Poor 'could turn to loan sharks'
TENS of thousands of city residents who will be forced to pay council tax for the first time face one of the biggest cuts to support in the country.
Stoke-on-Trent City Council is to hit 20,000 households who currently pay nothing with a bill for 30 per cent of their council tax from April, which is already a concession on an earlier proposal of 35 per cent.
The figure is understood to be equal to the highest proposed charges anywhere in the country and compares to a 20 per cent levy proposed in Cheshire East, Newcastle and the Moorlands.
Birmingham City Council also plans to cap the amount of the tax bill it covers at 80 per cent.
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Critics have questioned why Stoke-on-Trent, one of the country's most deprived areas, is imposing above-average reductions in support, with Simon Harris, of the city's Citizens Advice Bureau, raising fears the measures could even force people to turn to loan sharks, 'to keep bailiffs away'.
Mr Harris said virtually all of the residents it advises on debt already have high interest payday loans.
He said: "The only consolation is that council tax in Stoke-on-Trent is low because of property values.
"But it's all relative because those values reflect the poverty and lack of affluence in the area.
"I think it will cause huge problems. One concern is that we will see arrears rising dramatically.
"Councils will be more reliant on this income and may be tougher on people who don't pay. That will drive them into the less scrupulous ends of the credit market and it's certainly possible they'll resort to loan sharks to keep the bailiffs away."
Lord Patrick Jenkin, the Conservative peer who masterminded the poll tax, has warned cuts to council tax benefit faces becoming a 'poll tax mark two' as thousands refuse to pay.
City councillor Paul Shotton, cabinet member for finance, said: "The Government is reducing the amount it gives the council to fund the benefit by more than £6.4 million, which means we have been left with no choice but to introduce a charge to some people on low incomes." The Government is scrapping council tax benefit and instead paying councils to offer discounts to claimants – but it is paying 10 per cent less than the current cost of providing the benefits and insisting all pensioners are excluded from changes.
Senior figures in the Local Government Association, which represents 373 councils in England and Wales, claim the Government may impose a further 8.5 per cent cut in the amount it gives councils to cover tax benefits from 2014.
A further cut, which the Government has so far denied, would force councils to slash discounts even further.
Councillor Dave Conway, leader of the opposition City Independents, said: "People won't pay because they won't be able to pay. The council didn't tell people it was one of the highest caps in the country when it was consulting people on this."