Agenda item

[Report of the Interim Director of Finance. To be introduced by the Cabinet Member for Finance.]To agree the approach for a  potential revised Council Tax Reduction Scheme and required consultation.

 

 

Following the deputation, the Cabinet Member for Finance formally introduced the report which set out the process and content of proposed potential changes to the 2019/20 Council Tax Reduction Scheme. The report set out a series of options to amend the current scheme, with a preferred option highlighted as being a combination of increasing the maximum level of Council Tax Reduction from 80.2% to 100% for working age claimants with children and updating the CTRS to align with some national welfare changes.

 

The Cabinet Member emphasised the Labour administration’s manifesto commitment to ensuring fairness for all. Costs were continuing to rise but the Council was not able to respond with fair increases to collect what was needed to carry on delivering vital services. The Cabinet Member acknowledged that old commitments by previous local government administrations were sometimes not deliverable but the focus was to deliver key services for residents and to recognise the problems they faced. The Cabinet Member concluded his presentation by commending the report to the Cabinet for approval.

 

Following questions from Cllr Dennison, the subsequent points were noted:

 

• For working age claimants, the Council Tax Reduction Scheme had not been updated since 2013 but the new scheme would bring this up to date. The complexities involved in updating such figures under this scheme (going out to consultation) and working through quite prescriptive government guidance meant that this exercise was completed periodically.

 

• Whilst almost all of those affected by the Council Tax Reduction Scheme would be better off as a result of the preferred proposals, there was a small number of residents identified that would not be financially better off. For those identified, it was estimated that this would result in no more than a 95p increase a week and, although it was not possible to identify how many would be affected negatively, for most residents it was clear that they would gain from the revision.

 

• The Council Tax Reduction Scheme was aimed at helping the 6,000 most in need working age claimants, rather than all 10,000 working age claimants, because it was anticipated that this was as much as could be done within 2019/2020 budget. Nonetheless, this was an important step in delivering on a key manifesto commitment and a positive step in the right direction.

 

• With regards to funding the proposed changes to the scheme, this would be part of budget discussions that would take place later in the year.

 

• In relation to individual’s eligibility under Universal Credit being used as the basis for their entitlement for the Council Tax Reduction Scheme, it was acknowledged that there was a number of ways in which to deliver the Council Tax Reduction Scheme. This option was considered but was not a preferred method as Haringey Council was at an early stage of implementing Universal Credit. It was therefore decided that, at this time, it would not be appropriate to use this as the basis of any new Council Tax Reduction Scheme.

 

RESOLVED

 

1. To agree to go out to consultation on the following preferred option to replace the existing CTRS. This option is a combination of:

 

a)    Increasing the maximum level of Council Tax Reduction from 80.2% to 100% for working age claimants with children.

b)    Updating the CTRS to align with some national welfare changes. The maximum level of Council Tax Reduction would continue to be 100% for pensioners and working age claimants in receipt of disability related benefits, as it is under the existing CTRS.

 

2. To note that, following consultation with the Greater London Authority (“GLA”) and having considered the GLA’s response:

 

i)             A draft CTRS will be published;

ii)            A consultation on that draft CTRS will be carried out with persons likely to have an interest in its operation;

iii)           An initial Equality Impact Assessment will be published, which will assess the proposals for consultation; and

iv)           The findings of the consultation and an Equality Impact Assessment will inform the final CTRS, which will be put to Members to consider at full Council in January 2019.

 

Reasons for decision

 

The stated ambition of the current administration is to:

 

a)    Ensure the greatest weight is placed on the broadest shoulders by consulting on options that make Council tax and our policies for charging for Council services fairer; and

b)    Extend the level of Council tax relief for our least well-off residents to 100%.

 

Councils have limited powers to effect change to Council Tax without primary legislation. However, the CTRS offers a vehicle through which the Council can redistribute the burden on Council Tax payers and provide additional financial support to those in receipt of Council Tax Reduction.

 

Since 2013, the existing CTRS has capped the maximum amount of Council

Tax Reduction at 80.2% for working age claimants who were not in receipt of disability related benefits. It is recognised that some residents have increasingly struggled to pay contributions towards their Council Tax. Therefore, there is a desire to provide additional financial support to residents who are the least well-off.

