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Local Support for Council Tax Managing the Risk

Local Support for Council Tax Managing the Risk. The Risks of Localisation.

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Local Support for Council Tax Managing the Risk

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  1. Local Support for Council TaxManaging the Risk

  2. The Risks of Localisation • Irrespective of the £500m cut, the total sum of government funding for the replacement CTR scheme should be subject to reviews in line with the New Burdens procedure with the total rising in line with the total council tax levy and the growth in unemployment and other socio-economic factors. • Collection performance will suffer significantly with the 10% reduction which will fall largely on working age claimants. • The impact of the reduction in housing costs as a result of housing benefit changes and the cap will have a cumulative affect on the ability to meet council tax and other domestic bills

  3. The Risks of Localisation • CTB is currently based on actual as opposed to estimated eligibility. Therefore an increase in the number of claimants will automatically lead to an increase in CTB costs This will expose councils to increased expenditure. • If the current financial crises continues, benefit costs will continue to rise. Any cap on expenditure needs to protect local authorities from the burden of increased caseloads. This problem is evidenced by the latest expenditure statistics from CLG that suggest that planned expenditure has risen by 10% in the last twelve months.. • Any system where CTB becomes a discount is likely to increase take-up, for example among pensioners, again leading to pressure on local authority budgets. • There are particular issues in two-tier areas, where the district authority would have to take on the whole risk of CTB. This risk should be shared with precepting authorities • The localisation of CTB is being introduced in conjunction with a cut of almost £500m. This will make implementation of local CTR replacement schemes much more challenging as decisions will need to be taken about where reductions in entitlement are to be made.

  4. Managing risk • The Institute agrees that councils should be able to share the risk of any scheme across the tiers of administration. • There is however a need for more discussion on how risk is managed between consortia of local authorities and between central and local government. • The consultation document suggests that it is for local authorities to administer council tax rebate in as fair and efficient a way as is possible whilst minimising errors and the risk of fraud. Local authority performance in this area of administration is good, particularly in the recovery of excess benefits. • The Department for Work and Pensions will be launching the new Single Fraud Investigation Service (SFIS) in April 2013. The Institute believes local authority administration of these functions should continue, whilst working in partnership with SFIS where the need arises. • The risk of fraud and error should be minimised by effective data sharing across all areas of the public sector. The Government have yet to realise the potential savings of comprehensive public sector data sharing coupled with effective partnerships with the private sector.

  5. The Risks of Localisation 1 • Irrespective of the £500m cut, the total sum of government funding for the replacement CTR scheme should be subject to reviews in line with the New Burdens procedure with the total rising in line with the total council tax levy and the growth in unemployment and other socio-economic factors. • Collection performance will suffer significantly with the 10% reduction which will fall largely on working age claimants. • The impact of the reduction in housing costs as a result of housing benefit changes and the cap will have a cumulative affect on the ability to meet council tax and other domestic bills

  6. The Risks of Localisation 2 • CTB is currently based on actual as opposed to estimated eligibility. Therefore an increase in the number of claimants will automatically lead to an increase in CTB costs This will expose councils to increased expenditure. • If the current financial crises continues, benefit costs will continue to rise. • Any cap on expenditure needs to protect local authorities from the burden of increased caseloads.

  7. The Risks of Localisation 3 • This problem is evidenced by the latest expenditure statistics from central government that suggest that planned expenditure has risen by 10% in the last twelve months.. • Any system where CTB becomes a discount is likely to increase take-up, for example among pensioners, again leading to pressure on local authority budgets. • The localisation of CTB is being introduced in conjunction with a cut of almost £500m. This will make implementation of local replacement schemes much more challenging as decisions will need to be taken about where reductions in entitlement are to be made.

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