The Tower Hamlets Community Housing Centre on Commercial Road. Pic: LoopZilla

Tower Hamlets Council has announced plans for a new council tax benefit scheme to compensate for welfare funding cuts made by the coalition Government.

The Government will reduce funding for local authorities under the national council tax benefit scheme by 10 per cent, taking effect from April 2013. According to Tower Hamlets Council this will result in a loss of £2.7 million from its budget.

However, on July 25 Tower Hamlets Mayor Lutfur Rahman decided to create a new means tested ‘council tax support scheme’, to compensate for the reduction in funding and to continue to provide support to the 25,000 residents who would otherwise be negatively affected by the changes.

Rahman said: “With high levels of child poverty and rising living costs, I am committed to ensuring that we support residents in any way we can.”

The Mayor was also critical of the coalition Government, telling the East London Advertiser that he was “very worried about this latest attack on the welfare state”.

Joshua Peck, the local Labour Group leader, was sceptical of the council’s proposals, saying that Rahman was “keen to spend money” but “not clear about where the money is coming from in the future.”

The proposed changes are currently at the consultation stage and are due to be implemented in January 2013.