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Subject:
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Council Tax
Reduction Scheme 2021/22
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Date of Meeting:
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28 January 2021
21 January 2021 - Policy & Resources
Committee
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Report of:
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Acting Chief Finance
Officer
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Contact Officer:
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Name:
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Paul Ross-Dale
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Tel:
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01273 291969
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Email:
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Paul.ross-dale@brighton-hove.gov.uk
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Ward(s)
affected:
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All
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FOR GENERAL
RELEASE
1
PURPOSE OF REPORT AND POLICY CONTEXT
1.1
Each financial year, national legislation requires the council to
consider whether to revise or replace their local Council Tax
Reduction (CTR) Scheme for working age people.
1.2
This year, Covid-19 has increased financial uncertainty for many
residents in the city, and the council has endeavoured to ensure
that people are supported, including implementation of the
government’s Covid-19 Hardship Fund which provided an
additional discount of £150 for eligible claimants.
1.3
Council Tax Reduction helps thousands of households on a low income
to pay their Council Tax and so, in reviewing the scheme, there are
opportunities to improve the support available to claimants but
this must obviously be balanced with the financial cost and
affordability of any changes to the scheme.
2
RECOMMENDATIONS:
That the Policy & Resources
Committee recommends to Council that:
2.2
The minimum award of Council Tax Reduction be reset to one of three
options to be recommended by the Policy & Resources
Committee:
1)
Option 1: reset the minimum award to 50p per week;
2)
Option 2: reset the minimum award to 20p per week;
3)
Option 3: reset the minimum award to 1p per week.
2.3
Funding of £0.200m be allocated for the Discretionary Council
Tax Reduction fund.
2.4
The requirement for completing a Council Tax Reduction claim form
be removed for Universal Credit recipients, in the circumstances
described in paragraph 4.9 of the report.
2.5
It is noted that the council’s appointed S151 Chief Financial
Officer will, prior to 1 April 2021, exercise delegated powers to
increase the appropriate calculative elements of the scheme to give
effect to national changes.
2.6
It is noted that a more fundamental review of the Council Tax
Reduction Scheme will be undertaken and consulted on for 2022/23,
including the alignment of the scheme with a wider review of the
council’s Welfare Support Framework.
3
CONTEXT/ BACKGROUND INFORMATION
3.1
A localised system of Council Tax support was introduced in 2013,
following the abolition of the national Council Tax Benefit system.
The law requires that the scheme for pensioners retains the same
eligibility and awards as the previous Council Tax Benefit scheme.
However, a local authority may design its own Council Tax Reduction
(CTR) scheme for working age households. To account for an
immediate 10% reduction of government funding in 2013, the Council
agreed a local CTR scheme which changed the rules for working age
people, principally a change in the maximum discount from 100% to
91.5% of their Council Tax liability.
3.2
Subsequent years saw more changes, as government funding was
further reduced (Appendix 2 outlines the changes over the years).
Since April 2016, the maximum available discount has been 80% of
Band D. Approximately 9 in every 10 CTR recipients (around 11,000)
receive the maximum discount rate. This means that all working age
recipients are asked to pay a minimum 20% of their household
Council Tax, amounting to an average of £260.61 for a Band A
property in the 2020/21 year.
3.3
Each year the Council is required to review the local CTR scheme
and this review must be considered by full Council. A more
fundamental review of the scheme had been planned for 2021/22
pursuant to a recommendation at the 5 December 2019 Policy &
Resources Committee. However, Covid-19 has severely impacted on the
ability of the Revenues & Benefits team to undertake a detailed
review due to the very large number of Covid-19 business grants,
discretionary funds, emergency assistance and hardship funds the
team have had to administer as well as managing a substantial
increase in CTR claimants and distribution of food and Local
Discretionary Fund vouchers for people in hardship. Similarly,
Covid-19 could also have impacted on the consultation time
available.
3.4
To accommodate the impact of the pandemic, for 2021/22 the review
has been scaled down to look at a small number of changes to
existing parameters within the scheme, which can still have
significant impact, and the review timetable has been put back to
January Policy & Resources Committee and full Council, rather
than December, to enable a 6 week consultation period to be
undertaken. However, next year a full and fundamental review of the
CTR Scheme will be undertaken for the 2022/23 financial year,
including considering how the scheme aligns with and can complement
the council’s wider Welfare Support Framework.
4
PROPOSED CHANGES 2021/22
4.1
Suggested changes to existing parameters of the scheme were put
forward on the basis of providing a modest increase in the support
available to working age claimants while taking into account the
council’s very challenging financial situation. The changes
proposed were as follows:
a) To
increase the maximum discount from 80% to 82%;
b) To
reduce the minimum award from £5.00 per week to 50p per
week;
c) To
apply CTR automatically (i.e. without the need to complete a claim
CTR form) for most Universal Credit claimants who have indicated
that they wish to claim a CTR discount; and
d) To
maintain the Discretionary CTR fund at the higher level of
£0.200m.
