Low-income families in Wales that receive help with their council tax bills will lose an average of £74 per year as cuts in funding from the UK Government are passed onto benefit claimants by the Welsh Government - according to a new report by the Institute for Fiscal Studies.
Researchers say 328,000 receive Council Tax Benefit (CTB) in Wales and would be affected by the UK Government's proposals to abolish CTB across Britain from 2013–14 and give the Welsh Government the power to create their own systems for rebating council tax to low-income families.
But finance to the administration will be based on 90 per cent of what would have been spent on CTB in each area.
A new report, funded by the Welsh Government and published today by the IFS, examines the options available to Ministers in Cardiff Bay, and says means-testing support for council tax more aggressively could protect the very poorest altogether.
But the report suggests one way of reducing the potential cut could be to reduce the amount of relief available to single person households.
Currently those living alone receive a 25 per cent discount of their council tax bill, but the IFS claims reducing the relief to 20 per cent would raise enough money to cover the potential shortfall.
Local Government and Communities Minister Carl Sargeant said: “This report identifies the challenges the Welsh Government faces in putting in place a system to replace council tax benefit by April 2013.
"It confirms what we have been telling the UK government all along about our profound concerns over the impact the cuts to council tax benefit will have on some of the most vulnerable members of our society.
“Council tax benefit is a mainstream benefit whose claimants are living in the margins of poverty - pensioners, single parents and people in low-paid work. The Welsh Government is considering options for the scheme following a consultation exercise that closed in April and will be taking the IFS report's findings into account."
Responding to the report, a spokeperson from the Department for Work and Pensions said:
"Under the complicated system we have at the moment, council tax support is delivered in the same way across all areas of the UK, and local authorities have no flexibility to make changes to meet the needs of their local communities.
"Localising support will give the Welsh Government the freedom to decide how best to support communities within Wales."