A LOCAL charity has warned that Sefton Council’s plans to axe Council Tax benefit for thousands of residents could lead to a huge increase in the people they are forced to help.
Citizen’s Advice Sefton has written to the council in response to its proposals to replace the discounts with its own local plan – called the Council Tax Reduction Scheme – which must be in place by April 1, 2013.
All councils in the country are to replace the benefits with their own local proposal with Sefton Council having to find at least £3.8m following a deficit in funding.
Sefton Council faces the stark choice of having to make up the shortfall through the Council Tax Reduction Scheme or by making additional cuts to services.
The council is required to ensure that pensioners are not affected by the changes, but more than 33,000 residents in the borough, who receive benefits, could still be affected by the changes.
The main features of the draft scheme which was recommended by Sefton Council’s Cabinet earlier this month include:
All persons claiming under the new scheme should pay at least 20% of their council tax bill;
Lowering the capital limit to £6,000 of savings for qualification under the new scheme;
Removing the facility to backdate any award of council tax benefit.
In the letter written to the council, Citizen’s Advice Sefton said: “Council Tax debt is already the biggest priority debt the CAB advisers deal with on behalf of the local population.”
The letter also warns that localising Council Tax benefit reforms will encourage low income families to move out of the area and that the council will face huge problems when collecting taxes.
It reads: “The poll tax experience showed how difficult it can be to collect small amounts of tax from low income households.
“Options that protect the poorest claimants either fail to generate large savings, or significantly weaken work incentives.”
The letter goes on to say that the potential consequences of across-the-board reduction to 80% of full benefit for claimants of working age could include “unaffordable arrangements being made with bailiffs to stave off seizure of goods” and “claimants turning to unscrupulous money lenders with extortionate interest rates”.
Sefton Council said it was already struggling to find savings of £43m and that the Government Settlement for Local Authorities which added an estimated £7m to this amount was a “massive blow”.
Sefton Council leader Cllr Peter Dowd, said: “It is hard to believe how this settlement could be seen as fair.
“The council is currently consulting on a range of options and this will continue.
“However, we will also have to look once again at our budget options and cut deeper into services so that we can balance our budget.”
What do you think about plans to make people on benefits pay council tax for the first time?