Big Changes to Benefits

Council Tax Benefit and how the changes could affect you

Major changes are planned to the current system of welfare benefits and tax credits, some of which are to take effect as soon as next April. These changes are part of the general cuts in government spending.

One of the first benefits to be affected is Council Tax Benefit, currently claimed by many thousands of people in Birmingham. From April 2013 Council Tax Benefit will be known as Council Tax Support

Under the present system, central government provides funding to the Council for Council Tax Benefit. From April 2013, the government will only provide 90% of the funding, so the Council is currently deciding how to manage the shortfall.

It is proposed that some of the funding will come from removing exemptions for empty properties and second homes – the owners will now be liable to pay full council tax and in some cases 150% council tax. The rest of the shortfall will be met by reducing benefits for the majority of claimants. According to the Council’s consultation document:

People of working age (unless specified) will have their Council Tax Support assessment based on 76% of their council tax liability.

This means that even if a person qualifies for maximum support, for example an unemployed person on Income Support, they will still have to pay 24% of their council tax. It is unclear though why, when there is only a 10% shortfall in funding, claimants are expected to fund 24% of their council tax.

There are some exceptions where certain people will still be entitled to 100% Council Tax Support, such as:

Pensioners.
People with disabilities (entitled to Disability Premium or Disabled Child Premium).
People with dependent children under six years old.
People in receipt of a war pension.

Also there are proposed changes to the backdating of claims – from April this will be limited to only one month.

If these proposed changes are adopted, a vast number of claimants will have their benefits reduced. The lowest council tax band is £840.64 per year, a person living within this tax band claiming for example Job Seekers Allowance, would be expected to pay approximately £202 towards their council tax, about £3.88 per week. This may not sound a lot, but with a weekly income of £71 (£56 if under 25) every penny counts.

The overall proposed cuts in benefits – Council Tax Benefit, Housing Benefit and Tax Credits, combined with the general rise in the cost of living, particularly gas and electricity, seem likely to increase hardship and debt, which will ultimately lead to an increase in poverty and homelessness. It seems the most vulnerable and those on the lowest incomes will suffer the most for a national debt that is not of their making. Greater inequality and an increase in social problems, is this David Cameron’s vision of the “Big Society”?