The decision to localise council tax support has complicated plans to roll out the Government's flagship Universal Credit programme, a Commons spending watchdog has warned.

A Public Accounts Committee report into the impact of last April's transfer of responsibility for council tax support from the Department for Work and Pensions (DWP) to English councils finds 230 local authorities introduced minimum payment regimes.

Of these, more than half, 133 councils offered no protection to working-age people in vulnerable groups.

In addition, in 19 local authority areas, up to 225,000 people stand to lose more of their earnings because of the way Income Tax and National Insurance contributions impact upon the withdrawal of the previously national council tax benefit and housing benefit.

Margaret Hodge, chair of the PAC said: ‘DWP on the one hand wants to simplify benefits by merging six benefits into the new Universal Credit.'

‘Yet here DWP and DCLG are complicating matters by localising council tax support. They will have their work cut out to make sure the 326 separate council tax support schemes interact effectively with Universal Credit.'

Cllr Sharon Taylor, chair of the Local Government Association's Finance Panel, said: ‘The Public Accounts Committee's call for government to review the scheme echoes concerns raised by councils. Government should consider giving local authorities the full amount of funding needed to provide council tax support and ensure that decisions over council tax and discounts are fully localised.'

Responding for the Government, local government minister Brandon Lewis said spending on council tax benefit doubled under the last Government to £4bn a year – equivalent to almost £180 a year per household.

‘Localised council tax support has also given councils stronger incentives to support local firms, cut fraud, promote local enterprise, get people into work and end the 'something for nothing' culture,' he said.