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Local Council Tax Support Schemes Somerset Advice Network Conference 14 March 2013

Local Council Tax Support Schemes Somerset Advice Network Conference 14 March 2013. About Me. Paul Harding Corporate & Client Services Lead, TDBC. Leading on Welfare & Finance Reform Preparation for TDBC. About this Session.

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Local Council Tax Support Schemes Somerset Advice Network Conference 14 March 2013

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  1. Local Council Tax Support Schemes Somerset Advice Network Conference 14 March 2013

  2. About Me Paul Harding Corporate & Client Services Lead, TDBC. Leading on Welfare & Finance Reform Preparation for TDBC.

  3. About this Session 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.

  4. 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).

  5. 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.

  6. The Context –Welfare Reform “an historic step in the biggest welfare revolution in over 60 years.” David Cameron

  7. WelfareReform - Why? • Incentives – ‘making work pay’ • Reduce ‘welfare dependency’ • Reduce complexity – ‘simplification’ • Reduce welfare expenditure

  8. Why include CTB in Reforms? • £2.01bn 1997/98 • £4.29bn 2010/11

  9. CTB Expenditure TrendsTDBC

  10. New Support Scheme- What’s it called? • Officially – Council Tax Reduction Scheme • Commonly known as – Council Tax Support (or CTS)

  11. Government Objectives • 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.

  12. £490m Ferret Information Systems

  13. Council Tax SupportFunding Now £8m £7 m £7m £8m Funding From 1st April £8m £7m £6.3m £6.3m £1.7m gap. £700k gap.

  14. CTS Grant • 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).

  15. Transfer of Risk • 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?

  16. Designing a Local Scheme- Initial Considerations • 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?

  17. 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.

  18. Somerset Approach • 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.

  19. Somerset Principles • Every working age household should contribute something towards local services, • Greater account should be taken of certain types ofincome, • 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.)

  20. 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?

  21. Consultation “before adopting a scheme, the billing authority must in the following order: • consult any major precepting authority which has power to issue a precept to it (SCC, Police and Fire), • publish a draft scheme in such manner as it thinks fit, and • consult such other persons as it considers are likely to have an interest in the operation of the scheme.”

  22. Who’s affected? Pension Age Unaffected by changes to Council Tax support. Working Age

  23. Council Tax SupportWho’s potentially affected in Taunton Deane?

  24. Somerset SchemesMain Changes from CTB

  25. Other Points To Note • 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.

  26. Other Points To Note • 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.

  27. Softening the Impact • 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.

  28. Growth in the Economy is Key. • More jobs = less demand for Council Tax Support • Will growth make everything OK?

  29. Questions?

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