Cuts to council tax support (CTS) have led to a surge in unpaid tax, new research from the Institute for Fiscal Studies has revealed.

In a new report, the IFS found most local authorities have chosen to implement CTS schemes that are less generous that the council tax benefit they were replacing.

This includes the introduction of minimum council tax payments, with almost a quarter of council requiring a 20% minimum payment in 2018–19.

It found more deprived and Labour councils were more likely to introduce minimum payments as they had received larger cuts to CTS funding from the Government.

However, it estimates that around a quarter of the extra council tax now owed by low-income households has not been collected in the year it is due – a figure that is ten times higher than the typical rate of council tax non-collection.

The report states: ‘These difficulties in collecting the extra tax appear to be long-lasting: we estimate that councils failed to collect a quarter of the additional liabilities created by minimum payments in 2017–18 even when the minimum payment had been in place since 2013–14.’

Council leaders said CTS schemes were no longer fully funded by the Government with almost £2bn removed between 2013 and 2020.

‘No one wants to ask those on the lowest incomes to pay more but this has put councils in an impossible position,’ said Cllr Richard Watts, chair of the Local Government Association’s Resources Board.

He added: ‘Councils have worked hard to try and protect discounts as much as possible but the Spending Review needs to ensure councils have the full amount of funding required to provide council tax support to those who need it. Otherwise, it is almost inevitable that bills will continue to be forced up for those who can least afford to pay.

Laura Sharman (LGA)

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