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Local Council Tax Support Schemes

Somerset Advice Network Conference

14 March 2013

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About Me

Paul Harding

Corporate & Client Services Lead, TDBC.

Leading on Welfare & Finance ReformPreparation for TDBC.

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To raise awareness of the new way in which people on low incomes will get help with their Council Tax from 1st April 2013.

Session scheduled for 1 hour There will be time for questions at the end.

About this Session

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Current Scheme?

Currently low income owners and tenants = Council Tax Benefit,

Application required / ‘passporting’,

Reduction against Council Tax liability (not paid in cash),

Up to 100% reduction possible (e.g. Nil to pay),

Scheme been around since 1993,

Government set the rules. Same rules in each Council,

Government fully fund scheme (minus errors).

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Background

The Welfare Reform Act 2012 - abolition of council tax benefit from 1st April 2013.

Local Government Finance Act received Royal Assent in November 2012, - localisation of council tax support in England from 1st April 2013.

Duty on billing authorities to make a localised council tax reduction scheme by 31 January 2013.

Default scheme imposed if a billing authority had not made a scheme by 31 January 2013.

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“an historic step in the biggest welfare revolution in over 60 years.”

David Cameron

The Context –Welfare Reform

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Incentives – ‘making work pay’

Reduce ‘welfare dependency’

Reduce complexity – ‘simplification’

Reduce welfare expenditure

Welfare Reform - Why?

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Why include CTB in Reforms?

£2.01bn 1997/98

£4.29bn 2010/11

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CTB Expenditure (£m) by Year - TDBC onlySource: http://statistics.dwp.gov.uk/asd/asd4/la_expenditure.xls

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2

3

4

5

6

7

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£M

Taunton Deane 3.6 4.3 4.8 5.2 5.6 5.8 6.1 6.6 6.8

2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11

CTB Expenditure TrendsTDBC

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Officially – Council Tax Reduction Scheme

Commonly known as – Council Tax Support (or CTS)

New Support Scheme- What’s it called?

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Reduce spending by 10 per cent, localising schemes, saving £490 million a year from 2013-14. This means £700k pa less for Taunton Deane area.

For pensioners there should be no change in the current level of awards, as a result of this reform,

Local authorities should also consider ensuring ‘protection’ for other vulnerable groups,

Local schemes should support work incentives, and in particular avoid disincentives to move into work or to stay in work.

Government Objectives

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£490m

Ferret Information Systems

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£7 m

£7m

£7m

£6.3m

Council Tax Support Funding Now

£700k gap.

£8m

£6.3m£1.7m gap.

£8m

£8m

Funding From 1st April

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CTS funding not ring fenced – surplus (really?!?) can be used for any purpose,

Incentive to manage down expenditure (expected to be via encouraging jobs but could just be cuts);

Take up campaigns less likely as extra claims cost Councils and not Govt (their grant will remain static).

CTS Grant

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Funding capped but demand isn’t.

40% - 45% of all pensioner households entitled to Council Tax Benefit are not claiming it (1.7 million households) – Benefit to Discount,

Deepening recession,

What if Govt estimates are wrong?

Transfer of Risk

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Can we afford to keep the status quo? (e.g. fund our share of the £700k shortfall between Govt grant and actual cost of support)

~18% cuts in Government funding 2013/14 & 14/15

~Predicting £1.19m budget deficit 2014/15, £2.49m 2015/16 and £3.26m 2016/17

‘NO’

What are the views of the other major precepting authorities?

Designing a Local Scheme- Initial Considerations

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Blank Sheet of Paper?

Not quite.

~Prescribed regs.

~Pensioners.

~ Govt Objectives

However, could be reasonably radical …(in theory!)

Need to drive down admin costs in future years

Simplification needed in future.

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Officers from Somerset Districts got together,

Keen to avoid ‘cliff edges’/ ‘postcode lottery’,

One scheme if possible, similar schemes if not,

Concluded CTB was good basis around which to develop local models,

Agreed on 5 general principles upon which to base schemes.

Somerset Approach

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Every working age household should contribute something towards local services,

Greater account should be taken of certain types of income,

Greater account should be taken of the collective income of a household,

Our schemes should provide incentives to encourage people into work, or to stay in work and should not create a disincentive to saving for the future, nor penalise those who have already saved for their future,

Our schemes should provide protection for the vulnerable (but see top bullet.)

Somerset Principles

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Further Considerations

Is it ‘fair’?

Is it practical (given the timescales)?

Will the software support it?

Is it understandable by customers?

Is it affordable? (cost of awards, admin and collection)

Does it satisfy the Government objectives?

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“before adopting a scheme, the billing authority must

in the following order:

a) consult any major precepting authority which has power to issue a precept to it (SCC, Police and Fire),

b) publish a draft scheme in such manner as it thinks fit, and

c) consult such other persons as it considers are likely to have an interest in the operation of the scheme.”

Consultation

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Who’s affected?

Pension Age

Working Age

Unaffected by changes to Council Tax support.

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Council Tax Support Who’s potentially affected in Taunton Deane?

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ProposalsMendip District

CouncilSedgemoor District

Council

South Somerset District Council

Taunton Deane Borough Council

West Somerset District Council

1Maximum supportthat can be awarded

Yes (80%) Yes (85%) Yes (85%) Yes (80%) Yes (85%)

2Include incomefrom childmaintenance

In full Partial In full In full In full

3Increase in non-Dependantdeductions

Yes Yes Yes Yes Yes

4Abolish second adult rebate Yes No Yes Yes Yes

5Increase earned income disregard Yes No Yes Yes Yes

6Create adiscretionary hardship fund

Yes Yes Yes Yes Yes

7Limit support to a Band D council tax No Yes No No No

8Minimum weeklyaward of £1

NoYes No No No

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Include income from sub-tenants and boarders within the means test

Yes No No No Yes

Somerset SchemesMain Changes from CTB

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Scheme only covers 2013/14,

Scheme has to be approved each year,

No application needed from current CTB claimants,

Can change scheme, but not in-year,

If significant changes made, consultation and EIA,

Have to consider transitional protection to those who might lose out due to future changes,

Discount not a benefit

‘Applicants’ not ‘claimants’

No ‘official error’ or ‘underlying entitlement’.

21 days to notify change in circs - £70 penalty

could apply.

Other Points To Note

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Cannot use DHP’s for Council Tax

Appeals - Separate for HB and CTS - No time limit at the start

- Different bodies, different rules, different processes, different outcomes?

Separate Applications - One application at present for housing costs and

Council Tax, - In future, once UC in, separate claim required

for CTS and Housing Costs.

Backdating – ‘Good Cause’ still applies to CTB claims made after 1st April. Cost though is borne by LA.

Other Points To Note

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CTS is calculated AFTER the award of other reductions,

£1000 ctax=at least £200 payable

£1000 ctax – 25% sole occ = at least £150 payable

Wasn’t previously as important, where 100% CTB applied,

Make sure receiving any discounts that might apply

~ sole occupier discount~ Student discount

Disabled band reduction,

12 month instalments now a right,

Local exceptional hardship arrangements.

Softening the Impact

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Growth in the Economy is Key.

More jobs = less demand for Council Tax Support

Will growth make everything OK?

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Questions?