Agenda item

[Report of the Chief Operating Officer. To be introduced by the Cabinet Member for Finance and Health.]Review of proposed Council Tax Reduction Scheme for 2017/18. The Scheme needs to be approved each year by Full Council regardless of any changes.

The Cabinet Member for Finance and Health introduced the report which set out the details of the review of Haringey’s current Council Tax Reduction Scheme (CTRS) 2016/17 and the recommendations for Haringey’s CTRS for 2017/18 taking into consideration the assessment of options and an Equalities Impact Assessment (EQIA). 

Cabinet noted that the proposal to maintain the current scheme .The Cabinet Member advised that to increase the minimum payment would cause low income residents more financial difficulties, but to also to reduce the minimum payment would have an impact on the budget.

RESOLVED

That Cabinet recommend to Full Council:

1.    To note that an Equalities Impact Assessment (Appendix E) has been undertaken in relation to the Council Tax Reduction Scheme and that the findings of this EIA must be taken into account when making a decision regarding the Scheme for 2017/18.

2.    To agree to adopt the Council Tax Reduction Scheme 2017/18 as contained in Appendix C and therefore retains the same Scheme agreed for 2013/14 and continued since.

3. Accordingly, the scheme as summarised in Appendix A and set out in full at Appendix C will continue to apply for 2017/18:

                      I.        That pensioners will continue to receive support for the payment of Council Tax.

                    II.        That those in receipt of certain disability benefits continue to receive support for the payment of Council Tax.

                   III.        For all working age claimants, the extent of Council Tax Support available will continue to be capped at 80.2% of Council Tax liability.  In other words, working age claimants will continue to receive the same level of Council Tax Support as 2013/14, this amount representing a 19.8% reduction in the level of Council Tax Support available as compared with the amount of Council Tax Benefit received in 2012/2013.

4. For Authority to be given to the Chief Operating Officer and Assistant Director of the Shared Service Centre to take all appropriate steps to implement and administer the Scheme.

Reasons for Decision

The recommendation to retain the current scheme continues to support the Government’s initiative of work incentives and pays due regard to the challenging financial climate we are currently in.

In recognition of the vulnerable sectors of society, we have supportive measures in place. It is proposed that these continue into 2017/18. Maintaining the current scheme ensures that these protected claimants will not be further disadvantaged.

Although performance remains higher than originally anticipated, there remains a shortfall in collection.  This coupled with the fact that the Revenue Support Grant has been reduced by over 50%, equating to over £50m, has meant that the Council has had to implement significant service reductions and efficiency savings.  As a result it is not possible for the Council to expand the scheme to include protection for other groups.

Alternative Options Considered

In accordance with paragraph 5 of Schedule 1A to the Local Government Finance Act 1992 (the 1992 Act), each financial year the Council is required to consider whether to revise or replace its scheme.  One option for the Council is to continue with the scheme in place for the current financial year.  Another option is to revise the scheme in some respects. The Council could choose to increase or decrease the amount of financial support available under the scheme.  Options should be considered in the light of the knowledge gained during the implementation of the scheme over previous years. 

The options for changing the scheme that have been considered to date have been listed below.  Some of these were proposed by respondents to the consultation undertaken prior to adpopting the 2013/14 scheme.

·         Increase the level of financial support so all customers pay less

·         Decrease the level of financial support so all customers pay more

·         Absorb the full shortfall into the Council budget by providing financial support up to the level previously funded by Central Governement as part of Council Tax Benefit. 

·         Protect certain vulnerable groups in addition to those in receipt of certain disability benefits, these include but are not limited to:

o   Households with children

o   Households with a child under one

o   Households with a child under five

o   Households with more than three children

o   Households with a lone parent

·         Protect band A-C properties

·         Protect claimants who are working but on low income.

·         Protect claimants in receipt of Single Person’s Discount

·         Increase Council Tax

A breakdown of these options with accompanying financial data has been provided in Appendix D.  Appendix D further sets out the potential advantages and disadvantages of each option. 

Having regard to the detailed points set out at Appendix D, it is recommended that none of these options for change are taken forward.  This is because:

                      I.        Any option which would require the Council to increase levels of support for Council Tax payments would need to be directly funded by the Council and given the competing demands on the Council’s reducing budget, increasing support for Council Tax funding would require the Council to find reductions elsewhere, cut services, utilise reserves or increase Council Tax.

                    II.        Any option which would require the Council to increase levels of support for particular groups of people could have a disproportionate impact on some claimant groups over others.

                   III.        The majority of the options do not support the Central Government initiative of encouraging people back to work

                  IV.        The Council do not consider that it is appropriate to increase Council Tax.

It was worth noting that method of payment for Central Government grant funding allocation has also changed since the CTR Scheme was first set up. Several grants, including CTR, have been consolidated within the overall Revenue Support (Core) Grant paid, this makes the proportion allocated to each area harder to identify.  This Core grant also continues to reduce in overall terms, by 2016-17 it will have reduced by 50% equating to approximately £50m in comparison to 2013-14. 

In April 2016 an independent review of Local Council Tax Support Schemes was conducted at the request of the Secretary of State.  The recommendations from this are still being considered by Central Government and when a decision is made on them Haringey may need to make further changes to its scheme to reflect any new decisions.  As such the previously considered option of overhauling the scheme so that Council Tax Support falls under Council Tax legislation as a discount, similar to the existing Single Person Discount, has not been taken forward.

Other London LAs have changed their schemes over the past 3 years.  A full breakdown of 2016/17 schemes are provided in Appendix B and some summary points are shown below:

·         12 LAs have a higher contribution level than Haringey including Newham and Barking & Dagenham.

·         Wandsworth and Harrow have the highest contribution level at 30% for non disabled working age claimants

·         9 protect disabled claimants – either completely or by asking them to pay less than non disabled working-age claimants including Brent, Croydon and Enfield.

·         7 fully cover the shortfall including City of London, Hammersmith & Fulham and Tower Hamlets.

Haringey is comparable with other London LAs and its scheme reflects the need to strike a fair balance between protecting the wellbeing of our residents and recognising the challenging financial situation we are in.