RISING COST OF COUNCIL TAX FOR PENSIONERS

Halifax research calculates that the average council tax bill in Great Britain for all households has risen by 121% since 1993/94, significantly outstripping the estimated 82% increase in average net income, including council tax benefit, for pensioners over the period.

The research also found that council tax bills have risen faster than average in areas with the most pensioners. Since 1993/94, the average council tax bill per dwelling for all households in the 20 English Local Authorities (LAs) with the highest proportion of pensioners has increased by 149%, compared with a 121% rise in the overall average bill over this period. Chichester recorded the fastest increase, up 173% from £456 to £1,244.

Areas with most pensioners have seen sharp rise in council tax bills

Christchurch in the South West of England is the local authority with the most pensioners - 30% of the population there is aged 65 or above. (source: ONS) The average council tax bill in Christchurch has risen by 171%, one of the fastest rates of increase for areas with a high number of pensioners.

Council tax burden is larger for pensioners

Pensioners spend proportionately more on council tax than younger age groups. For households aged 75 and over, council tax accounted for 6% of their total spending in 2003/04 and 5% for those aged between 65 and 74 years old. This compares with only 3% of total spending for people aged younger than fifty years old. (source: ONS)

Council tax benefit helps 2.4 million pensioner households

There are some important caveats to this research. Average council tax bills included in this analysis are not adjusted for the means tested council tax benefit that some pensioner households may receive. This is because there is no published data on average council tax bills per pensioner or the impact of the council tax benefit at a local authority level. There are approximately 9 million households in Great Britain aged 60 or higher. There are 2.4 million households aged 60 or higher in Great Britain, which receive council tax benefit. The average pensioner recipient of council tax benefit receives a rebate of £619 per year. (source: DWP)

The means tested aged-related payments, which will be paid by the DWP by the end of the year, have also not been included in this analysis. There is no data on the average aged-related payment or details of the proportion of households eligible for this payment at a local level. These are one-off payments for some pensioners in 2005, worth up to £200, designed to help with council tax bills and living expenses. There has been no indication from the authorities as to whether these payments will be repeated in the future.

Key Findings

  • 18 of the 20 LAs with the highest proportion of pensioners in England have seen rises in their average council tax bill faster than the English average since 1993/94. Of the 20 LAs, the fastest increase has been in Chichester, up 173% to £1,244. Only 13.3% of households receive council tax benefit in Chichester. (see Table 1)
  • The local authority with the highest proportion of people aged 65 and over is Christchurch - 30% of the population is aged 65 or above. The average council tax bill (for all dwellings) has risen by 171%, one of the faster rates for areas with a high number of pensioners. 16.2% of households receive council tax benefit in Christchurch. (see Table 1)
  • 6 of the 20 LAs with the fastest increase in average council tax bills in England since 1993/94 have a high number of pensioners (20% or more). These areas are North Dorest (192% increase in council tax), Purbeck (179%), Scarborough (175%), Chichester (173%), New Forest (172%) and West Dorest (171%).
  • 2 of the 5 LAs with the fastest increase in average council tax bills in Wales since 1996/97 have a high number of pensioners - Powys with a 123% increase in council tax and Conwy with a 118% rise. Across Wales the average council tax bill rose by 92% over the period.

Tim Crawford, Group Economist at Halifax comments:

"Clearly council tax is an important issue for older residents. The tax accounts for a higher proportion of their spending than for younger age groups.

Pensioners' incomes have not kept pace with the significant growth in the rate of council tax. Since the introduction of the council tax, 18 of the 20 local authorities with the highest proportion of pensioners in England have seen rises in their average council tax bill faster than the average.

The government provides help for many pensioner households to pay council tax through the council tax benefit scheme, which is administered by local authorities. An additional one-off payment is also available for eligible households this year through the DWP. Unfortunately these are means tested schemes and many pensioners will not benefit from them. Eligible households need to make sure they are claiming these benefits."

Table 1 – Increase in average Council tax bills over 1993/94 to 2005/06 in areas with highest proportion of pensioners – England

Local Authority / Region / Average council tax per dwelling 1993/94 £s / Average council tax per dwelling 2005/06 £s / % Increase in average bill since 1993/94 / % of population aged 65 and over
Chichester / South East / 456 / 1244 / 173% / 23%
New Forest / South East / 423 / 1152 / 172% / 23%
Christchurch / South West / 441 / 1193 / 171% / 30%
West Dorset / South West / 439 / 1189 / 171% / 24%
East Dorset / South West / 516 / 1356 / 163% / 26%
North Norfolk / East of England / 392 / 1024 / 161% / 26%
Lewes / South East / 474 / 1229 / 159% / 23%
East Devon / South West / 461 / 1160 / 152% / 27%
South Shropshire / West Midlands / 455 / 1149 / 152% / 22%
Rother / South East / 484 / 1208 / 150% / 29%
West Somerset / South West / 432 / 1054 / 144% / 27%
Eastbourne / South East / 450 / 1093 / 143% / 24%
Torbay / South West / 399 / 970 / 143% / 23%
Worthing / South East / 432 / 1045 / 142% / 23%
East Lindsey / East Midlands / 351 / 850 / 142% / 23%
Arun / South East / 468 / 1127 / 141% / 26%
Tendring / East of England / 399 / 959 / 140% / 26%
Teignbridge / South West / 477 / 1110 / 133% / 22%
Fylde / North West / 508 / 1101 / 117% / 23%
Wyre / North West / 485 / 1034 / 113% / 22%
England / 456 / 1009 / 121% / 16%

