Council tax benefit is not effective because the rules on who gets it are too restrictive and take-up is too low, according to MPs.

The Communities and Local Government cross-party select committee has called on the Government to:

However, the committee does not support financial incentives for councils to encourage benefit take-up.

Chair of the select committee, Dr Phyllis Starkey, said: ‘It is unacceptable that a significant number of households in poverty do not qualify for any reduction in their council tax liability. We call on the Government to urgently review its rules governing council tax benefit eligibility and entitlement, to reduce the burden of council tax on low-income households.'

LGA vice chairman, Sir Jeremy Beecham, said the level of administration grant for benefits must be reconsidered by the Government.

‘An overhaul of the system is needed so it is less like a handout, which deters some people from claiming, and more like a tax allowance.'