Local Council Tax Support - Scheme

About Local Council Tax Support Consultation 2018/19

Opens: 9 August 2017  

Closes: 3 October 2017.  This consultation has now closed.

Consultation Results: The results will be considered and the council will make their decision by 30 January 2018.

 

All of the local authorities within England have a difficult financial situation to manage over the next three years and will have to make savings and increase income.  Part of these savings could come from reducing the amount of financial help, provided to working age claimants on low incomes, through the Council Tax Reduction Scheme.  If these savings are not made through amending the Council Tax Reduction Scheme, savings will have to be found from other services provided to residents.

This is a complex issue.  Any decision affects more than this scheme.  We would like you to read the full background information before giving your opinion.  

 

2018/19 Council Tax Reduction Scheme – Background Information to Consultation

Prior to April 2013, Council Tax payers could apply for Council Tax Benefit (CTB) to help pay their Council Tax.  Under this national scheme, Council Tax payers could receive benefit of up to 100 per cent of their Council Tax liability.  The Council then received full funding from the Government for all correct Council Tax Benefit awards made.

From April 2013 local authorities became responsible for setting up their own local Council Tax Reduction Schemes (CTR) for working age people. The Government also reduced the amount of funding given to Councils to pay for the schemes in 2013/14.

Since 2014/15 the amount of grant received from Government to pay for CTR has been included within the general grant (Revenue Support Grant) we receive.  The amount of this grant has been significantly reduced each year and therefore there is less money available to meet the costs of CTR as well as significantly reduced resources to pay for all Council services.

The CTR scheme for Pension Age claimants is set by Government and is not affected by any of the options set out in this consultation.  The options proposed will affect working age claimants who currently receive CTR or may apply in the future.

Our Timetable

The council is required to formally adopt a scheme by 31 January each year to commence on 1 April of that year, and to consult on any potential changes to the scheme. 

Reduction in Funding to Local Authorities

Decisions about changes to the scheme need to be considered alongside the wider challenges being faced by local authorities. The council has had overall on-going government grant reductions of some £40m since 2011/12 to date, as well as having to accommodate inflation and other cost increases of a further £43m, requiring the council to make total savings of £68m with the balance being made up from increases in Council Tax of £15m. 

The council accepted the Government’s four year settlement offer on October 2016, which provides some certainty over future Government funding although the funding reductions remain significant and challenging. It is estimated that savings of £19m will need to be found over the next three years, including £6m due to Government grant reductions, making it increasingly difficult for the council to maintain services except for those relating to statutory duties.

For next year’s budget (2018/19) the council has a projected revenue budget gap of some £7.5m. The council needs to consider how it will deal with this and whether the current CTR scheme is affordable.

The Isle of Wight Council collects Council Tax in relation to the Isle of Wight Council, the Hampshire Police and Crime Commissioner and Town and Parish Councils. Each receives a percentage of the overall Council Tax that we collect. 

In 2017/18, the Isle of Wight Council will keep approximately 86 per cent of the Council Tax that we collect.  The Police and Crime Commissioner will keep approximately 10 per cent and Town and Parish Councils will keep approximately 4 per cent. The Council Tax Reduction Scheme (CTR Scheme) reduces the amount that is due to be collected and so impacts on the finances for delivering services for the Police and Crime Commissioner, Isle of Wight Council and Town and Parish Councils.

It follows that reducing the cost of the scheme (and so increasing the amount of Council Tax we collect) will benefit the Precepting Authorities in the same proportion as the split of Council Tax.

So, for instance, if the CTR scheme cost was reduced by £300,000 the Isle of Wight Council would benefit by approximately £258,000 and the Police and Crime Commissioner by £30,000 and for Town and Parish Councils £12,000 based on the percentages set out in the previous paragraph.

Who We Are Consulting

We want the consultation to be as wide as possible and invite responses from all interested parties including CTR claimants and potential claimants, council taxpayers, other residents, businesses, town and parish councils, the voluntary sector and advocates and representative groups.  We will also be consulting with the Police and Crime Commissioner who is a statutory consultee about the proposed options.

