e-mail Paul Lewis on paul@deadline.demon.co.uk
The change is part of a programme of social security cuts which the Government inherited from its predecessor and which will save around £600 million a year by the turn of the century. Many of the cuts will fall heavily on older people.
Council tax benefit
When council tax was introduced in 1993 all dwellings were valued and put into one of eight bands depending how much they were worth. The lowest value properties - under £40,000 in England - were in band A and the highest - over £320,000 in England - were in band H. The more valuable the property, the higher the council tax. So property in band D is charged tax at one and a half times the tax in band A. Property in band H pays twice the tax on property in band D. Values in Scotland and Wales are slightly lower.
People with incomes below a certain level can get help with their council tax. For example, from April, a person aged 67 with an average band D council tax who lived alone and had an income of £100 a week will get £168 a year off their council tax of £476. Until April this year the benefit could pay all the council tax for people on the lowest incomes. But from April people living in the more expensive property in bands F, G, or H will have their council tax benefit cut. The benefit will be calculated as if they paid band E tax and any extra will have to be paid in full.
The new rule will affect anyone whose home is assessed for council tax in bands F, G, or H and who gets council tax benefit. The loss for any individual will depend on the amount of council tax set by their local council. But for a typical council in England and Wales with a typical council tax for band D properties of £635 in 1998/99, the loss will be £141 for those in a band F property, £282 for those in band G, and £494 for those in a band H. People living alone get a 25 per cent reduction in their council tax and so the loss for them will be three-quarters of these amounts.
The idea of the changes is to make sure that people in larger and more expensive homes are not subsidised by taxpayers. But in parts of England and in some parts of Scotland very modest homes are in the higher bands. band F for example starts at £120,000 in England and £80,000 in Scotland. In London, south east England, and some Scottish cities many houses and a lot of flats fall in that band.
The older people affected fall into three groups.
None of these groups will find it easy to move or to pay the extra costs. Liz Phelps, Social Policy Officer at the National Association of Citizens Advice Bureaux, says the problem has arisen because the Government is using council tax rules to deal with social security.
"The banding system is pretty crude and doesn’t make a good basis for benefits policy. House prices are different across the country and so £120,000 doesn’t buy much in London and the south east. Out of the 65,000 people affected nearly half - 30,000 - will be over 60."
One of her clients, a widow aged 65 who did not want to be interviewed, still lives in the family home in which she brought up her children and where her husband recently died. She gets the basic retirement pension and some income support totalling £68.80 a week. Her home is in band F and from April she will have to find an extra £110 a year - £2.11 a week - because of these changes. Liz told Saga Magazine
"She can see no way of making it up and is considering having to sell her home."
Defending the changes to Parliament, social security minister Keith Bradley said
"We inherited the measure from the previous Government....Council tax benefit restriction was carefully considered when we came to power. Having examined it, we have decided to proceed...[one] criticism is that claimants will suffer hardship and anxiety from the change. Again we have considered those concerns carefully, but we are not convinced that the fears are justified."
The measure is expected to save £15 million a year and about £7 million of that will come from older people. But the National Association of Citizens Advice Bureaux points out that if older pensioners in low rent flats are forced to move into smaller but much more expensive properties and if some elderly people move into residential care earlier than they would have done, those savings will soon disappear.
WINTER FUEL PAYMENTS DELAYED
The Government has delayed the winter fuel payments promised to all pensioners by Chancellor Gordon Brown before Christmas. Most people will not be paid until the end of March. And around 130,000 people who reach pension age after January 11 but before the payment is made will not qualify at all.
In his statement to Parliament on 25 November the Chancellor promised that the payments would be made "in time to meet winter fuel bills". But the complexity of making the payments to nearly 10 million older people has led to delays and most will not get them until the end of March - long after the bills will arrive for the cold months of November and December and far too late for people who pay for their fuel in advance through a pre-payment meter.
The Chancellor also said he was "not prepared to allow another winter to go by when pensioners are fearful of turning up their heating, even on the coldest winter days". But by fixing the date to qualify for the payment in January around 130,000 people who become pensioners after January 11 will not get a penny to help with their fuel bills even though January, February and March can be very cold indeed.
The Government has now set out who will get the payment and how much it will be.
1. People aged 60 or more who get income support or the income related version of jobseeker's allowance
2. People who do not qualify for £50; who are aged over 65 (men) or 60 (women); and who get retirement pension, widow's benefits, attendance allowance, disability living allowance, incapacity benefit, invalid care allowance, severe disablement allowance or war disablement pension.
Pensioners who live with their grown up children will qualify for the payments at the same rates as people living in their own home. In other words they will get £50 if they claim income support or income related jobseeker's allowance. Otherwise, they will get £20 if they are the only person at that address to qualify or £10 if anyone else in the household is also a pensioner.
Where two or more pensioners share the same address, any who get income support or income related jobseeker's allowance will get £50 each; any who do not will get £10 each.
The qualifying date for the payment is the week of January 5 1998. So only people who got one of the qualifying benefits in that week will get a payment. It is too late to claim income support to try to get the higher amount. And people who reached 60 or 65 after January 11 1998 will not get the payment at all.
It is inevitable that mistakes will be made and that people who in fact should have £20 will get £10. The Government has said they will be paid another £10 if they ask for it. Where someone who qualified dies before the payment is made, they will still be entitled and the payment will be made to their estate.
March 1998
e-mail Paul Lewis on paul@deadline.demon.co.uk