What we know about claims single-person household council tax discount could be scrapped
A senior Labour MP has indicated the single-person household council tax discount will not be scrapped by the government.
In the past few weeks, Labour has refused to be drawn on speculation it plans to axe the 25% discount for people who live on their own in the budget on 30 October, as it bids to find vital funds to balance the books.
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The reports come amid pressure on Sir Keir Starmer as he also faces scrutiny for the government's controversial plan to scrap winter fuel payments for about nine million pensioners.
But on Tuesday, the third day of the party's conference in Liverpool, Pat McFadden, chancellor of the Duchy of Lancaster, gave the clearest indication yet that the discount will not be dropped.
[Click to expand our brief guide to the single-person discount or skip to carry on reading the article]
What is the single-person discount?
The single-person council tax discount gives people a 25% discount on their council tax bill when they live on their own. It can save single households anywhere from a few hundred pounds to over £500 per year depending on what band they live in.
It is estimated it costs local authorities around £3bn a year and it is believed they have been lobbying the government to ditch the discount.
Of the 8.4 million homes that are entitled to the relief, over half of the beneficiaries over 65.
Who is eligible?
The only requirement is that you can prove you live on your own in a property that pays council tax. Councils will run checks with third-party sources to make sure that no-one else is living at the property even if only one person is registered to pay the bills.
If you're a single parent then you also qualify for the discount as long as your child or children are below the age of 18.
What we know
It has been rumoured that Labour would do away with the discount in order to help fill the "£22bn black hole" in the public finances it claims the previous Conservative government has left it.
Asked on ITV's Good Morning Britain by presenter Susanna Reid if he could confirm that the single-person council tax discount would not be scrapped in the budget, Pat McFadden said there were "no plans" to do so as far as he knew.
He said: “If that’s what's been briefed out by the Treasury, that will be the case. They write the budget, the Labour chancellor writes the budget, and the chancellor will put all this together over the next few weeks."
When pressed again by Reid to confirm this, McFadden replied: “If that’s what the Treasury has said, of course I can confirm it. I don’t see every briefing that goes out. I don’t think there’s any plans to do that, that’s for the treasury. If that’s what the treasury said, that’ll be right.”
McFadden's comments follow a report in The Telegraph quoting Treasury officials that Reeves will not scrap the council tax discount.
A Downing Street spokesperson said on Monday: "I would not steer you away from those reports."
Last week, Starmer refused to rule out axing the single-person discount, telling BBC West: “I am really concerned about this and obviously I’m not going to pre-empt the Budget, but I don’t want to risk putting the fear of God into people."
A week earlier, the prime minister had already refused to be drawn on the issue, and was forced to deny that he is "punishment beating" pensioners with his party's planned cuts.
He added: “I’m not going to say before the budget what we’re going to do.
“That does not mean that I’m ruling in anything that you might be putting to me, it simply means, like every prime minister, we’re not going to reveal what’s in the budget before we get to it.”
When did the issue arise?
The issue first came into the spotlight at the start of September when deputy prime minister Angela Rayner was quizzed about the discount in the House of Commons in light of other expected spending cuts in the budget.
Rayner, who is also housing and local government secretary, was asked by the Conservative former minister Graham Stuart if Labour planned to scrap the discount. He described it as being "so important" to pensioners, especially after the winter fuel payment was scrapped for millions of retirees.
Rayner did not commit to keeping it in place, instead saying it was "astonishing" that after "running down the economy" while in government, the Tories were now trying to claim Labour are "about raising taxes".
Caroline Abrahams, charity director at Age UK, said: “If the single person discount for council tax was abolished, many pensioners—particularly widows—could find their finances severely strained, especially if they also lose their winter fuel payment.”
The Local Government Association, which represents councils, has argued that cash-strapped authorities should be given the power to vary the single-person discount, which is worth about £3bn a year.
According to the Your Money finance website, 8.39 million households in England received the discount in 2023 and 34% would be affected if the discount were to be scrapped.
So, is it actually confirmed?
Although McFadden appeared to rule out scrapping the council tax discount, we won't know for sure until the budget on 30 October.
The Department for Levelling Up, Housing and Communities has previously said there are currently no plans to reform council tax.
The new government has repeatedly warned the budget will contain painful measures and tax rises that are necessary to plug a £22bn financial black hole they claim they inherited from the previous administration. The Institute for Fiscal Studies has disputed this claim, saying that while many of the challenges Labour has outlined were “entirely predictable”, some of the financial pressures facing the new government “genuinely appear to be greater" than anticipated.
Labour has ruled out increasing income tax, national insurance and VAT, which, according to the Institute for Fiscal Studies, makes up around 63% of the government's tax revenue. This means tax changes will be limited to a much smaller part of the total income pie.
Changes to inheritance tax and capital gains tax are reportedly being considered.
