Birmingham council tax payers are facing the widespread scrapping of benefits after the Government revealed an £11.8 million cut in funding.
Council tax discounts for second and empty homes and properties being renovated are being axed by Birmingham City Council.
The council has been told it will receive a ten per cent reduction – the equivalent of £11.8 million less – in council tax benefit.
It is being forced to make up the cash by deciding who out of Birmingham’s 135,000 claimants it should collect the missing money from.
Part of the shortfall – about £5 million – will be raised through stopping the discounts for second and empty homes and properties being renovated.
The move, which will see landlords who leave homes empty hit with higher bills, will raise about £5 million extra in revenue for the city.
Details emerged as a council scrutiny committee inquiry into the new charges heard evidence from finance officers and politicians.
With pensioners’ benefit protected by law, it means that the cut will hit claimants of working age, whether unemployed, on low incomes or disabled, handing them, on average, an additional £224 tax bill.
Yet the total cost to the council of introducing, administering, collecting and enforcing all additional new taxes could also rise by about £15 million as the Government has not yet agreed to cover the admin bill.
The assistant director of revenues and benefits at the council, Chris Gibbs, said a £1 million hardship fund would be set up.
“We are not going to get everything right so we are proposing a discretionary fund which would be given on a case by case basis,” he admitted
The council is now consulting on whether to hit all claimants with a share of the bill or protect vulnerable people like the disabled or those with children under six and charge more to those in larger homes.
The committee heard that while the empty homes discount could be removed, discounts for single people could not be altered.
Birmingham’s Labour leader Sir Albert Bore said even more people, including the unemployed, could now be asked to pay council tax – a move which had “shades of the poll tax” about it.
“The Government is making this cut through the back door by asking us to deliver it,” he said. “They could have changed the system themselves but instead have left it up to councils.
“It is a pretty awful thing to do. They have passed the buck.”
He said that the council has four options for reforming council tax benefit. They are:
n Everybody, including the unemployed, currently receiving Council Tax benefit pays 20 per cent – about £200 per year, depending on property size;
n Disabled people and families with children under six are protected, others pay a higher proportion of the bill;
n Disabled and those with children under six protected, those in larger band D to H properties only get rebate to value of band C property;
n Disabled and those with children under six protected, those in band D to H properties get no benefit.
Both Age Concern Birmingham and the Birmingham Citizens Advice Bureau believe their offices will be inundated when council tax benefit is cut back for thousands of out of work or low income households next April.
The charities were commenting as a City Council scrutiny committee inquiry into the Council Tax benefit changes opened.
Age Concern has warned that although pensioners are exempt from the cut, there could be some older people, such as those still in work, who could be hit.
A spokesman said: “Many recipients of benefit have very limited budgets which should there become a requirement to find additional money to pay council tax could affect their spending resulting in cutting costs elsewhere such as food and utilities.”
He added that they could also default, leading to eviction and homelessness.
Age Concern has called on the council to consider a softer cut in benefit, say five per cent, and spread the cost to the wider city and taxpayer.
In evidence to the committee Citizens Advice Bureau chief executive Yvonne Davis said that the withdrawal of part of the benefit could impact heavily on those whose circumstances improve.
“People moving from disabled to abled or people with children are seen as currently carrying an unfair burden within the cuts agenda. Seeking not to unfairly further penalise these groups will bring significant challenges.”
She said that the city centre branch of CAB was handling 30,000 enquiries a year and is already struggling under funding cuts.