The proposals

Councils across the county have been developing proposals for the 2018/19 scheme, which take into account three issues: how to balance the need to provide support against the continued difficult financial environment for local government; the aim to protect or enhance any work incentives in the current scheme which, as a consequence, help to reduce the burden on the public purse; and whether to align the CTR scheme with national welfare reform changes to benefits such as Housing Benefit, Tax Credits and Universal Credit. 

How much the Council Tax Reduction (CTR) Scheme costs

The estimated gross cost of the Isle of Wight Council CTR Scheme to residents for 2017/18 is approximately £10.9 million compared to £11.2m in 2016/17. The Isle of Wight Council's share of this cost is around 86 per cent in line with the split of Council Tax with the Police and town and parish councils.  The council also administers a further £50m of benefits for Island residents on behalf of government, one of the largest expenditures the council manages. The level of this benefit is set nationally and does not form part of this consultation.    

What savings must we find overall?

The Isle of Wight Council has a difficult financial situation to manage.  For next year’s budget (2018/19) the council has a projected revenue budget gap of some £7.5m. Some of these savings could come from further reducing the amount of help provided to residents through the CTR Scheme, by limiting the amount of money awarded to claimants to assist in paying their council tax.

Council Tax Reduction Scheme options being considered

There are five proposed changes being considered for the Isle of Wight Council Tax Reduction Scheme for working age claimants from 1 April 2018:

Option 1

Reducing the maximum level of CTR support from 80 per cent to either 75 per cent or 70 per cent;

Option 1 case study 1

Option 1 case study 2

Option 1 case study 3

Option 1 case study 4

Option 1 case study 5

Option 2

To limit CTR to a maximum Council Tax Band C charge; for the Isle of Wight, Band C is the average level of tax for claimants

Option 2 case study 1

Option 2 case study 2

Option 2 case study 3

Option 3

To set a minimum level of CTR support at £2 per week or £4 per week to qualify for CTS

Option 3 case study 1

Option 3 case study 2

Option 3 case study 3

Option 3 case study 4

Option 3 case study 5

Option 3 case study 6

Option 4

Non-Dependant deduction levels round up to the nearest £1 or £2

Option 4 case study 1

Option 4 case study 2

Option 4 case study 3

Option 5

Bereavement benefit changes (part of the national welfare reform change to disregard from Housing Benefit, but currently not specified within CTS. This will bring the CTR Scheme in line with changes to Housing Benefit).

These are described in the consultation questionnaire (below).

The potential savings from the proposed changes are summarised in the table below (please note that a combination of options doesn’t necessarily equal the saving figures suggested for each of the individual options if they were to be combined):

  

Option Description

Estimated Number of claimants impacted

Estimated saving to the Isle of Wight Council and town parish councils (90%)

Estimated saving to Hampshire Police (10%)

Estimated total saving

Option 1: Reducing the maximum level of CTR support from 80 per cent to either:

1a - 75 per cent 

1b - 70 per cent

 

5248

 

5323

 

 

£254,553

 

£513,275

 

 

£28,284



£57,030

 

 

£282,837


£570,305

 

Option 2: to limit CTR to a maximum council tax band C charge

 

57

£9,445 £1,050

£10,495

Option 3:

a - to set a minimum level of CTR Support at £2 per week

b - to set a minimum level of CTR support to £4 per week

33

 

66

£1,340

 

£6,057

£148

 

£673

£1,488

 

£6,730

Option 4:

a - to round non dependant deductions up to the nearest £1 per week

b - to round non dependant deductions up to the nearest £2 per week

92

 

114

 

£1,382

 

£6,512

 

£154

 

£724

£1,536

 

£7,236

Option 5: bereavement benefit changes (part of the national welfare reform change to disregard from Housing Benefit but currently not specified within CTS)

