The solution to Cornwall's Council Tax Benefit shortfall

On the 25th of September, I read on the Cornwall Council's website that they were looking for feedback on a consultation on how to breach the gap in the Government's reduction in funding for Council Tax Benefit. It would appear that they are £6,000,000 short, and are looking for ways to make up this deficit.

The Council's preferred option is a mixture of limiting Council Tax Benefit benefit to 70%, and the adoption of the following measures;

• Remove the 'second adult rebate' scheme which prevents a householder from receiving a 'single person reduction' on their council tax because they have another adult, on a low income, living in their property.
• Reduce the 'capital limit' someone is allowed to have and still be able to receive council tax benefit from £16,000 to £6,000.
• Limit entitlement to a maximum of council tax band D preventing people who live in houses in a higher council tax band from claiming a higher benefit.
• Remove the ability to 'backdate' an award of a benefit to when it is applied for.
• Remove 'underlying entitlement' to recover overpayment when someone has failed to notify the Council of something relevant to their claim.

This, in effect means that the poorest people in the county will now have to pay 30% of their Council Tax bill. I thought this short-sighted and grossly unfair. With that it mind, I sent a Freedom of Information request to Cornwall Council requesting:

What is the current amount of outstanding debt for council tax bills in Cornwall for people that do not claim any council tax benefits?

Please include figures for people receiving single occupier households, second home owner//holiday lets and properties subject to council tax but are registered as a business premises.

Their response?

The amount of council tax outstanding for 2012/2013 as at 28 September 2012 for people not claiming council tax benefit is £88,147,190.29.

It seems to me, that if Cornwall Council collected the arrears of those that - according to the law - can and should pay the full amount of Council Tax, then they would have - after paying for the £6 million Council Tax Benefit shortfall - an extra £82 million to invest.

As for the adoption of the measures in Option 3?

• I confess, I have little practical understanding of the 'Second Adult Rebate', so I shall reserve judgement on it for now.
• I am in favour of reducing the 'Capital Limit', but I think it would be fairer to align it to the amount permitted for ISA accounts (presently standing at £11,280). The amount is neither arbitrary, nor does it restrict those on benefits from utilising the full weight of the benefits of holding an ISA.
• Abolish the 10% discount given to people with second homes/holiday lets. If you can afford a second home, you can afford to pay the full amount, and if a property is being run as a holiday let then it will encourage owners to have the property occupied year round rather than sitting idle.
• Limit entitlement to a maximum of council tax band D preventing people who live in houses in a higher council tax band from claiming a higher benefit. This is actually one of the council's own proposals as set out under Option 3. I support this proposal with one proviso: that families that are unable to find suitable accommodation in sub-band E properties are exempted.
• Raise the amount on higher value properties (bands E - H). Band A properties have a nominal value under £40,000, whereas band H properties are over £320,000. This 8-fold value strategy is not reflected in the amount paid in Council Tax. In fact, Band H properties pay less than 2.5 times the amount of a band A property. I do not suggest that Band H properties should pay eight times the amount of a band A property, just that the current dynamic could be tweaked to protect those that cannot afford Council Tax Benefit by charging more for those that can.

If you support my plan, please complete Cornwall Council's Consultation Survey, linking this page. You have until the 12th November 2012.