This report sets out the proposed changes to the Authority s treatment of empty property and the award of Council Tax Discounts and Exemptions

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1 Agenda Item 10 PART A Report to: Cabinet Date of meeting: 21 January 2013 Report of: Title: Head of Revenues & Benefits Council Tax Discounts 1.0 SUMMARY This report sets out the proposed changes to the Authority s treatment of empty property and the award of Council Tax Discounts and Exemptions 2.0 RECOMMENDATIONS Cabinet is requested to: 2.1 Note the contents of the report 2.2 Recommend the scheme to Council for adoption from 1 April Contact Officer: For further information on this report please contact: Phil Adlard, Head of Revenues & Benefits Telephone extension: phil.adlard@watford.gov.uk Report approved by: David Gardner, Director for Corporate Resources & Governance, Three Rivers DC. Bernard Clarke, Strategic Finance Director, Watford BC

2 3.0 DETAILED PROPOSAL 3.1 The Local Government Finance Act 2012 has given local authorities the ability to raise additional income through changes to the exemptions awarded for second homes, uninhabitable properties, properties occupied by a mortgagee in possession, properties that have been empty for up to 6 months and properties that have been empty for 2 or more years. 3.2 The impact of these changes are as follows: 3.3 Second Homes A second home is a furnished property which is unoccupied and no person s main residence. A 50% discount is currently awarded on such properties. The Government will allow full council tax to be charged on these properties. It is proposed to charge 100% council tax on second homes. 3.4 Uninhabitable Properties An uninhabitable property is a vacant dwelling where major repair works or structural alterations are required, under way or recently completed. These properties are exempt from council tax for 12 months (Class A Exemption). The Government is abolishing this exemption and allowing Local Authorities to apply a discount in the range of 0 to 100% on such properties. In should be noted that a potential impact of this change could fall on people who have an empty uninhabitable property resulting from flood or fire damage (but see paragraph 3.7 below). It is proposed to remove the 12 months exemption on uninhabitable properties. There is no provision in the proposed legislation to reduce the number of months this exemption can be applied for. It must be zero or twelve. 3.5 Empty Properties An empty property is exempt from council tax for 6 months if it is vacant and substantially unfurnished after which time the full council tax becomes payable (Class C Exemption). In parallel with the abolition of uninhabitable properties exemption, the Government has abolished the exemption on empty homes, replacing it with a discount which Local Authorities have discretion to set at 100 per cent, or any lower percentage. The potential impact of this change could fall on people who have moved home without selling or letting their properties and on developers who have vacant new properties on their books. It is proposed to remove the 6 month exemption on empty properties 3.6 Empty Homes Premium At present, Watford Borough Council charges 100% council tax on a property that has been empty for more than 6 months. The government has expressed concerns about the number of properties that are left empty across the country at a time when there is an overall housing shortage, and there are 1.7 million people are on social housing waiting lists. Local Authorities now have the option

3 to levy a 50% empty homes premium on the council tax payable in respect of properties that have been left empty for a period of two years or more. We have 21 properties that have been empty for more than 2 years. The Government is currently consulting on whether to exclude properties from the empty homes premium which are genuinely on the market for sale or letting, an annex deemed unoccupied because it is being treated by the occupier of the main dwelling, as part of that main property and a property which is the residence of a member of the armed forces, who is absent from the property as a result of such service. We do not have a record of properties genuinely up for sale or left empty by members of the armed forces. It is proposed to charge a 50% premium on empty properties that have been empty for 2 or more years. 3.7 Other Local Discounts It should be noted that a local discount up to 100% can still be awarded on an empty or uninhabitable property to help address local problems such as flooding and other natural disasters. The council would have to meet the full cost of awarding such discounts 3.11 Consultation These proposals have been subject to a consultation exercise during the summer of The outcome of this consultation was reported to Budget Panel on 23 October 2012 with the majority of those who responded (441 in total) being in favour of such proposals 4.0 IMPLICATIONS 4.1 Financial The impact of these proposals is that the additional income generated will assist the Authority in adopting a Local Council Tax Reduction Scheme that will not result in reductions in the amount of support we are currently paying The Head of Strategic Finance comments it is essential that this report is approved as it very much helped to provide the additional funding which obviated the need to reduce council tax benefit to any of the Council s claimants. 4.2 Legal Issues (Monitoring Officer) The Head of Legal and Property Services comments that the Local Government Finance Act 2012 has given local authorities the power to vary exemptions applied to the payment of council tax across a range of categories. 4.3 Equalities An equalities impact analysis has been produced alongside the development of

4 4.4 Risk the scheme. Consultation on changes to current council tax discounts showed significant support across all equality groups for implementation. An analysis of the consultation to identify those people who said they would be affected by these changes showed no particular impact on those belonging to any particular equalities group Potential Risk Likelihood Impact Overall score The software required for a local Scheme is not in place for the scheme to be fully operational in Staffing None Specific Background Papers: Local Government Finance Act 2012 WBC council tax reduction scheme EIA Jan 2013 (attached as Appendix 1)

5 Equality Impact Analysis Title of policy, function or service Watford Borough Council Council Tax reduction scheme and Council Tax discount reforms Lead officer Phil Adlard, Head of Revenues and Benefits Person completing the EIA Type of policy, function or service: Kathryn Robson Existing (reviewed) New/Proposed Version v.03- January