 

Unknown as information is not available in current caseload

 Unable to model potential savings impact against current caseload.  See the example calculation to understand potential affect

Alternatives to reducing the amount of help provided by the Council Tax Reduction Scheme

In considering the level of financial support to be given through the Council Tax Reduction Scheme the council will consider alternative ways of funding it. All of these, however, have major constraints as indicated below:-  

We have considered:

1     Increasing the level of Council Tax

In forecasting the council’s budget position and revenue budget gap of some £7.5m for 2018/19 it is assumed that there will be a council tax increase of 4.99 per cent including an Adult Social Care precept of 3 per cent. Any increase above this level is likely to require a public referendum as under current regulations the Council is not free to set  its council tax at 5 per cent or above without one. A public referendum is costly to undertake and there is no guarantee that it would be successful.

2     Reduce Funding Available for Other Council Services

The Council faces a projected revenue budget gap of some £7.5m in the next financial year 2018/19. The council faces having to make substantial savings in any case and the ability to make savings and meet its statutory duties is becoming more and more difficult.

Conclusion 

The Council has to consider where savings will come from in order to meet the impact of the continued reductions in government grants along with  future cost pressures and are therefore proposing some further changes to the Council Tax Reduction Scheme to meet a small percentage of the required savings. No final decisions have been made yet and the questionnaire (below) seeks your views and suggestions to help us design the scheme for 2018/19. 

How to Have Your Say:

This consultation has now closed. The results will be considered and the council will make their decision by 30 January 2018.

 

Previous Years Schemes

For 2013/14 the council agreed the following:

  • To reduce maximum entitlement for working age non vulnerable claimants to 80 per cent of their Council Tax liability. This would be deferred for one year under a transitional scheme applying a maximum entitlement of 91.5 per cent, decreasing to 80 per cent of their Council Tax liability in the 2014/2015 scheme.
  • To safeguard those claimants, their partner, or disabled dependent child who are deemed working age ‘vulnerable’ in respect of disability and related allowances by ensuring that the new Council Tax Support Scheme provided the same level of assistance as the previous Council Tax Benefit Scheme.

  • To retain work incentives by not increasing the taper (20 per cent) by which additional income over the applicable amount is taken into account.

  • To uprate applicable amounts in line with housing benefit regulations on uprating in line with the changes outlined within the scheme policy document.

  • To keep non dependant deductions in line with the government’s default scheme.

  • Provide protection to working age families with children, by not including certain incomes received, such as child benefit and maintenance payments in respect of children.

  • Removing the ‘second adult rebate’ for working age claimants.

 For 2014/2015 the council agreed the following:

  • To provide maximum entitlement for working age non vulnerable claimants to 80 per cent of their Council Tax liability.  

  • To introduce the ability to apply a minimum income floor for self-employed earners, as created under the Welfare Reform Act 2012. 

  • To continue to apply the provisions of the scheme in 2013/14 as that agreed by council in January 2013.

For 2015/2016 the council agreed the following:

Removal of Family Premium from May 2016

  • Backdating requests for Local Council Tax Support, limited to one calendar month

  • Minimum living wage for self employed claimants after a start up period of one year

  • Removal of the blanket protection for certain claimants (maximum Local Council Tax Support limited to 80% of Council Tax liability)

  • Reduced capital limit from £16,000 to £6,000

For 2017/18 the council agreed the following:

  • Agreed to reducing the period a person can be absent from Great Britain from 13 weeks to 4  weeks (national welfare reform option).

  • Agreed to removing the work related activity component in the calculation of CTS for new Employment Support Allowance claimants (national welfare reform option).

  • Agreed to limit the number of dependent children within the CTS calculation to a maximum of two for any new children born on or after 1 April 2017 (national welfare reform option).

  • Agreed to the removal of Severe Disability Premium where another person is paid Universal Credit (Carers Element) for looking after them (national welfare reform option).

For more information about Local Council Tax Support please click on the links below: