Agenda item

(Cabinet Member with Special Responsibility Councillor Bryning)

 

Report of the Head of Resources

(Cabinet Member with Special Responsibility Councillor Bryning)

 

Cabinet received a report from the Head of Resources to inform Members of the changes being proposed from April 2013 in respect of council tax benefit, and to endorse the approach regarding consultation on the new localised scheme.

 

As the report was presented primarily for information no options for decision were presented at this stage, although Cabinet was asked to endorse the plans regarding consultation.  Member decisions on the scheme would be sought later this year, when the outcome of the consultation was known.

 

Options for consultation on the new scheme:

An operational working group of Revenues and Benefit Managers across the county have been considering the possible options for a new scheme, taking into account the constraint of major changes to software systems in the limited timescales available, and with the aim of reducing the total amount of council tax support provided to manage the reduction in Government funding.  Three options had been identified and these were outlined below.  Key advantages and disadvantages were also set out but these were by no means exhaustive.  For all options, pensioners would not be affected by the proposals and therefore any reference to ‘claimants’ excludes this particular group.

 

Option A:        Apply a Flat Rate Minimum Charge for Council Tax to Claimants

 

Applying a ‘flat rate’ minimum charge for council tax to claimants would mean that:

 

-        those claimants in receipt of 100% support would still need to pay this minimum charge;

-        for those in receipt of a lower percentage of support, the amount they pay would increase by this minimum charge; and

-        any claimants that would have been due to receive support of less than the minimum charge would lose their entitlement altogether.

 

As an indication and in order for the costs of the scheme to match expected Government funding, the standard flat rate additional charge payable by working age claimants might average at a minimum of £157 per year (or £3 per week).  This calculation did not take account of the impact of those losing their entitlement; the actual reduction would require further modelling.

 

Advantages:

·         It appears that the software suppliers are likely to make this option available and it should therefore be practical to administer.

·         Easy to explain to customers and front line services

·         It would also be relatively easy to communicate to customers and stakeholders as additional £3 per week or so for claimants to pay.

 

Disadvantages:

·         A flat rate charge may be subject to challenge on the basis that it fails to differentiate between affected groups:

·         Imposition of a minimum charge would remove all entitlement to support from those currently receiving CTB at a rate equivalent to less than the proposed minimum charge. This might be construed as disproportionately affecting these customers.

·         An across the board cut takes no account of those most vulnerable.

·         Debt management would be difficult for those with existing debts.

·         A separate risk with any approach based on achieving the minimum levels of expenditure reduction is that it does not provide contingency for economic changes, other than to increase the flat rate charge.

 

Option B:       Apply a Percentage Reduction to the Support Award based on the Current CTB Scheme – eg. Reduce Current Entitlement by around 18%

 

This was based upon a fairly straightforward amendment to the current scheme whereby support was calculated in accordance with current CTB rules but a percentage reduction was applied at the end of the calculation.  As an indication, the minimum percentage reduction required might be approx 18% in order to deliver the required savings across working age claimants.  It would be possible to increase the percentage reduction in benefit and this might allow some funds to be treated as available for contingency, and / or special cases of hardship.

 

Advantages:

·         Simple and easy to explain to claimants and front line services

·         Easy to administer – no retraining of assessment staff

·         Fair scheme for Equality Impact Assessment purposes

·         Software suppliers will make this option available as it requires minor changes to existing parameters

·         Aligns with other needs assessments e.g. care

·         Aligns with the basic principle for any new scheme to create work incentives

 

Disadvantages:

·         No additional recognition of special groups although protection is built into the existing rules

·         Creates difficulties in collecting small amounts of council tax

 

Option C:       Limit the Amount of Council Tax Eligible for Support – eg. Setting around 80% as the Maximum Allowable

 

The principle of limiting the amount of tax eligible for benefit would deliver the required savings whilst retaining the core calculation associated with Council Tax Benefit.  It would restrict the amount of council tax eligible for benefit to a given percentage.  This is very similar to applying a percentage reduction in support.  However, due to the effect of the ‘taper’ within the CTB calculation this method of approach would reduce benefit slightly more steeply for those customers above minimum income levels (‘non-passported cases’).

 

Advantages:

·         Simple and easy to explain to claimants and front line services

·         Easy to administer – no retraining of assessment staff

·         Forecasting for future years is a simpler process

·         Software suppliers will make this option available as minor changes to existing parameters

Disadvantages

·         Less incentives to work

·         No additional recognition of special groups although protection is built into the existing rules

·         Creates difficulties in collecting small amounts of council tax

·         This reduces the number of claimants qualifying for benefit

 

Summary Appraisal:

 

The option of a ‘flat rate’ charge (Option A), whilst initially appearing fair, would have the consequence of removing all entitlement from those who would otherwise be due support at less that the flat rate figure.  This would have a disproportionate effect on claimants with an income above minimum ‘living allowances’, including those in work.   Given that this option raises significant concerns regarding the principle of fairness, it was not recommended to be taken forward as a feasible option, unless consultation or further modelling suggested otherwise.

