Hundreds of thousands more people could be entitled to council tax benefit under reforms proposed by council chiefs. At the moment only those with savings under £16,000 and a low income are eligible for council tax benefit. But the Local Government Association has proposed raising the threshold up to £50,000 to allow more people to claim the payment – it also suggests that people should be able to have a higher income before they lose the benefit.

The LGA argues that this would both allow more people to claim and encourage greater take up of the benefit. At present about 9 million people are entitled to council tax benefit – about one in three households – but a third of those eligible do not take it up, saving the government £1.8 billion.

Pensioners are particularly reluctant to admit they are on the breadline with two million failing to claim the benefit. The LGA argues that nonclaimers are paying nearly £2 billion in council tax when they could be getting rebates from Whitehall.

An LGA report published today calls for a radical shake-up of the benefit which would realign council tax benefit more closely with income tax. It also calls for much more proactive measures to encourage take up by sharing information between agencies and directly contacting those eligible.

“An eye watering £1.8 billion goes unclaimed every year,” said Sir Jeremy Beecham, LGA vice-chairman“ One-and-a-half million children and one million pensioners in poverty are living in households that pay full council tax. Physically going to people’s homes and helping them to apply is just as important as publicity campaigns.”

Times Recommends

• UK regional accents thrive against the odds
• ‘Scarecrow’ wind farms put rare birds to flight
• What an anti-climax: G-spot is a myth