Council tax: How a million pensioners are paying too much

Pensioner groups this week accused the government of failing to publicise council tax benefits that could save more than a million retired people hundreds of pounds on their annual bills.

As the row over huge hikes in council tax bills raged on, with two Devon pensioners in court this week for refusing to pay the full 18% rise imposed by the local council, critics said a lack of publicity and an overly complex state pension system had left many people in poverty.

The government extended council tax benefits last year to make them more generous. It has agreed to expand the scope of discounts in April, allowing thousands more pensioners to escape paying all or some of their council tax.

But the Department of Work & Pensions has done little so far to advertise that many more pensioners can claim council tax benefit.

Figures this week show the take up rate for council tax benefit has actually fallen by 5%, with now as many as 43% of pensioners who are eligible for reductions not getting the financial help they need.

Richard Wilson, of Help the Aged said: "These figures further highlight the shambles of the Government's council tax policy, and demonstrate how the poorest pensioners are facing bills they simply cannot afford to pay.

"The government and local authorities' inability to get these reductions to the pensioners who need them is scandalous. Ministers have known that council tax benefit take-up has been a problem for years, but have done nothing about it. Over the past few years the poorest pensioners have paid billions of pounds worth of council tax that they shouldn't have."

Liberal Democrat spokesman Steve Webb said the figures revealed that up to 1.76 million pensioners are missing out on up to £770m worth of council tax benefit.

In total pensioners are missing out on up to £2.5bn in benefits owed to them based on 2001/02 figures. If anything the number of pensioners missing out has gone up now that more of them qualify for benefits.

Mr Webb says the figures also show pensioners, often the poorest groups, are missing out on a raft of benefits designed to lever them out of poverty. He pointed to figures showing:

· There are up to 350,000 people missing out on £880m worth of Income Support payments.

· There are up to 870,000 pensioners missing out on the Minimum Income Guarantee. which boosts the state pension to £102.10, at a cost to them of £1.26bn.

Branding the figures "a disgrace", Mr Webb said: "The figures show that the government strategy of introducing more complexity and more form filling means fewer people receive what is rightfully theirs."

Ministers have blamed local councils for failing to tell pensioners about savings from council tax benefit.

A spokeswoman for the DWP said the department hoped more pensioners would take up council tax following the introduction of the pension credit. Thoss who claim the pension credit, which raises the minimum income to £102.10 and rewards savings, boosting single pensioner incomes up £116, includes a box asking if they claim council tax benefit. If the tick the box indicating the are not claiming then they are sent a claim form automatically.

Unfortunately take up of the pension credit has been painfully slow and few pensioners are likely to claim through this route.

Elizabeth Winkfield, the 83-year-old council tax protester who has pledged to go to jail rather than pay the shortfall on her council tax bill, is understood to be working with officials from her local council to claim Council Tax Benefit. If as reported, her sole income is a state pension of £77.45 a week she would be entitled to a full rebate and wouldn't have to pay council tax at all.

She is also believed to be eligible for pension credit, taking her income to the minimum £102.10.

While all households have been hit by the hike in council tax bills which have almost doubled in the 10 years since it replaced the poll tax, when earnings have risen by only 50% over that period, pensioners have borne the brunt with older pensioners being the hardest hit. That's because most of their pension income is either fixed or linked to price inflation which has only gone up by a third.

The scope for council tax benefit payments expanded last year when the government switched from a system that allowed for full benefit up to the level of the minimum income guarantee to one which offered some rebate up to an income of£194 for single pensioners and £278 for couples.

Thousands of pensioners became eligible for partial rebates, but few, it is understood, have claimed.

In April householders living in properties that fall into the top three council tax bands - F,G and H, have been made aware that from April this year their benefit will no longer be restricted to the amount payable on a E band property in their area as they are now. This change is expected to benefit 22,000 households, at a cost of £6.5m. Take-up, it is understood, is expected to be low.