Wealthy people living alone and occupying large homes are costing councils more than £200m a year and should lose their “wealthy bachelor” discount, the Local Government Authority (LGA) has said.
The LGA claims this compulsory system, which requires that councils must give a 25 per cent discount for all homes with only one adult liable to pay council tax, is making it harder for local authorities to protect discounts for struggling families on low incomes.
New research from the LGA claims it is costing councils more than £200m a year to give a compulsory discount to people living in properties rated band E and above where there is only one council tax payer, while these houses are typically bigger and more expensive than the average family home.
Peter Fleming, chairman of the LGA Improvement board, said: “This ‘wealthy bachelor’ discount is subsidising individuals occupying large homes at a time when there is a dire shortage of housing.
“Giving local areas the option of removing this automatic discount would help protect discounts for struggling families and those who need it most.”
But Local Government Minister Brandon Lewis has called the LGA’s proposals the equivalent of a “Bridget Jones tax”, which would unfairly hit those who live alone.
The LGA has stressed that discounts for single people living in smaller homes and all pensioners would remain protected.
The body is calling for local authorities to be given more flexibility in deciding who receives the single person discount, as one in three councils expects it will have to reduce its council tax support for low-income families due to a reduction in Government funding. It has set out its proposals and submitted them to the Treasury ahead of this year’s Budget.
Funding for local council tax support schemes changed in April last year and was replaced by a national council tax benefit. The LGA claims this led to a 10 per cent reduction, equivalent to £410m in Government funding, for council tax support.
The LGA, which represents councils across England and Wales, said the funding gap is expected to hit £1bn and that local authorities are now faced with the decision to either make additional cuts to hard-pressed budgets for local services, or to ask low-paid people who would previously have received council tax benefit to pay more.