Communities and Local Government Committee: Press Notice

Session 2006 - 07 7 August 2007




Publication of Report

Local Government Finance - Council Tax Benefit

Structural weaknesses damage council tax fairness

Council tax is an important part of local government revenue yet council tax benefit is failing to provide adequate financial relief to low-income households as a result of significant weaknesses in its operation, the Communities and Local Government Committee concludes.

The Committee’s report on Local Government Finance-Council Tax Benefit argues that council tax benefit is deficient on two main grounds. First, the rules governing eligibility and entitlement are too restrictive to reduce adequately the burden of council tax upon those in greatest need of relief and, secondly, take-up is extremely low -with only between 62 and 68 per cent of those eligible in receipt.

The Committee notes that the restrictive nature of the rules governing council tax benefit eligibility result in a situation where an estimated 600,000 children live below the poverty line in households which are not eligible for any relief from council tax.

Government figures show that currently an estimated 700,000 adults are not eligible to pay income tax but are still liable to pay full council tax. This is one of several anomalies the Committee found between council tax benefit rules and those governing other parts of the tax and benefit system.

Dr Phyllis Starkey MP, Chair of the cross-party select committee, said today “it is unacceptable that a significant number of households in poverty do not qualify for any reduction in their council tax liability. We call on Government to urgently review its rules governing council tax benefit eligibility and entitlement to reduce the burden of council tax on low-income households. This is key to maintaining the credibility of council tax as a source of local government revenue.”

Council tax benefit has the lowest take-up rate of any means-tested benefit. Dr Starkey added: “We call on the Government to do more to increase the take-up rate, not just for pensioners, but for all. The Government should accelerate efforts on data-sharing and its research into automatic assessment and billing of council tax benefit.”

Notes for Editors:

1. The Communities and Local Government Committee launched its inquiry on Council Tax Benefit on 8 May 2007, following the Lyons Inquiry into Local Government. One evidence session was held on 18 June 2007. The inquiry examined the effectiveness of council tax benefit in sustaining council tax as a source of local government revenue.

2. The Communities and Local Government Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Communities and Local Government and its associated bodies.

3. The current membership of the Communities and Local Government Committee is as follows: Dr Phyllis Starkey MP (Chair, Lab), Sir Paul Beresford MP (Con), Mr Clive Betts MP (Lab), John Cummings MP (Lab), Martin Horwood MP (Lib Dem), Mr Greg Hands MP (Con), Anne Main MP (Con), Mr Bill Olner MP (Lab), Dr John Pugh MP (Lib Dem), Emily Thornberry MP (Lab), David Wright (Lab).

4. Media Enquiries: Laura Kibby, Media Officer, Tel: 0207 219 0718/ Mobile: 07917488557 / e-mail: [email protected]

5. The Report will be available in the following ways:

• Copies of the Report may be obtained, on publication, from the usual outlets, including The Parliamentary Bookshop and The Stationery Office (reference: Eighth Report of the Committee, Session 2006-07, HC 718-I).

• The Report will be posted on the internet at approximately 11.00 am on 7 August, and will be accessible via the Committee' s Website: http://www.publications.parliament.uk/pa/cm/cmcomloc.htm