The remaining two options (Option B & C) were to restrict support, either by (B) using the existing benefit calculations, and applying a percentage reduction to the award at the end of the calculation; or by (C) applying a ceiling to the maximum rebate.  Whilst these two options were similar, initial analysis suggested that the effect of a ceiling approach (Option C) would reduce the number of claimants that qualify for support under the new scheme. 

A scheme designed under Option B would help protect those customers whose income was slightly above minimum ‘living allowances’, providing greater work incentives in line with the basic principles required of any new scheme. The preferred option was Option B, matching recommendations recently presented to the Lancashire Leaders Group. This would be one of the simpler schemes to administer.

A modelling tool would be used to assess the impact of these options on existing claimants within the authority, alongside the consultation process.

Vulnerable Persons:

 

The existing CTB scheme already provided protection for certain groups within the underlying rules, providing for:

-          disability premiums;

-          benefit disregards for child benefit, attendance allowance and disability living allowance;

-          additional personal allowances for children and for a small amount of earned income to be ignored in the calculation of benefit, dependant on household circumstances.

It was also intended that any new scheme would retain a local arrangement for war pensions to be disregarded in full.  By keeping existing income disregards/premiums and allowances, the local authority would be protecting vulnerable people, as the support calculations would reflect their specific needs.

Consultation Requirements:

The Bill set out the preparatory measures that must be carried out by a billing authority, prior to the making of a localised Council Tax Support Scheme.  Those provisions provided that a billing authority must, in the following order:

·               consult any major precepting authority that has power to issue a precept

·               publish a draft scheme in such a 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.

The rationale for consulting with major precepting authorities first was to ensure that they had been involved in shaping the initial proposals within the draft scheme that would be put out to the public for consultation.  Consultation letters had been issued to all three major precepting authorities and their responses were attached to the report at Appendix A.

Given the Bill had not yet received Royal Assent, provision was made within the new Schedule 1A to provide that the consultation requirements would not be rendered invalid simply because the relevant provision had not yet been enacted.  Failure to conduct meaningful consultation might leave the Council open to judicial review.

Arrangements were currently being developed for undertaking a public consultation, which would cover both working age benefit recipients and existing council tax payers as well as other stakeholders.  The timescales were tight, given that a scheme must be made by 31 January 2013.  In recognition of this, arrangements were in hand for the Leader and Cabinet Portfolio Holder to sign off the consultation documents; this was due to be completed prior to the Cabinet meeting. The consultation would include all three options set out in this report, although Option B would be identified as the preferred option at this stage.

 

It was important that the proposals were simple and could be understood by consultees, to enable them to give an informed response.  The Council must ensure it allowed adequate time for conscientious consideration of the consultation responses in order that these might inform the final proposals.

 

The development and implementation of localised council tax support was challenging in many ways.  The consultation process was an essential part of managing this challenge, helping to inform people of the planned changes as well as seeking their views on options for the new scheme. The consultation documentation would indicate that Option B was preferred at this stage, although Options A and C would also form part of the consultation programme.  Modelling work would continue to develop a more detailed understanding of the wider impacts of all three schemes during the consultation process.

 

The countywide Officer Working Group concluded that vulnerable groups should continue to receive protection within the underlying rules of the existing scheme, but that no additional protection was necessary as this would merely reduce the available benefit for other claimants still further.  It was planned that this too would be covered in the consultation.

 

The Council must ensure that it had due regard to equality in making its local scheme, including how it would remove or minimise any disadvantage suffered by people with a protected characteristic (by way of age, disability, gender, race, religion etc).  A comprehensive equality impact assessment would be carried out as part of the consultation process.

 

Ultimately it would fall to full Council to make final decisions on the new scheme, having due regard to the outcome of consultation.

 

Councillor Bryning proposed, seconded by Councillor Blamire:-

 

“(1)      That the recommendation, as set out in the report, be approved.”

 

Councillors then voted:-

 

Resolved unanimously:

 

(1)        That the report be noted and the plans regarding consultation for a local council tax support scheme be endorsed.

 

Officers responsible for effecting the decision:

 

Head of Resources

 

Reasons for making the decision:

 

The proposals within the report linked to Corporate Plan provisions regarding welfare reforms whilst also supporting the Council’s budget and council tax targets.  Should the Council fail to introduce a Council Tax Support scheme within the statutory timescale, effectively the Bill dictated that the existing scheme must be introduced as the default scheme. Given the financial pressures that would result, maintaining the existing arrangements was not considered financially viable.  Through noting the report a consultation exercise can be undertaken in readiness for decision-making.