Council tax benefit must support all those in need says London Councils

Low paid and lone parent households must not be forgotten in any moves by the government to make the council tax benefit system fairer, says London Councils.

The House of Commons' Communities and Local Government Committee is looking into ways of making the system fairer and ensuring anyone eligible for the benefit is aware of their entitlement. This follows the recommendations made in the Lyons Report into local government funding published in March.

The Lyons Report mainly focused on the need for the system to provide more help for pensioners. However, London Councils believes that low paid and lone parent households should also be able to reap the benefit of any changes to the system to prevent them falling further into the poverty trap.

A large proportion of a low paid households' income is taken up by paying their council tax, but the level at which people lose their entitlement to council tax benefit is lower than that used for other benefits.

Under the current system a couple without children on a single low wage will start paying council tax before they have to pay income tax or National Insurance. People are also liable to pay council tax before they become eligible for benefits like Working Tax Credits.

London Councils is concerned that the current council tax benefit system is inconsistent, does little to alleviate child poverty and unfairly penalises London's lone parents as it fails to recognise the capital's higher childcare costs.

As a result, London's low paid workers and lone parents are faced with the dilemma of seeking jobs offering higher salaries compared to other parts of the country or remaining on benefits.

A quarter of all children in inner London live in a household where no parent has a job, while 47 per cent of lone parents in London are in employment compared to the UK average of 58 per cent. One in four of all the poorest wards in England are in the capital.

London Councils believes one way of solving the system's inequalities would be for the salary level at which people start paying council tax to be aligned with the level at which they become eligible for the full Working Tax Credit.

Other ways could be to give low paid people and lone parents the same eligibility for council tax benefit as pensioners, or for the level at which people start paying council tax to be raised to match the level at which they would start paying income tax.