 

The proposal to increase the maximum level of Council Tax Reduction for working age claimants who have children is thought better to balance affordability with the need to provide more financial assistance to a group in particular need.

 

It is also proposed to update the scheme to bring it in line with some national welfare changes that have taken place since 2013. For pensioners, the CTRS automatically updates each year to align with national welfare changes. For working age claimants, the CTRS has not been updated since 2013. Therefore, it is proposed to update the scheme to ensure it is up to date, easier to understand and reflects inflationary changes. As a result of these changes, most working age claimants would have an increased level of Council Tax Reduction (i.e. would be financially better off) whether or not they have children.

 

The proposal to align with some national welfare changes is considered to balance the benefit of making the CTRS up to date and easier to understand by reflecting the national welfare scheme, reflecting inflationary changes since 2013, and the desire to provide additional financial support to a group who are in particular need. It is not proposed to align the CTRS with all national welfare changes. For example, it is not proposed to align with the two child limit for child allowances. This is because it would decrease the level of Council Tax Reduction a claimant would be entitled to (i.e. make them financially worse off). It is considered that aligning the CTRS with all national welfare changes would worsen the financial position of groups who are in particular need.

 

The Council is obliged to consider whether to revise or replace its CTRS each year. However, it is not obliged actually to revise or replace it. If any revision or replacement is to be made, the Council must follow the consultation process set out in the legislation and changes must be made by 11 March, to take effect from 1 April. The decision has to be made by Full Council. In order to give the Council sufficient time to implement any changes, Full Council should formally agree the proposals in January.

 

Therefore, the proposal is made now to ensure that any additional financial support for residents can take effect as soon as possible, from 1 April 2019.

 

Alternative options considered

 

The number of possible changes to the CTRS are virtually infinite. Councils have a wide discretion to tailor support based on factors such as:

 

a) Income;

b) Capital;

c) Number of dependants;

d) Whether the person has made an application for a reduction.

 

Bearing in mind the Council’s draft policy position referred to above, the following other options in particular have been considered in detail, but are not being included in the consultation process:

 

• No change to the existing CTRS;
• Increasing the maximum level of Council Tax Reduction from 80.2% to 100% for all working age claimants;
• Limiting the amount of Council Tax Reduction received in higher value properties to the amount provided in a designated band; and
• Altering the capital savings limit.

 

It should be noted that the Council could also reduce the maximum level of Council Tax Reduction from the existing rate (80.2%). However, this would not be consistent with the Council’s stated purpose to provide increased support to those residents most in need and so is not put forward as an option here.

 

No change to the existing CTRS

This is not recommended because the Council has indicated a commitment to providing additional financial support to residents in receipt of Council Tax Reduction to alleviate the financial burden for the least well-off.

 

Increasing the maximum level of Council Tax Reduction from 80.2% to

100% for all working age claimants

 

This is not recommended because it would mean a significant additional cost (£843,000) to the Council’s budget that would increase the additional cost of the scheme from an estimated £1.6m, of the preferred option, to £2.44m in 2019/20. The preferred option, which relates principally to a particular group of working age claimants considered to be in particular need, is thought to strike a balance between providing additional support to a group in need and the financial impact on the Council and its services.

 

Limiting the amount of Council Tax Reduction received in higher value

Properties to the amount provided in a designated band

 

The Council could “cap” the level of support based on the Council Tax liability of a designated Band. For instance, if the limit was set at Band D, the maximum support a claimant could receive would be no more than they would get if they lived in a Band D property, even if they lived in a higher Band property.

 

This is not recommended because it would significantly increase Council Tax bills for residents who are affected by the cap (i.e. those in bands above the limit). It is recognised that claimants in receipt of Council Tax Reduction are financially burdened and need support.

 

Altering the capital savings limit

 

Currently, if a resident has more than £10,000 in capital they do not qualify for support under the CTRS.

 

Changing the capital savings limit is not recommended because it is considered that the £10,000 limit strikes the right balance between recognising residents have a need to save and develop sustainable long-term financial plans, and ensuring the scheme reaches the most vulnerable residents.