Localising Support for Council Tax in England: Consultation

The key message in the consultation document is that the new localised CTB budget will be cash limited:

11.1 Currently funding is paid by the Department for Work and Pensions out of their
Annually Managed Expenditure to local authorities as a reimbursement of their
expenditure according to nationally-set criteria.  In future the funding to be distributed to local authorities will
be cash limited and will be paid from the Departmental Expenditure Limit budget of
the Department for Communities and Local Government. Moreover, the amount to
be made available will be reduced by 10 per cent. The Department expects to deliver
this money to local authorities as grant.

11.2 Schemes will need to be designed based on a fixed grant allocation. Local
authorities will need to consider what additional contingency arrangements should
be put in place within their local schemes to take account of unplanned increases in
demand or take-up.

…

11.5 Government envisages funding to be paid to local authorities in the form of an
unringfenced special grant. This means that councils who experience lower than
expected demand, or who are able to hold down demand by moving people into
work, are able to use any surplus to hold down council tax or support services.

…

11.8 A separate detailed technical consultation will be held on the specific factors
and indicators which should determine the level of grant allocated to a particular
authority. Decisions on this will inform what data Government may require from
local authorities about their schemes to enable allocations to be adjusted.

11.9
The Government considers that relevant factors could include:
• The relative size of eligible claimant groups – in particular pensioners – for which
local authorities are required by central government to provide support.
• Previous expenditure. This could be a useful indicator of likely levels of demand,
especially where take-up varies between areas. However, it will be important to
avoid perverse incentives to run very generous schemes which may prove to be
unaffordable. Adjustments may also need to be based on factors not subject to
local influence – such as claimant figures for other benefits

————————————————————————————————————————————————

The implication of para 11.5 is that from April 2013 Local Authorities will be provided with a financial incentive to discourage marketing or take-up campaigns that might increase the number of CTB claimants.

I have written a briefing paper on the impact of the government’s proposals that may be of interest. To access it please go to http://www.solutions.entitledto.co.uk/help/viewhelp.aspx?helpfile=CTBbriefingpaper. Any comments on the paper would be gratefully received.

Phil Agulnik - 05 August 2011 01:23 PM

I have written a briefing paper on the impact of the government’s proposals that may be of interest. To access it please go to http://www.solutions.entitledto.co.uk/help/viewhelp.aspx?helpfile=CTBbriefingpaper. Any comments on the paper would be gratefully received.

A very useful summary including figures on the local impact.

As expected the proposal undermines the aim of UC to simplify the benefit system and will allow LAs to devise their own system of council tax benefit / rebate / call it what you will. The proposal seems to put ideology before reality from a purely administrative point of view let alone wider policy implications.

One can see many local councillors keen to take on the additional powers and potential increased control of revenue / expenditure without appreciating the potential impact on their authority let alone constituents. Will this become an opportunity to pour more money into the pockets of private service providers like Capita to deliver an even poorer service to claimants?

Note the consultation is silent on issues like claims (inc. verification / proof of identity), payments, backdating, overpayments, persons from abroad, R2R rules etc etc.

Its Friday afternoon - the proposals really are the equivelent of a friday afterrnoon car - complete ****. Yet another welfare reform motorway pile up waiting to happen?

THE DISPROPORTIONATE EFFECT OF THE GOVERNMENT’S CTB REFORM ON HARINGEY

I’ve done some additional analysis on Phil Agulnik’s paper, which shows how the most deprived communities suffer most from the reform.  This is done by taking the budget cut figure for each LA and expressing it as an amount per head of working age population. 
The City of London is least affected as their £30k budget cut works out as £3.13 per head.
Haringey is worst affected as their £3.84 million budget cut works out as £24.20 per head.

The spreadsheets are attached.

PLAN TO SLASH COUNCIL TAX BENEFIT ‘MORALLY OUTRAGEOUS’

http://www.sthelens.gov.uk/news/article.htm?id=4985

“Leader of St.Helens Council Marie Rimmer has described government plans to slash Council Tax benefit as “morally outrageous.”

The move would affect thousands of people in St.Helens, many of them already on the bread line.  The borough stands to lose at least £1.6-million in grant aid.

The proposed changes, which would be introduced in 2013, will see dramatic cuts in the amount of benefit paid to households to assist them with their Council Tax bills. In St.Helens, 22,000 households rely on Council Tax Benefit.  These changes could see up to 13,000 of these households being required to pay more towards their Council Tax bills from 2013.  Under the proposals many residents will become liable to pay Council Tax for the first time.