4.2
In considering any changes, it should be noted that the claimant
count for CTR has increased by around 13% since the first Covid-19
lockdown in March 2020. As at the end of December 2020, there were
12,246 working age households in receipt of CTR, and 6,983
households of pensionable age. The rate of increase stabilised
between August and October but has started to increase again since
November. It is as yet unknown whether claim numbers will continue
to increase as a consequence of the latest national lockdown .
Increasing the Maximum
Discount
4.3
The proposed increase of the maximum discount from 80% to 82% is
estimated to benefit a projected 12,000 households in 2021/22.
Using an example calculation based on 2020/21 Council Tax bands, a
household on maximum CTR in Band A would save £26.06, whilst
a household in Band D would save £39.09 per year. The overall
cost of this proposed changed is estimated at £0.310m.
Resetting the Minimum Award
4.4
Like its predecessor, Council Tax Reduction is means-tested,
measuring an applicant’s needs against their income and
savings. The scheme is necessarily complex to allow for variations
in household size and income, alongside other factors such as
disability. Since 2017, the scheme has had a rule that a household
must qualify for at least a £5.00 per week CTR discount
before they are awarded the reduction.
4.5
It is possible to reset the minimum award to a lower level to bring
more households into the scheme, albeit at a low level of award.
The consultation asked about potentially reducing the minimum award
from £5 per week to 50p per week as a principle, however,
three options for resetting the minimum award are provided below.
The options are based on minimums of 50p per week, 20p per week and
1p per week (i.e. effectively, no minimum). The options indicate
the estimated additional households that would be brought into the
scheme, the estimated additional cost of administration, and the
potential advantages and disadvantages.
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Minimum Award
Options
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Option 1:
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Extra households entitled *
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Cost
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Reduce Min. Award from £5 to 50p per
week (£26 per annum)
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335
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£43,000
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Potential advantages
Matches the pensioner CTR Scheme (and old
Council Tax Benefit scheme).
May still be a meaningful and supportive
discount to many.
Brings more people onto the benefit, which may
entitle them to other general help or discounts **
Potential disadvantages
£26 might still be a meaningful amount
of discount for some very vulnerable households but it is worth
noting that these cases would be for those whose income places them
on the fringe of being entitled, so they are not as financially
vulnerable as those who receive a greater or full CTR award.
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Option 2:
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Extra households entitled *
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Cost
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Reduce Min. Award from £5 to 20p per
week (£10 per annum)
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355
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£46,000
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Potential advantages
£10 per annum may still be an amount
that households could usefully use.
Brings more people onto the benefit, which may
entitle them to other general help or discounts **
Potential disadvantages
Inequity with the (statutorily fixed)
pensioner scheme.
May be on the borderline of whether it has any
real value (i.e. 20p per week) to households and the administrative
cost exceeds the value of the award.
Estimates suggest it would only bring an
additional 40 households into benefit compared (i.e. in addition to
option 1).
Possibility that even the people in receipt of
the discount could be critical of the council issuing a 20p per
week award.
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Option 3:
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Extra households entitled *
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Cost
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No minimum award (i.e. effectively sets it at
1p per week (52p per annum)
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370
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£46,000
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Potential advantages
Sends a clear statement that the council will
pay anyone who is entitled to a discount, no matter how
minimal.
Brings more people onto the benefit, which may
entitle them to other general help or discounts **
Potential disadvantages
A financially meaningless discount of 1p per
week (52p per annum) may draw criticism.
Possibility that even the people in receipt of
the discount could be critical of issuing a 1p per week award.
Administrative cost far exceeds the award.
Inequity with (statutorily fixed) pensioner
scheme.
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* Estimated additional
households that would be entitled based on current case
information.
** It is not possible to state
precisely what entitlements this may bring, if any, but, for
example, some services (e.g. some Vets) offer services free or at
discounted prices if a person can show they are in receipt of
benefits which may be valuable to many.
Determining the level of the
Discretionary CTR Fund
4.6
The council supplements the main CTR scheme with a Discretionary
Council Tax Reduction (DCTR) fund. In 2020/21, £0.200m was
allocated towards DCTR (increased from £0.150m in previous
years). The scheme is used to “top up” CTR claims so
that entitlement is increased to cover some or all of the remaining
Council Tax liability not covered by CTR.
