Funding to offset tax benefit changes
WHITEHALL funding has been announced in a bid to help offset the impact of controversial changes to council tax benefit which it is warned will hit Plymouth's lowest-paid.
But it has been pointed out the strings attached grant totalling £100million will still leave councils facing a financial shortfall, and threatens to see an increase in non-payment of the charge.
Critics have branded the overhaul in support a "new poll tax".
The Government is seeking to reform the council tax benefit system in a bid to curb the spiralling costs.
The bill in Plymouth alone hit £21million last year.
Under the changes local authorities are to be put in charge of council tax benefit as the overall budget for rebates is slashed by 10 per cent, meaning they will have to decide where cuts are made.
Pensioners will be protected against any reduction.
But this hikes the average cut in support for the remaining working age claimants to 16 per cent.
Opponents have accused the Government of shifting the financial risk, and blame for centrally-imposed cuts, onto councils.
But ministers argue the new system will give local authorities an incentive to make savings by tackling fraud and error.
However, they acknowledge these may not be realised in the first year.
To qualify for a share of the £100million 'transition' grant councils, local authorities will have to cap council tax payable by those currently getting 100 per cent support to 8.5 per cent of the full charge.
And there must be no sharp reduction in help for those who find work.
The Government says the application process for funding will be published shortly. It is expected councils will make submissions after January, with funding paid in March.
In a ministerial statement, local government Minister Brandon Lewis said: "The grant will be a simple one, easy to apply for and swiftly paid out, to help those councils who choose to do the right thing.
"This measured, transitional approach will help deliver and important programme of welfare reform, whilst will protecting taxpayers' broader interests."
The chairman of the Local Government Association Sir Merrick Cockell welcomed the funding announcement, but warned this still left a £400million shortfall to deal with.
He said: "Councils are being put in a very difficult position…
"under the proposed scheme most councils will have to ask people on lower incomes, including the working poor, to pay more council tax than they currently do.
"Collection rates overall are very high. But there is clear evidence that, for a range of reasons including financial difficulties, the poorer people are the less likely they are to pay council tax.
"In their current form these changes are a significant concern."