York council accused of pushing people into poverty

Advice York, a partnership of advice organisations, says City of York Council was needlessly excessive in cutting council tax support last year, leading many of the city's poorest residents to go further into debt or to default on other bills, although the council denied it had erred and defended its record.

Advice York yesterday published "Pushed Into Poverty", based on interviews with 50 of its member groups' clients, and called urgently for change.

It said: "The council tax support scheme implemented in York as a result of the Government decision to abolish Council Tax Benefit is doing damage to some of York's poorest and most struggling residents".

The authors found a third of respondents had paid their council tax only by getting into further debt, including some using loan sharks. Furthermore, 54 per cent of respondents did not know the system had changed, 88 per cent did not know there had been consultation, 78 per cent found the new system unfair and only four per cent (two out of 50 people) felt the new system reflected local needs.

The report authors said: "It is having an impact on their finances and health by increasing their levels of debt and reducing their health and wellbeing. The resulting impact of the scheme is in direct opposition to many of the city's aims in regards to anti-poverty, health and wellbeing."

The Government told all councils to introduce their own Council Tax Support systems when it abolished the national Council Tax Benefit in 2013. The Government reduced funding by ten per cent at the same time and said councils must not cut support for pensioners, so most set a minimum-payment threshold for working-age adults.

Advice York says City of York Council made a series of miscalculations however, around how much tax would be collected, how many people would seek support and how much support the council would need to pay.

Based on those assumptions, York said every working-age adult must pay at least 30 per cent of their council tax, far higher than many other councils. Previously, those in most need could have their full council tax paid. Oxford has retained absolute exemption for some people, Hull's threshold is 8.5 per cent and Chester's is 25 per cent.

Advice York says fewer people actually sought support last year and points to a council report in July that said the council was on course for a council tax surplus.

Advice York says council tax arrears has become the biggest debt issue for York Citizens Advice Bureau clients in the past year, with 300 more cases, having previously been fourth on their list.

Advice York calls on the council to:

1. Continue lobbying the Government to reinstate full funding for council tax support at previous levels
2. Revise its own Council Tax Support scheme for 2015/16, to overturn the miscalculations and to reflect local concerns
3. Create a full discretionary hardship scheme for those struggling with payments
4. Support increased debt advice for those struggling

Advice York said the council had gone to great lengths to communicate with non-payers but said those who had paid, but with great difficulty, were being hit hardest and said an application form for support was very difficult to find on the council website. It said 42 per cent of those in council tax arrears were in that position for the first time and said those hit by the removal of the spare bedroom subsidy, the so-called bedroom tax, were hit particularly hard.

The council's own figures show that in 2013/14 it issued 13,987 summonses for people falling into council tax arrears, up from 11,466 in 2012/13 and 12,563 in 2011/12. It also took 9,061 people to court to obtain a liability order, up from 5,443 a year earlier and 8,814 in 2011/12.

A third of Advice York's respondents said the changes were causing them stress and a quarter said it was affecting their mental health and making them feel depressed. One in five said it was causing them difficulty with other bills and one in six was struggling with food costs as a result.

It also said the resultant impact was putting more pressure on stretched advice services.

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Ian Floyd, the council’s director of customer and business support, said the council could not plug the gap created by the Government cuts and said three quarters of councils had passed on the cuts.

He said the council did not accept its scheme was based on miscalculations or inaccurate information.

He added: “Disappointingly, what the Advice York report does not provide very relevant detail about are the council’s actions to minimise the impact on residents, in funding support for both customers affected by a reduction in council tax support and in implementing a wider strategic vision aimed at reducing poverty across the city as a whole.

“We worked proactively with residents, businesses and partners to see how we can best work together to implement the local scheme and support our customers to pay their council tax bills, despite the challenges.

“This support included investing £300k over three years to develop an inclusive financial support network with partners to address poverty, with £80,000 of this money used to support a CAB lottery fund bid that successfully released a further £260K to transform the advice sector in the city to help address financial inclusion and poverty issues. The council also provided £100,000 funding for the York Financial Assistance Scheme (YFAS), to continue to assist those most in need."

Mr Floyd said further Government changes meant council tax support in 2014/15 had been cut by a further 9.7 per cent and said: “While not reflected in the Advice York report, in reality this makes the cut to Working Age customers nearly 40 per cent. However, the council has managed to maintain the cap of 30 per cent and fund an additional £100,000 for the York Financial Assistance Scheme (YFAS), making a £200,000 contribution in total for 2014/15.”

He said the council had already committed to continuing the YFAS scheme in 2015/16 despite the withdrawal of Government funding for it, and said the council was committed to addressing poverty in York and would look to use the personal experiences in the report and work with the advice agencies.