It follows a decision by South Ribble Borough Council to expand the number of working-age people exempt from making even a minimum contribution to local authority coffers.
Under the district’s existing council tax support scheme, some low income groups have to pay at least £3.50 per week as part of a means-tested system of help set up almost a decade ago.
However, councillors voted at last month’s budget to scrap that charge after hearing that hundreds were struggling to make the payments – and that more were likely to join them as the cost of living continues to rise.
The so-called “baseline” council tax demand will be removed from working-age claimants in receipt of universal credit and some level of earnings or other “non-disregarded” other income, such as carers allowance or a private pension. However, some people within those groups may still have council tax to pay depending on their income.
Other low-income groups receiving neither universal credit nor a “passported benefit” – such as income-based Jobseekers’ Allowance – could also stop paying council tax in South Ribble, again depending on their exact level of income.
Labour cabinet member for communities, social justice and wealth building, Aniela Bylinski Gelder, said that the current system of minimum payments had “proven to be ineffective” – with more than 240 of the 1,330 people whose contributions will be scrapped for the 2022/23 financial year having previously accrued council tax arrears in spite of their reduced bills.
She also told February’s budget meeting that a quarter of a million pounds of such arrears had built up in South Ribble under the council tax support scheme since responsibility for helping people with their bills was devolved to local authorities by the coalition government in 2013.
“We must ask ourselves [if] the cost of recovery is worthwhile – not only the cost to the council, but the social costs and the cost to our residents’ mental health.
“Many families are already having to make decisions on whether to heat or eat – and particularly those [who] have had their universal credit cut. Therefore it seems incredibly short-sighted to then ask these families to pay an additional cost brought in to pay for the last financial crisis,” Cllr Bylinski Gelder said.
The change will cost South Ribble Borough Council £26,000, which it says is likely to be recouped through a simplified council tax collection process.
However, Lancashire County Council – which accounts for the lion’s share of council tax bills – will be left £179,000 worse off. The authority said that if all district councils in the region took the same action as South Ribble, County Hall would face a hit of “several millions pounds” to its budget.
For that reason, South Ribble’s opposition Conservative group abstained in the vote after Cllr Caroline Moon said that the party understood the need to put support in place for residents, but didn’t agree with “the approach”.
“We feel that there are policies already in place to support those people who cannot pay their council tax bill – and we do have residents in South Ribble who cannot [do so] and I would be the first to say that we should remove that council tax bill.
“We are facing a really tough 12 months and beyond – everybody is.
“[But] it’s the unintended consequences…of what is being put forward [which] is why we are not going to support [the council tax support changes]
“You think about the services that will be removed from the most vulnerable,” Cllr Moon said.
Cllr Bylinski Gelder said that no services in South Ribble would be withdrawn as a result of scrapping the minimum council tax charge for a broader section of the population.
Meanwhile, South Ribble’s cabinet member for finance and assets, Cllr Matthew Tomlinson – who also sits on the county council – said he “didn’t care” if the policy change cost County Hall millions of pounds, because it was “the right thing to do”.
“We have said for years that the council tax is an unfair, regressive tax that costs poor people more – the better off you are and the bigger house you live in…proportionately, you pay less. The more people at the bottom we can take out of this, the better,” Cllr Tomlinson said.
Two years ago, South Ribble took 2,000 passported benefit recipients out of council tax payments.
St. Ambrose Labour councillor Kath Unsworth backed the expansion of the exemption.
“We have become less compassionate as a society – we see individuals without food and shelter from other countries and we can think that the government should do something about it. But in our country, we blame people for their own situation, citing the need to make better financial decisions.
“Asking poor people to tighten their belts is both insulting and shows a lack of understanding of other peoples’ situations. £3.50 a week could be the cost of running an electric heater for an extra hour a day.
“This is a compassionate policy and compassionate policies make economic sense – less demand on social and mental health services [and] in the long term, well-fed, happier children are less likely to need as much input from the state,” Cllr Unsworth said.