LGA: Council tax support grant extension needed to protect low-income households struggling to pay

Rising numbers of families on low incomes face paying more council tax from April without an extension to one-off government funding for local council tax support schemes, the Local Government Association warns today.

Latest 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 – this remains the highest number since records began in 2015.

The Government has provided £670 million to councils in this financial year (2021/22) to help them provide discounts to households struggling to pay their council tax bills because of the pandemic.

With the ongoing economic fallout of COVID-19 likely to continue for some time, the LGA is calling on the Chancellor to use this month’s Spending Review to continue the grant for the next three years.

Without this extension, the LGA is warning that councils – facing significant existing and future spending pressures over the next few years – will be unable to provide council tax support to all those in need.

This could combine with the end of the Universal Credit uplift, and other COVID-related support, and rising bills to add to cost of living concerns for some of our most vulnerable.

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 has increasingly 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.

Local authorities have been at the forefront of providing support to economically vulnerable households through the pandemic.

As we move on, the LGA said the Spending Review also needs to provide an effective long-term solution to preventing poverty and disadvantage that moves away from providing crisis support towards improving life chances and building resilience. This is vital to levelling up and tackling the stark inequalities exposed by COVID-19.

Councils want to be able to work with households and communities to tackle the underlying causes of crisis and disadvantage, to reduce inequality and promote strong, integrated and economically enfranchised communities.

While the mainstream benefits system will need to provide the first line of support to those in need, the vital role of local government in supporting individuals and families in hardship must be appropriately recognised and adequately resourced.

The LGA said the Spending Review also presents an ideal opportunity to fully restore core, separately identified funding of at least £250 million each year for wider local welfare provision to ensure that all communities are fairly and effectively supported throughout recovery and beyond.

Cllr Shaun Davies, Chair of the LGA’s Resources Board, said:

“Councils know how tough things are for many low-income working households who are already concerned about potential income losses and the cost of living.

“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.”