4.7
The current expenditure on DCTR is lower than expected, due to the
government already providing additional Covid-19 financial hardship
support for CTR recipients. The council received £2.330m
additional funding earlier in the year, to be distributed to
existing Council Tax Reduction claims for 2020/21, up to a maximum
value of £150 per household. £1.970m is already allocated to existing
claims as at the end of November. There is an expectation in the
government guidance that underspent funding will be allocated to
those in need of assistance where possible. Policy & Resources
Committee approved that any remaining resource from this fund is
used to augment existing discretionary funds
4.8
The proposal for 2021/22 is to maintain the DCTR at £0.200m
which will require allocation from one-off resources within the
proposed 2021/22 General Fund revenue budget.
Removing the
requirement for claim forms in certain circumstances
4.10 There is an
associated knock-on improvement in the smoothness of Council Tax
collection, because until CTR is calculated, the household’s
Council Tax bill cannot be updated. The sooner a household’s
CTR is calculated, the sooner a bill can be issued for the
remaining balance.
4.11 In a proportion
of cases there would still be some information we would need to
request from the claimant concerning their Non-Dependants. In these
scenarios, a claim form would still be required.
Precepting Authorities and
Calculative Elements
4.12 The council
collects Council Tax on behalf of the East Sussex Fire Authority
and the Police and Crime Commissioner for Sussex; any decisions the
council makes relating to the CTR scheme affects the council tax
base and in turn the resources these precepting authorities can
generate
4.13 The calculative
elements of the scheme are updated each year in line with national
amounts under the delegated powers of the Executive Director of
Finance & Resources currently exercised by the Acting Chief
Finance Officer.
5
ANALYSIS & CONSIDERATION OF ANY ALTERNATIVE OPTIONS
5.1
There are other mechanisms within the CTR scheme that could be
altered to make it more or less supportive. For example, the extent
to which a person’s earnings and income affects their
entitlement (known as ‘the taper’). However, less than
10% of working age households have their CTR reduced as a result of
the taper, so changing this element would not impact (benefit) as
many people as the proposals outlined above.
5.2
Some Local Authorities have moved to an entirely new method of
Council Tax support, where calculations are based on the band of
income that a household falls into, rather than individual income
assessments. However, this would be a significant undertaking
requiring full analysis of the impact on our residents and
extensive consultation. As explained above, the capacity to
consider and research a fundamental change of approach this year
has been impacted by the pandemic and also introducing such
uncertainty would be problematic in the context of national and
local uncertainty.
5.3
Another alternative is to leave the scheme unchanged. There will be
challenging budget decisions for the 2021/22 year and any funding
allocated to increase CTR support to working age claimants could
alternatively be put toward other priority services and provision
or, if not allocated, would reduce pressure on the General Fund
budget and reduce the need for savings elsewhere. However, a key
priority for the council, as set out in its Corporate Plan, is to
support vulnerable people and reduce inequality, and this is one of
the most wide-reaching methods at the council’s
disposal.
6
COMMUNITY ENGAGEMENT & CONSULTATION
6.2
The Sussex Police Authority has responded that it fully supports
the proposal to increase maximum CTR to 82%, and to reduce the
minimum £5 award requirement of CTR.
6.3
The East Sussex Fire Authority has responded that it recognises the
impact of Covid-19 on local communities and the need to support
those who are vulnerable, both financially and for other reasons.
However, in common with other local authorities they are already
facing significant financial challenges due both to reductions in
government funding and the impact of Covid-19. They further
stated: “Council Tax is our most important funding stream
(70% in 2020/21). The Authority will need to take account of
any further reduction in council taxbase on its income when
considering options for achieving a balanced budget for 2021/22 and
beyond.”
6.4
There were 597 responses to the public consultation. All of the
proposed measures attracted strong support.
6.5
Over 80% agreed with making the scheme more supportive in general
(66.7% of whom strongly agreed). 71.7% agreed with increasing the
maximum CTR rate, with around 20% thinking it should increase to
82% and 40% thinking it should be more than 82%. There was a lower
percentage of respondents (56.5%) who agreed with resetting the
minimum award to zero or £0.50p. There was support for
increasing the Discretionary Payment fund, with 67.9% of
respondents agreeing. Finally, the proposal to remove the
requirement for a claim form in certain circumstances attracted
support from around 70%.
6.6
Additional freeform comments are included in Appendix 1. Whilst
this data is challenging to analyse statistically, it is possible
to identify themes. For example, where people had concerns about
the proposals, it was often around the impact on Council Tax bills
going up for all other residents and whether or not other council
departments would have their funding reduced, thereby impacting on
services. It has also been highlighted that there is a group of
people for whom there is no CTR entitlement as their income is just
over the entitlement threshold, and yet these people have been also
been impacted by Covid-19, specifically those households whose
income has been reduced by Furlough or have had their hours of work
reduced.