Source: DWP, ODPM, ONS

Table 2 –Areas with highest proportion of pensioners in Great Britain and the proportion of all households receiving council tax benefit

Local Authority / Region / % of population aged 65 and over / % of all households receiving council tax benefit
Christchurch / South West / 30% / 16.2%
Rother / South East / 29% / 17.4%
East Devon / South West / 27% / 13.7%
West Somerset / South West / 27% / 21.0%
Tendring / East of England / 26% / 21.5%
North Norfolk / East of England / 26% / 16.9%
Arun / South East / 26% / 16.0%
East Dorset / South West / 26% / 19.1%
West Dorset / South West / 24% / 14.6%
Eastbourne / South East / 24% / 20.9%
Conwy / Wales / 23% / 20.1%
Chichester / South East / 23% / 13.3%
New Forest / South East / 23% / 12.6%
Fylde / North West / 23% / 13.8%
Worthing / South East / 23% / 14.6%
Lewes / South East / 23% / 15.4%
East Lindsey / East Midlands / 23% / 21.4%
Torbay / South West / 23% / 24.3%
South Shropshire / West Midlands / 22% / 16.3%
Wyre / North West / 22% / 17.9%
Great Britain / 16% / 20.4%

Source: DWP, ONS

Editors' Notes

Average council tax bills included in this analysis are not adjusted for council tax benefit that many pensioner households may receive. (Data on average council tax bills per pensioner is not available).

Council tax benefit is a rebate paid by local councils, which provides assistance with a household's council tax bill. It is available to low income earners and households receiving income support. The rebate can cover up to the full amount of an annual council tax bill.

Of note for pensioners is the criteria that unless you are aged 60 or over and receive the guarantee credit of Pension Credit, savings over £16,000 usually mean you cannot receive Council Tax Benefit.

The average pensioner recipient of council tax benefit receives a rebate of £619 per year. There are 2.4 million households aged 60 or higher in Great Britain, which receive council tax benefit. (source: DWP)

Additionally, aged-related payments, which will be paid by the ODPM by the end of the year, have also not been included in this analysis. These are one-off payments for pensioners in 2005, worth up to £200, designed to help with council tax bills and living expenses. There has been no indication as to whether these payments will be repeated in future years.

The average council tax bill per dwelling is lower than the Band D council tax charge because most dwellings are in the lowest three property valuation bands - Bands A to C.

TABLE A1: Council Tax Valuation Bands by Country

Band / ENGLAND
Value of home (estimated at April 1991) / SCOTLAND
Value of home (estimated at April 1991) / Proportion of the tax due for a Band D property
A / Under £40,000 / Under £27,000 / 66.7%
B / £40,001 - £52,000 / £27,001 - £35,000 / 77.8%
C / £52,001 – £68,000 / £35,001 – £45,000 / 88.9%
D / £68,001 - £88,000 / £45,001 - £58,000 / 100.0%
E / £88,001 - £120,000 / £58,001 - £80,000 / 122.2%
F / £120,001 - £160,000 / £80,001 - £106,000 / 144.4%
G / £160,001 - £320,000 / £106,001 - £212,000 / 166.7%
H / Over £320,000 / Over £212,000 / 200.0%

TABLE A1: Council Tax Valuation Bands by Country (cont.)

Band / WALES
Value of home (estimated at April 2003) / Proportion of the tax due for a Band D property
A / Under £44,000 / 66.7%
B / £44,001 to £65,000 / 77.8%
C / £65,001 to £91,000 / 88.9%
D / £91,001 to £123,000 / 100.0%
E / £123,001 to £162,000 / 122.2%
F / £162,001 to £223,000 / 144.4%
G / £223,001 to £324,000 / 166.7%
H / £324,001 to £424,000 / 200.0%
I / Over £424,000 / 233.3%

Local authority restructuring and data availability issues means that data is only available since 1996-97 for the 32 billing authorities in Scotland and the 22 billing authorities in Wales. Additionally in England council tax comparisons for 1993-94 were available for 340 out of 354 local authorities because of local authority restructuring and data availability issues.

The datais prepared from information that we believe is collated with care, but we do not make any statement as to its accuracy or completeness. . People seeking to place reliance on the information for their own or third party commercial purposes do so at their own risk.

Ends.

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