Council Tax Benefit

Work and Pensions written question – answered on 12th February 2004.

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Photo of Gwyn Prosser Gwyn Prosser Labour, Dover

To ask the Secretary of State for Work and Pensions

(1) what estimate he has made of the (a) cost and (b) number of beneficiaries of abolishing the upper capital limit on council tax benefit for people aged 60 years and over; and what plans he has to introduce this change;

(2) what the basis is for setting the council tax benefit upper capital limit at £16,000 for pensioners; and when the limit was last uprated.

Photo of Mr Chris Pond Mr Chris Pond Parliamentary Under-Secretary, Department for Work and Pensions

Council Tax Benefit has lower capital limits above which benefits are reduced and upper limits above which benefits cannot be paid. When the present scheme was introduced in April 1988, the upper capital limit was set at £6,000. It was subsequently increased to £8,000 on 30 May 1988 and to £16,000 on 1 April 1990.

The estimated annual cost of abolishing the upper capital limit is approximately £50 million, with around 100,000 beneficiaries. We have no current plans to change these arrangements; however, under the new Pension Credit, there is no upper capital limit.

Notes:

i. Costs are rounded to the nearest five million, beneficiaries are rounded to the nearest 25,000.

ii. Each beneficiary represents a benefit unit, which can be a single claimant or a couple; where the benefit unit is a couple, at least one member is aged 60 or over.

iii. Costs are estimated using the DWP Policy Simulation Model for 2004–05; this model is based on the 2001–02 Family Resources Survey data, uprated to 2004–05 prices, benefit rates and earnings levels, and is calibrated to latest published forecasts and policies.

iv. Costs arise from cases becoming newly entitled to council tax benefit as a result of abolishing the upper capital limit. The estimates above assume that those with significant amounts of capital are as likely to take up benefit entitlement as those currently entitled.

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