One in three households would pay less council tax if the benefit system was reformed, according to a report commissioned by the Local Government Association. The study, written by Peter Kenway from the New Policy Institute, also shows that the same reforms could mean greater financial support for six million people.

It calls for changes that would allow more people to claim reductions in council tax and for extra measures to encourage people to apply for some of the 1.8 billion pounds that remains unclaimed each year. The study shows that six million people living in poverty are in homes paying council tax in full.

The report highlights what it calls ‘chronic failings in the system’, which mean many people cannot claim as much as they should. It says, for example, that people claiming Working Tax Credit almost always lose council tax benefit. It also points out that in some cases claimants lose tax reductions even before they begin to pay income tax.

The document, ‘Council Tax Benefit and what to do about it’, calls for an increase in the income level at which claimants start to lose benefit; an end to Working Tax Credit and Council Tax Benefit cancelling out each other; allowing people with greater savings to claim reductions and measures to assist eligible people to apply, including a publicity campaign.

LGA vice-chairman, Sir Jeremy Beecham, said, “The system has been failing society’s most vulnerable for too long. Root and branch reform is sorely needed,” and he added, “One and a half million children and one million pensioners in poverty are living in households that pay full council tax. Physically going to people’s homes and helping them to apply is just as important as publicity
campaigns”