Last updated: January 31, 2013 8:05 pm

Councils in court over benefit changes

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A policy dubbed “the new poll tax” by critics is to be tested in the courts, in the first concrete sign of a public backlash against one of the most controversial elements of the government’s welfare shake-up.

The Financial Times has learnt that a raft of local authorities are facing judicial reviews over changes that will mean millions having to pay council tax for the first time.

From April, as part of a broader drive to cut billions from the welfare bill, council tax benefit will cease to be a national scheme with criteria set out by the government. Instead, every local authority will decide its own eligibility rules.

However, two key restrictions have been imposed on councils: overall funding for the scheme has been cut by 10 per cent and ministers have ordered that pensioners must be protected.

Analysis by the Resolution Foundation think-tank this week found that three out of four councils were planning to ask for more money from the 3.2m poorest working-age households who currently paid either no council tax or a reduced charge.

The London borough of Haringey, which includes some of the most deprived areas in the country, has been called to the High Court on Tuesday to defend changes. If the judge rules against it, the council will have to rethink its plans.

Alex Rook, a specialist lawyer at Irwin Mitchell, is representing the residents, who have funded their action through legal aid.

He said that, under the council’s plan, every adult in Haringey other than pensioners and the disabled would be required to pay almost 20 per cent of their council tax, “even if they have little or no income or capital”.

He went on: “Our client is a single mother and she is simply not going to be able to make these payments. The council’s own papers recognise that there will be very high levels of non-payments.”

Haringey said it had “considered various options for our scheme and consulted widely with residents – including writing to the 36,000 households directly affected”.

It had taken on board the views of residents, it said, “which is why those households that include claimants in receipt of certain benefits recognising significant disability have been shielded from the change”.

At least six local authorities are braced to defend the legality of their policies, including Sheffield, part of which is represented by Nick Clegg, the deputy prime minister.

Sheffield council said: “We have received two challenges to our council tax support scheme and both will be heard in the High Court in Leeds ... on February 8.”

Hackney and Camden councils in London have been sent “letters before action” – the first step in the judicial review process.

Residents in Birmingham and Rochdale are also understood to be preparing actions against their local authorities.

Mr Rook said residents were facing a “postcode lottery” on the new council tax rebate system.

“People living across the road from each other but in different London boroughs could [have] a significantly different council tax bill simply because different councils have different policies,” he added.

Sir Merrick Cockell, who chairs the Local Government Association, said the 10 per cent cut in funding had left many councils with little choice but to reduce discounts for people on low incomes.

“Councils are working hard to protect the most vulnerable and needy members of society but, as we warned when the cut was first proposed by the government, this means that other benefit recipients will have to carry a larger share of the cut,” he said.

Birmingham city council said the council believed its council tax support scheme was fair and lawful and that it would strongly defend any legal proceedings.

“The scheme has been developed in full consultation with its citizens, and is both fair and protects Birmingham’s most vulnerable citizens. We simply have no choice but to make changes to our benefits system because of cuts that are being imposed upon us by national government,” it said.

“We believe that our scheme is very different from those of other authorities and do not at this stage believe that a finding against another authority would be binding on Birmingham.”

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