Dire predictions on tax arrears as benefit axed

Have your say

UNPAID council tax bills worth around £140m could rocket even further as benefit cuts bite, piling new pressure on Yorkshire’s badly cash-strapped local services, experts warn today.

Figures obtained by the Yorkshire Post reveal that between 2008 and 2012, council tax arrears in the region rose by 30 per cent, from £108m to £140m, as people struggled to pay in the downturn.

But council chiefs fighting to recoup that cash now face an even greater task as thousands of low-income families were dragged into the net when council tax benefit was scrapped on April 1.

The benefit was abolished under money-saving measures unveiled by Communities Secretary Eric Pickles, and local authorities were told to draw up their own scheme of “council tax support” instead.

Funding was made available by Westminster, but was 10 per cent less than given under the old system, meaning bills have had to be issued to those who had never paid council tax before.

The Government stipulated the elderly should be protected, meaning the burden falls on people of working age, many of whom are also being hit by the controversial “bedroom tax”.

Chris Goulden, head of poverty research at the York-based Joseph Rowntree Foundation, said the new system posed several problems, including how to collect from people previously considered “too poor to pay”. He said: “Most councils in Yorkshire seem to be making major changes to the system, but they are free to change again from year to year, and you may see things alter in 2014 if they are finding it impossible to collect.

“It is difficult to predict with any accuracy, but based on these figures, council tax arrears will become an even bigger problem as people with low incomes are pressured to pay.”

Just two councils in Yorkshire, Calderdale and Harrogate, decided not to pursue former council tax benefit claimants and have opted to absorb the 10 per cent cut and continue to pay 100 per cent of claimants’ tax.

Others, however, are forcing people of working age to pay a large portion of a bill previously covered by their council tax benefit, with Wakefield and York asking for 30 per cent.

In Sheffield, the council will chase 34,200 people who have never paid before, and will ask them to pay 23 per cent of their total bill, or £225 a year based on a band A house.

Sheffield Council’s chief executive, John Mothersole, who is charged with reducing the city’s budget by £50m this year, said councils were between “several rocks and a hard place”. He said the city’s arrears, currently £33m, up by £8m in five years, would be collected “eventually”. “As council, we can’t pay people’s council tax for them, we simply can’t afford it.

“This benefit cut is now an additional pressure when there are already lots of financial pressures on the council.”

Mr Mothersole said Sheffield had set up a £500,000 “hardship fund” to meet some of the expected shortfall this year, but as cuts continue and resources dwindle that is unlikely to be repeated.

He said: “We recognise that this year will be a difficult year as people are asked to pay council tax for the first time, and nobody is yet sure how it is going to pan out.”

Leeds Council’s arrears stand at more than £23.5m, up almost £5.8m since 2008, and the authority’s leader, Keith Wakefield, said the loss of council tax benefit meant the future looked bleak.

Former benefits claimants in Leeds will have to pay 19 per cent of their bill, or £2.80 a week, and Coun Wakefield said: “We face a huge financial problem because this council tax will prove very difficult to collect and that will impact on our budget.

“If you already have a budget that has holes in it and you are not collecting council tax because people can’t pay, the situation starts to look very serious.”