Benefit cuts will see poor having 'to live on loans'
BENEFIT cuts will plunge thousands of the city's poorest residents into debt and force them to depend on high-interest loans, a council has been warned.
The Citizen's Advice Bureau (CAB) is challenging Stoke-on-Trent City Council to rethink plans for passing on Government welfare cuts to residents from April.
Council tax benefit paid by the Government is being replaced by cheaper discounts offered by councils – but they will get about 10 per cent less than the total cost of the current benefits paid.
In Stoke-on-Trent, working age residents who currently pay no tax will have to pay 35 per cent. Pensioners, the severely disabled and claimants aged under 25 'actively seeking work' will be exempt.
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The CAB said the number of city residents asking for help with council tax debt has more than doubled from 610 in 2008/09 to 1,236 this year – with the total level of tax debt in its caseloads increasing from £466,397 to £1.3 million.
It called on the council to drop its 65 per cent cap and not include child benefit when assessing residents' income.
The CAB said: "Requiring those on the lowest incomes to contribute will increase levels of personal debt – either by increasing arrears as residents default on payments or by forcing them to borrow, often at exorbitant rates, from home credit providers, pay day loans and pawnbrokers."
The CAB is also warning tax collection rates will slump as residents refuse to pay. Other changes proposed include capping the maximum any resident can claim at 65 per cent of the council tax charge for a Band D property.
Other proposed changes mean residents with savings of £6,000 or more will receive no support.
Childcare payments will be deducted from income assessments, but child benefit payments will be counted as income for the first time.
To provide an incentive to work, the council will deduct £25 per week when assessing a working claimant's income. A small 'hardship fund' will be set up to support residents in extreme financial difficulty. Cabinet members will consider the results of a citywide consultation before setting the tax benefit support scheme in January.
The council's deputy leader Councillor Paul Shotton said: "The Government's welfare reform is not something we choose to do but something that is forced upon us and every council nationally.
"The funding shortfall will not be confirmed until just before Christmas.
"Thousands of households will be affected by this and the council is facing some difficult decisions.
"We are mindful of the potential impact and we want the changes to be fair as possible."
A spokesman for the Department for Communities and Local Government said: "Spending on council tax benefit has more than doubled since 1997 and reform is needed to tackle the deficit and help people move into work."