6.7
The consultation did not give rise to a need for the proposals to
be amended. However, members may wish to note the concerns raised
about how the changes would be funded and whether there would be a
detrimental impact on the very same services that vulnerable people
rely on. These concerns were highlighted by a selection of
respondents in all categories, whether they agreed, or were unsure
about the proposals. In terms of the group of people who are
struggling but not quite entitled to CTR, removing the £5
minimum award requirement will bring a modest amount of households
into entitlement. There are also potential opportunities to assist
these groups from other temporary government funds, such as the
Winter Covid grant and Local Discretionary Social Fund. Officers
will ensure that where feedback is relevant from the CTR
consultation, it will be fed into discussions about how those
discretionary funds are allocated.
7
CONCLUSION
7.1
By changing the thresholds for two of the key Council Tax Reduction
criteria, the council can assist up to around 12,000 working age
households. If approved, this would provide both practical and
symbolic support for some of the most vulnerable households in the
city.
8
FINANCIAL & OTHER IMPLICATIONS:
Financial Implications:
8.1
Changes in the number of claimants and the planned council tax
increase in 2021/22 will affect the overall cost of the scheme
regardless of other changes. The number of claimants has increased
considerably due to the pandemic and it is particularly challenging
to estimate to what extent this may level off next year as the city
comes out of lockdown and as vaccination programmes are rolled out
and begin to impact. The estimated cost of the proposed 2021/22 CTR
scheme has been reflected in the Council Tax Base report elsewhere
on the Policy & Resources Committee agenda.
8.2
The proposed changes to the scheme in this report are estimated to
add up to £0.356m to the cost of the scheme. Provision of
£1m had been put in the Medium Term Financial Strategy for
2021/22 toward supporting Corporate Plan priorities. This increase
in the cost of the CTR cost would be a first call on this
allocation and an estimate was included in the draft budget to
Policy & Resources Committee on 3 December 2020. However, as
with other commitments and service pressure funding, this
ultimately adds to the projected budget gap in 2021/22, requiring
savings to be found elsewhere to balance the budget as required by
law.
8.3
It is also proposed to maintain the discretionary CTR fund at the
level provided in 2020/21 of £0.200m. The existing recurrent
budget is £0.010m and has been supplemented each year by
one-off funding and therefore this will require additional one-off
funding of £0.190m in the 2021/22 budget. This allocation is
included within the draft budget report elsewhere on this agenda
and will be treated as a commitment in setting the 2021/22 budget
if approved.
Finance Officer
Consulted: James
Hengeveld
Date: 25/11/20
Legal Implications:
8.4
Section 67 of the Local Government Finance Act 1992 requires that
the making or any revision to a Council Tax Reduction scheme be
approved by the authority itself; such a determination is not
capable of delegation to a Committee. Accordingly, approval for the
revisions to the scheme must be obtained from full Council.
Recommendations 2.1 to 2.3 above reflect this requirement.
8.5
The council is empowered by the Council Tax Reduction Schemes
(Prescribed Requirements) (England) Regulations 2012 to pay up to
100% of an eligible individual’s council tax, so the
recommendation to increase the maximum rate of Council Tax
Reduction from 80% of Band D, to 82% of Band D, is within the
council’s powers.
Lawyer Consulted:
Liz
Woodley
Date: 23/11/2020
Equalities Implications:
8.6
We do not anticipate any negative impacts on those with protected
characteristics, as the measures will make CTR uniformly more
supportive. For example, the CTR caseload shows that those with a
disability are disproportionately likely to be recipients of CTR,
along with women, who are more likely to be the head of a lone
parent household. However, the new proposals mean that both
groups would receive more support.
8.7
The EIAs for the Recovery and Renewal programme are linked and also
help to provide insight for vulnerable groups in the CTR arena. The
work being undertaken in the vulnerability, Welfare Support and
Food project ‘cells’ all complements the aims of
supporting the City’s most vulnerable residents.
8.8
One category highlighted as a concern is not from a specific
protected characteristic, but instead from a financially vulnerable
cohort. Those households on the cusp of entitlement are seeing
increased debt and financial pressure, and yet just miss out on
CTR. By reducing the minimum award level, it is anticipated that
around 370 more households will become eligible for CTR.
Sustainability
Implications:
8.9
There are no specific sustainability implications.
Brexit Implications:
8.10 Some of the same
risks around Brexit also impact in the welfare area. For example,
if there are disruptions to the supply chain for food, medical
supplies and other essential items, this could impact on
availability of those items and also cost. The more vulnerable
households in the city would be more adversely impacted in such
circumstances. Whilst CTR cannot mitigate those risks, there is
clearly some benefit in making the scheme more supportive.
Any Other Significant
Implications:
None.
SUPPORTING DOCUMENTATION
Appendices:
1. Summary of
Consultation Responses
2. Details of
previous scheme changes
3. Ward
Breakdown of the CTR Scheme
4. Equality
Impact Assessment
Background Documents
1.
Consultation responses held by the Revenues & Benefits
team.