What is this consultation about?
Each year, the Council has to decide whether to change the Council Tax Reduction Scheme (known locally as Council Tax Support) for working-age applicants in its area. This year, the Council has decided that significant changes should be made to the Council Tax Reduction Scheme due to the introduction of Full-Service Universal Credit within the Telford and Wrekin area. In effect, the traditional link between Housing Benefit (which will no longer be available to new working-age claimants) and Council Tax Reduction will no longer exist. It is therefore essential that the scheme is changed to meet future requirements so as to reduce administration costs and ultimately prevent any additional costs being added to Council Tax.
What is Council Tax Reduction?
Council Tax Reduction is a discount to Council Tax, the level of which is based on the income of the household. Currently, working-age households who meet the relevant criteria and are not in a Protected category may have any award reduced by 25%. Applicants within a protected category, such as those who are severely disabled or in receipt of certain disability-related incomes, may receive support of up to 100% (a full list of Protected applicants can be found at www.telford.gov.uk/ctsprotectedgroups).
Pensioners can also receive up to 100% support, depending on their income.
In April 2013, the Council Tax Benefit scheme was replaced by the new Council Tax Reduction Scheme. Council Tax Benefit had been funded by the Department for Work and Pensions and it supported people on low incomes by reducing the amount of Council Tax they had to pay.
The Council Tax Reduction Scheme is determined locally by councils rather than by the Department for Work and Pensions. Although Central Government initially provided funding for the scheme, it was reduced from the amount that was awarded under the previous Council Tax Benefit scheme. Funding has since reduced each year in line with the reduction in the Revenue Support Grant provided to councils by Central Government and there is a likelihood that no Government funding will be provided for the scheme in the future.
People can claim Council Tax Reduction if they are on certain benefits. The current scheme reduces the award of all working-age applicants (not in a protected category) by 25%. Applicants, not falling within a protected category but in receipt of income-based Jobseeker’s Allowance, Income Support and income-related Employment and Support Allowance receive 75% support. Others receive a level of Council Tax Reduction based on their income and other factors.
A separate Central Government scheme is retained for people of pension-age, and Councils are only able to vary their schemes for people of working-age.
Each Council is required to review their scheme each year to decide whether they want to make any changes to it. Before any changes can be implemented, however, they must be subject to a public consultation.
The Council is proposing a number of changes to its existing scheme and, in line with current legislation, we have a duty to consult and provide you with the opportunity to tell us your views on the proposed changes to our Council Tax Reduction Scheme.
The Council is consulting on the following changes to its scheme for 2020/21:
- introducing an income ‘grid’ scheme for all working-age applicants, replacing the current means-tested approach, which was based upon the previous Council Tax Benefit scheme (Proposed Change 1);
- limiting the number of dependant children used for the purpose of calculating support to two for all working-age applicants (Proposed Change 2);
- removing the Protected group category and replacing it with a targeted Exceptional Hardship Scheme based on individual requirements (Proposed Change 3);
- removing Non-Dependant deductions (Proposed Change 4);
- removing the current earnings disregards and replacing them with a standard £20 disregard for all applicants who work (Proposed Change 5);
- disregarding Carer’s Allowance and the Support Component of Employment and Support Allowance, which are currently taken into account as income (Proposed Change 6);
- removing the Extended Payment provision (Proposed Change 7);
- making any new claims or changes in circumstances apply from the date on which the claim is made or the change occurs rather than the weekly basis as at present (Proposed Change 8);
- allowing the backdating of applicant claims for up to 3 months (Proposed Change 9);
- removing the disregard for child maintenance (Proposed Change 10) and
- the removal of the benefit cap rules from the scheme (Proposed Change 11).
In the Telford and Wrekin area, 14,218 people currently receive Council Tax Reduction. The gross cost of the scheme is £12.3 million, which is spread across Telford & Wrekin Council (76.4%), Parish and Town Councils (5.0%), the Fire Service (5.9%) and the Police (12.7%), in accordance with the proportion of Council Tax that each organisation levies (as shown in brackets).
Working-age households in the area who currently receive, or can apply for, Council Tax Reduction.
Pension-age households will not be affected as Central Government prescribes the scheme relating to those households.
These proposed changes to the scheme will rebalance the distribution of the funding across working-age claimants of Council Tax Support. This means that all current recipients are likely to see a change in the amount of support they receive. Some will see the amount of support they receive increase and some will see it reduce. In this proposal, all working age customers will need to pay at least 10% of their Council Tax.
We believe however, that this is a fairer way to allocate the funding available, as well as making the scheme much easier to understand and administer.
We have already decided to make claiming simpler for Universal Credit applicants and we will use the award information provided by the Department for Work and Pensions as an automatic claim, which will ensure that their entitlement to Council Tax Reduction is maximised.
We have also thought about other ways to make administration simpler. These have not been completely rejected (including maintaining the current scheme) and you are asked about them in the Questionnaire. However, at the moment, we do not think we should implement them for the reasons we give below.
We have considered:
Continuing with the current scheme
This would mean higher administration and scheme costs generally. Not making these changes would significantly increase the administration of Council Tax Reduction. The current scheme will not work effectively with the Government’s Universal Credit system. The multiple changes in Universal Credit inevitably lead to multiple changes in Council Tax Reduction which means that we would have to issue a new bill for each change, which is both costly and confusing for customers. This would increase the costs for all Council Tax payers in the area - who pay towards the scheme. Any decision to increase Council Tax may need to be made following a local referendum.
Reduce funding to other Council services to pay for the additional administration costs
Keeping the current Council Tax Reduction Scheme will mean an increase in administration costs and result in less money being available to deliver other Council services.
Use the Council’s reserves to keep the current Council Tax Reduction Scheme
Using reserves to fund the additional administration costs would be a short-term option. Once used up, they will no longer be available to support and invest in other Council services, and additional cuts would have to be made in subsequent years.