Council tax support cut leads to surge in court action against poor households

New research published today (Monday) by False Economy – the TUC-backed anti-cuts campaign website – has uncovered a huge surge in low-income families being summoned to court for non-payment of council tax.

The research finds that there has been an annual increase of more than 500,000 court summonses in England, largely driven by low income working-age households affected by a £490 million cut to council tax support (2013/14).

One in seven local authorities are set to further increase the size of cut to council tax support in the new tax year, which commences today.

This will subject many of the poorest families to even higher council tax demands, which the TUC believes will result in the numbers summoned to court continuing to grow.

The council tax support scheme (CTS) was introduced in 2013/14 in England to replace council tax benefit (CTB). The change included a 10 per cent cut to central government funding of the scheme. The majority of local authorities have passed the cut on to claimants in the form of a minimum council tax payment requirement for working-age households, regardless of whether or not they are in paid work. Only a small minority of local authorities kept full council tax support in place for those on low incomes.

According to the Institute for Fiscal Studies, around 2.5 million low income households were hit by the resulting council tax rises in the first year of the minimum payment schemes.

The research by False Economy found that in local authorities with minimum payments, court summonses for non-payment of council tax increased by 30 per cent. But the increase was only 9 per cent in local authorities that still provided support for the full council tax bill.

The research also found that CTS qualifying households subject to the new minimum payment rules accounted for 58 per cent of the net increase in court summonses from 2013 to 2014. And this is despite the fact that they are only around 11 per cent of all council tax liable households.

The freedom of information requests also revealed that the use of direct deductions from benefits and earnings, as well as the use of bailiffs, is now very widespread as a consequence of the liability orders the courts are issuing. The TUC is concerned that this is likely to be pushing families into severe poverty.

TUC General Secretary Frances O’Grady said: “Slashing council tax support has been one of the government’s cruellest cuts. It was foolish for ministers to think that families who can’t afford to heat their homes can pay new tax bills for hundreds of pounds. And it is heartless for them to stand by as the poorest families are hauled through the courts and harassed by bailiffs.

“If anyone is to be hit with higher taxes it should be the fat cats in the boardrooms and those corporations that are dodging paying their fair share, not the poorest working-age households in the UK.”

A False Economy spokesperson said: “Council tax support cuts have caused chaos for families and households, and also for councils. They are leaving people out of pocket and in debt, which is also bad for local businesses that depend on them as customers.

“Councils are now pursuing people through the courts for money they do not have. It is a shambles made by a cabinet of millionaires in a government that has been completely out of touch with reality.”

NOTES TO EDITORS:
- False Economy sent FOI requests to all 326 English local authorities. 275 responded with data on court summonses and liability orders for all council tax payers. 42 local authorities gave further responses specific to those residents who are in receipt of CTS. The findings of this research are only applicable to England. The full dataset can be downloaded from https://www.tuc.org.uk/sites/default/files/FOIdata.xlsx
- From the subset of 42 local authorities that gave data specific to working age CTS claimants, it was found that there was an increase in summonses of 50,821for working age CTS claimants, relative to an overall increase of 87,317 for all council tax payers. From this it is calculated that the contribution of working age CTS claimants to the overall increase is 58 per cent.
- Council Tax Benefit (CTB) was abolished by the government in April 2013. Previously families on the lowest incomes could have 100 per cent of their council tax bill paid by CTB. But this changed when it was replaced by localised schemes called Council Tax Support (CTS) from April 2013 onwards. Funding for CTS was cut by 10 per cent relative to funds for CTB. The majority of English local authorities passed on the cut to the poorest working-age households by introducing new minimum council tax payments. Nearly all working-age households in the affected areas must now pay some of their council tax, no matter how poor they are.
- 228 out of 326 English local authorities introduced minimum payments in 2013/14, and the number has since risen to 244. The average annual cost to households affected by the change in 2013/14 was £160, however the cost to some households has been several hundred pounds (IFS). More information about the changes and their financial impact can be found at http://www.ifs.org.uk/comms/r90.pdf
- Research by the Local Government Association published in January 2015 found that 17 per cents of local authorities were planning to increase the minimum payment requirement in 2015/16 to a higher percentage of the overall council tax bill. The full report can be found here http://www.local.gov.uk/media-releases/-/journal_content/56/10180/68604…
- All TUC press releases can be found at www.tuc.org.uk
- False Economy can be found at http://falseeconomy.org.uk/
- Follow the TUC on Twitter: @tucnews

Contacts:
Media enquiries:
Tim Nichols  T: 020 7467 1337  M: 07876 452902  E: tnichols@tuc.org.uk
Alex Rossiter  T: 020 7467 1285  M: 07887 572130  E: arossiter@tuc.org.uk
Clare Santry  T: 020 7467 1372  M: 07717 531150  E: csantry@tuc.org.uk
Kay Atwal  T: 020 7467 1385  M: 07941 547469  E: katwal@tuc.org.uk