already meagre benefits. It really is a new Poll Tax by the back door. Over the past three years, in partnership with the Child Poverty Action Group (CPAG), we have tracked the impact of Council Tax Support schemes in London. This week, we published our latest report, Still Too Poor to Pay.

From responses to our Freedom of Information requests, we found that London boroughs summonsed 98,723 Council Tax Support claimants to court for council tax non-payment in 2015/16. This figure was slightly down from 102,204 in 2014/15 – reflecting the overall fall in claimant numbers as London’s economy picked up. However, the number of summonses as a proportion of working-age claimants has increased, demonstrating that many claimants continue to be unable to pay their council tax bill.

As well as this, just over 81,000 of those summonsed had “court costs” loaded on top of their council tax arrears, an increase of 10,000 claimants compared to 2014/15. Our most shocking finding, however, was that 19,212 London claimants of council tax support were referred to bailiffs in 2015/16 for council tax arrears – a 51 per cent increase on 2014/5. Any adviser that has worked with a debtor experiencing bailiff actions knows what misery they can cause – sending households into a spiral of debt.

The past three years have seen a stream of cuts to the level of Council Tax Support (CTS) across London as boroughs either introduce a Minimum Payment or increase the one they set in 2013. Only seven boroughs now continue to provide full support and many charge CTS claimants £200 to £300 a year in Council Tax from their benefits. The only exception is Camden, which given the difficulties it has experienced collecting money from CTS claimants, is now consulting on re-introducing 100 per cent support.

A last minute House of Lords’ amendment to the legislation abolishing CTB required the Government to carry out an independent review of its impact within three years. That review turned out to be a complete sham – it was led solely by a former Member of Parliament who had voted for the legislation and failed to speak to a single claimant affected. Inevitably, it failed to make any meaningful recommendations to ease the financial burden or restrict the use of bailiffs against claimants in arrears.

We hope Still Too Poor to Pay will persuade both national and local politicians to take a proper look at the distress this cut has caused the nation’s poorest households.