Council Tax Benefit is currently paid to households where residents are receiving other benefits, particularly those relating to sickness, disability, income support and unemployment.  Under the new scheme, the government will slash the total amount that can be paid, with the Council expected to pass these cuts to claimants.  From 2013 the Council will have to decide who gets financial support and how much they get, but with much less money available than is currently the case.

Says Councillor Rimmer:  “Relatively less prosperous areas such as St.Helens will stand to lose out financially under these changes, while more prosperous regions of the country will be largely protected.  St Helens as a whole will lose at least £1.6 million in benefit. These losses will be felt exclusively amongst the very poorest members of our community.”

The council will consult with residents, landlords, charities and other parties to try to find ways to protect the most vulnerable from these cuts, however the greatly reduced level of money available will mean that further financial hardship for many is unavoidable.  Pensioners will not be affected by these changes, but it is clear that the implications for many working age families will be significant.

Councillor Rimmer pledged:  “The Council will make every effort to ensure that vulnerable households are protected from these cuts, however it is inevitable that many less well off households will see their Council Tax costs increase as a result of this government’s proposal.  These changes will affect those seeking work and those on low incomes and will be introduced alongside the government’s changes to Housing Benefit, which will see household rent increased significantly for many tenants.  These measures will significantly increase the housing costs for low income families, and seem particularly cruel at a time when food and fuel costs are increasing by the month.”

Has anyone held any meetings in their own local authorities to consider how the current system could be tweaked to save the required 10%?
We all know that pensioners and vulnerable people (those on ESA supported rate and single parent families with children under 5?) have to be protected and so the 20% will be hitting working families with older children; couples and single people.
So, for this target group do local authorities: -
•  lower capital thresholds
•  limit benefit to a maximum of 80% of their council tax bill
•  Have a maximum benefit threshold capped at band C
•  Stop owner occupiers from claiming

Anyone have any fresh and innovative ideas?  ( I know its Friday and its tempting but serious suggestions only please)

Don’t like the idea of stopping owner occupiers from claiming. They are arguably in a worse position than tenants who can look to their landlords responsibilities to maintain their properties and can potentially go somewhere else at the end of their tenancy. In contrast the owner occupier might watch whilst their place falls to bits round their ears for wont of the money to maintain the place, whilst they can’t sell it because of the state of the housing market, struggle to pay the mortgage because of the standard interest rate, ineligible loans etc and are up to their eyes in negative equity. Likewise the person in the higher than band C property who may have had the bad luck to fall on hard times when made redundant from his postion in a local authority welfare rights department might also feel hard done by at being excluded from full help when he can’t get anyone to take the heap off his hands.

I don’t have any other fresh innovative ideas though, just a bit of an unhelpful winge this really….

abolish:

most unoccupied dwelling exemptions
student exemption (student financial support package is higher than means tested benefit personal allowance and they use local services!)
single occupier discount (a hangover from the Poll Tax) - those on low income would still get CTB

or make CTB part of Universal Credit!

Have LA’s realised the additional administative burden localised CTB could generate yet? Remember what it was like trying to collect 20% of Poll Tax from people on benefits/low income/who were transient etc!

Anyone have any information on what the thinking is in Scotland and Wales, (and Northern Ireland?) 

The consultation document is only in respect of England, but the rest of the UK also have to contribute to the £490 million savings target set by George Osborne in the 2010 spending review.  http://cdn.hm-treasury.gov.uk/sr2010_completereport.pdf (p.69)

Ther is no council tax in NI.

not seen any proposals for scotland yet

Ariadne - 22 August 2011 05:20 PM

Ther is no council tax in NI.

There are rates and water rates which are treated in the same way.

Yes, but they are part of housing benefit.

Ariadne - 23 August 2011 04:58 PM

Yes, but they are part of housing benefit.

Not quite, housing benefit for rates or rate relief is administered by a couple of different organisations and is available for house owners and others who don’t qualify for HB.

Peter Turville - 19 August 2011 03:01 PM

Have LA’s realised the additional administative burden localised CTB could generate yet? Remember what it was like trying to collect 20% of Poll Tax from people on benefits/low income/who were transient etc!

This is an extract from a report you can find on Burnley Council’s website http://www.burnley.gov.uk/egov_downloads/Item_10_Localised_Council_Tax_Benefit.pdf

I would imagine all local authority Directors of Finance are preparing similar reports.

<“In the end, local authorities will have to decide, from a limited number of claims, which vulnerable group they support the least.  It is possible that these claimants will then suffer a reduction in support much greater than 10% to cover the protections offered to other groups; these may be claimants who have no current liability to pay council tax and who have limited means and minimal assets.  Extracting Council Tax from this group of people will be extremely difficult and this will inevitably have an adverse impact on the collection rate.”>