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Benefit schemes to be cut back next year

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Many people on low incomes will see big jumps in their council tax bills when the government stops funding schemes to cushion them from the removal of benefit, research seen by LGC reveals.

Almost 20% of the 195 billing authorities receiving a share of the £100m pot intend to switch to less generous support regimes in 2014-15 or review the more generous ones that transition cash helps fund, according to National Policy Institute figures.

This comes after the government announced one year of funding for schemes that aim to limit the council tax liability of claimants who previously received a 100% discount on bills to just 8.5%.

The funding, revealed in October, led many councils to change their original plans.

Sabrina Bushe, a researcher at the NPI who is compiling the figures, said they provided an early indication of what authorities would do next year.

“Many councils will simply revert back to the - sometimes quite harsh - schemes that they had initially consulted on,” she said.

The NPI figures show that 13 of the 195 councils will switch back to less generous discount schemes in 2014-15, while 23 will put this year’s regime under review.

Sevenoaks DC, one of the authorities reverting to a less generous discount regime, will expect claimants to pay a minimum of 18.5% of the total tax. Council leader Peter Fleming (Con) said that the 18.5% figure reflected the size of the funding cut applied to Sevenoaks.

The council was unable to use other budgets to plug the financial gap once transition funding ran out, he said. “We are making far more than 10% savings in all our other budgets,” he said.

Referring to the need for councils to fund support schemes, he said: “They have handed us something extra and are not fully funding it.”

Another authority reverting to a less generous scheme is Newcastle City Council, according to NPI’s research. Its proposed scheme for 2014-15 will include a minimum contribution of 20%.

City treasurer Paul Woods said the council would revert to the regime it proposed before ministers announced the transition funding for 2012-13. “As we have already fully consulted on this, further consultation is doubtful and would not be good value for money,” he said.

However, Mr Woods suggested the government could combine the £50m it underspent on the transition funding with any leftover council tax freeze grant to provide a second year of transition funding. “This would give greater certainty and stability while the new arrangements bed in,” he said.

A spokesman for the Department for Communities & Local Government said the grant was to help councils deliver long-term savings.

“The expectation is local authorities will be taking all possible steps to help families with their cost of living, keeping down pressure on council tax bills by sharing services and back-office functions, cutting wasteful expenditure, and smarter procurement,” he said.

“We will consider whether further action is required in due course.”

Full list of councils

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