Low-income families could face council tax hike if Government does not extend support

Families on low incomes face paying more council tax if the Government does not extend discounts to help during the pandemic recovery period, councils warn.

The Local Government Association (LGA), a membership body of councils in England and Wales, said its members will have to end council tax support to some of the most in need if no extension is made.

Faced with increasing budget pressures which “stretch local services to the limit”, councils will have “little choice” but to reduce support, said the LGA.

The organisations warned higher council tax bills could combine with the end of the Universal Credit uplift, other Covid-related support, and rising bills to add to the cost of living for the most vulnerable.

The Government last week launched a spending review to set out budgets from 2022 to 2025, prompting the call from the LGA.

Shaun Davies, chair of the LGA’s Resources Board, said: “Record numbers are claiming a discount on their council tax due to the pandemic and one-off Government funding has been crucial to help councils provide vital support for those struggling to pay this year.

“No council wants to ask those on the lowest incomes to pay more. Faced with severe funding and demand pressures that continue to stretch local services to the limit, many councils will have little choice but to reduce discounts without an extension to this Government grant beyond this year.

“The spending review needs to provide councils with the full amount of funding required to provide council tax support to those who need it over the next few years to avoid bills being forced up for those who can least afford to pay.”

Recent figures show more than 2.5 million working-age people across England claimed a discount on their council tax between April and June this year – the highest number since records began in 2015.

The Government has provided £670 million to councils in the same period to help provide discounts to households struggling to pay their council tax bills because of the pandemic.

Since 2013, councils in England have been running their own local schemes to help economically vulnerable households with council tax bills after the national benefit was abolished.

However, the funding Government has given to councils to fund these schemes reduced by around half – £2 billion – between 2013 and 2020.

This, the LGA said, has left councils with an “unpalatable choice” between charging council tax to the working-age poor – who in many cases may not have paid council tax before – or diverting funding from under-pressure services, such as adult and children’s social care, homelessness support and roads maintenance, to pay for discounts.

The LGA also said the spending review needs to provide a long-term solution to poverty and disadvantage that allows councils to move away from providing crisis support and could be a chance to allocate at least £250 million each year for wider local welfare programmes.

An HM Treasury spokesperson said: “We’ve allocated more than £12 billion directly to councils since the start of the pandemic.

“Core departmental spending will grow in real terms over this Parliament at nearly 4% per year on average – a £140 billion cash increase and the largest real-terms increase in overall departmental spending for any Parliament this century.

“At the spending review we will set out budgets for future years and continue to will continue to deliver on the public’s key priorities.”

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