No claim, no gain

Recently, council tax levels have featured heavily in the press. There are some indications of a national “non-payment” campaign being organised, with pensioner groups to the forefront. Kent Council, before being warned off by its lawyers, even tried to score a public relations victory by suggesting that they would peg future council tax rises for pensioners to the inflation rate.

However, much of the debate about the affordability of council tax has simply missed the point: the single biggest reason that many pensioners find it hard to pay their council tax is that they fail to claim the council tax benefit (CTB) due to them.

Of course, CTB is means-tested, so will be unpopular to many. But, like it or not, it ought to be used. One of the key messages that social care staff can get across to the people they see, particularly pensioners, is that council tax benefit could be a crucial part of their income.

CTB is often misunderstood. Increases in council tax can be covered in full once any amount of benefit eligibility is established. Kent’s idea of reducing the “headline” (pre-benefit) figure, even if lawful, would have made no difference at all to many pensioners.

Here’s why: Anne Brookes, 75, has a pension of £77.45 a week, a private pension of £34.65 a week and £11,000 in savings. Her council tax is £20 a week before any benefit is deducted. Her total income is assessed as £122.10 (includes £10 a week assumed income from savings above £6,000).

CTB is calculated by comparing her total income with what she would get if she were on pension credit (guaranteed credit element). In her case that would be £102.10 per week (couples, carers and some disabled people would have a different and usually higher “threshold” figure).

For every £1 a week that she has above that threshold, she is assumed to be able to afford 20p towards her council tax. In her case, she can afford £4 (20 x 20p) so CTB meets the remaining £16. So, if the council tax went down by £3, to £17 per week, she would be no better off. Her contribution would still be £4 as this is what she can “afford”.

Similarly, if council tax rises 25 per cent to £25 a week, she is protected from the increase in the same way – her contribution is still £4, because this is what she can “afford”. The political fury caused by pension rises of 4 per cent and council tax rises of 15 per cent is therefore somewhat misguided. Only pensioners who are too wealthy to claim CTB (those with over £16,000 in savings and no guarantee credit) or who although eligible have failed to claim would gain from an across-the-board reduction for pensioners.

The picture can be clouded by other factors. Some pensioners may be due a big rebate based on their income but having a working son or daughter in the house reduces or wipes out their benefit. Pensioners in larger houses (above band E) also have their CTB capped at band E level. But the introduction of pension credit in October brought a corresponding rise in CTB rates. This has meant more pensioners being eligible for CTB.

So, the message is simple: we have to make sure that every pensioner who is missing out on what is rightfully theirs is encouraged to claim council tax benefit.

Gary Vaux is head of money advice, Hertfordshire Council. He is unable to answer queries by post or telephone. If you have a question to be answered please write to him c/o Community Care.