6 Background This analysis considers the potential impacts, both positive and negative, of the proposed Watford Borough Council Tax reduction scheme and discount reforms. This change in policy has arisen as part of the government s welfare reforms as set out in the Local Government Finance Act 2012 and associated regulations. Council Tax Benefit (CTB) will be abolished on 31 March 2013 and will be replaced by local schemes of Council Tax Support (CTS) devised by each local authority. Each Scheme will be cash limited at around 10% less than current expenditure. Local authorities have, within certain government parameters, a degree of choice as to how they devise their local scheme and how they manage the funding reduction. Council Tax Reduction Scheme In October 2012, government announced that it was making 100million pounds available for councils to help them manage the change to the new scheme, particularly to ensure that people do not see a significant reduction to their council tax benefit. This transitional grant will be available for 2013/14 only. For Watford it would mean 159,000. The government set a number of rules that have to be met if the council wanted to apply for the money. Watford BC undertook an analysis of how it could benefit from government s transitional grant funding, whilst ensuring it complied with the rules set down for eligibility. This resulted in the following proposed reduction scheme being developed: No change from the current scheme in terms of the eligibility for council tax support and the rates applied This fulfils the government criteria for applying for transitional funding. Council Tax Discount Reforms In addition to abolishing Council Tax Benefit, the government has changed how local authorities can apply Council Tax benefits in certain circumstances. Watford BC has considered these and is proposing the following changes: Second Homes A second home is a furnished property which is unoccupied and no person s main residence. A 50% discount is currently awarded on such properties. The Government will allow full council tax to be charged on these properties. It is proposed to charge 100% council tax on second homes. Uninhabitable Properties An uninhabitable property is a vacant dwelling where major repair works or structural alterations are required, under way or recently completed. These properties are exempt from council tax for 12 months (Class A Exemption). The Government is abolishing this exemption and allowing Local Authorities to apply a discount in the range of 0 to 100% on such properties. In should be noted that a 2

7 potential impact of this change could fall on people who have an empty uninhabitable property resulting from flood or fire damage (but see paragraph 3.7 below). It is proposed to remove the 12 months exemption on uninhabitable properties. There is no provision in the proposed legislation to reduce the number of months this exemption can be applied for. It must be zero or twelve. Empty Properties An empty property is exempt from council tax for 6 months if it is vacant and substantially unfurnished after which time the full council tax becomes payable (Class C Exemption). In parallel with the abolition of uninhabitable properties exemption, the Government has abolished the exemption on empty homes, replacing it with a discount which Local Authorities have discretion to set at 100 per cent, or any lower percentage. The potential impact of this change could fall on people who have moved home without selling or letting their properties and on developers who have vacant new properties on their books. It is proposed to remove the 6 month exemption on empty properties Empty Homes Premium At present, Watford Borough Council charges 100% council tax on a property that has been empty for more than 6 months. The government has expressed concerns about the number of properties that are left empty across the country at a time when there is an overall housing shortage, and there are 1.7 million people are on social housing waiting lists. Local Authorities now have the option to levy a 50% empty homes premium on the council tax payable in respect of properties that have been left empty for a period of two years or more. We have 21 properties that have been empty for more than 2 years. The Government is currently consulting on whether to exclude properties from the empty homes premium which are genuinely on the market for sale or letting, an annex deemed unoccupied because it is being treated by the occupier of the main dwelling, as part of that main property and a property which is the residence of a member of the armed forces, who is absent from the property as a result of such service. We do not have a record of properties genuinely up for sale or left empty by members of the armed forces. It is proposed to charge a 50% premium on empty properties that have been empty for 2 or more years. The council has calculated that the implementation of these discounts with the support of the transitional grant and an increased council tax base overall will achieve the 10% reduction in support required whilst not impacting directly on any individual currently in receipt of Council Tax Benefit. This Equality Impact Analysis (EIA) is considering the potential impact of the Council Tax reduction scheme and discount reforms on the people in the groups or with the characteristics protected in the Equalities Act These are: 1. Age 2. Disability 3. Gender Reassignment 4. Pregnancy and maternity 5. Race 6. Religion or belief 3

8 7. Sex (gender) 8. Sexual Orientation 9. Marriage and Civil Partnership The analysis also considers how we can achieve the positive effects and reduce or mitigate the negatives. Information on current Council Tax Benefit recipients Watford s overall population is currently 90,700 (mid-year 2011 revised estimates) As of January 2013, Watford BC has 6,462 people claiming Council Tax Benefit. Government regulations on local reduction schemes stipulated that pensioners were not to face any reduction on support. This means that any locally introduced scheme can only affect Working Age Claimants. As of January 2013, there were 4,123 Working Age Claimants in Watford Of these, 2,290 claimants are recorded as having a child aged under 5 and 1,052 with the youngest child over 5. Additional premiums are paid in cases where the claimant and/or partner are disabled. For the purposes of this assessment, we have taken a person to be disabled if they (or a member of their household) are in receipt of a relevant state benefit and granted an appropriate premium as permitted by the Council Tax Benefit Regulations More than one premium may be payable if circumstances permit. Premium Qualifying Criteria Number in Watford Jan 2012 Disability Premium Claimant and/or partner aged under 60 and; Claimant and/or partner receives at least one of: - mobility supplement - long-term Incapacity Benefit - Severe Disablement Allowance (SDA) - Constant Attendance Allowance (CAA) - Disability Element of Working Tax Credit - Disability Living Allowance (DLA) Claimant and/or partner is registered blind, Claimant is not in receipt of ESA 359 4

9 Premium Qualifying Criteria Number in Watford Jan 2012 Disabled Child Premium Severe Disability Premium Child is registered blind, or Child receives DLA Single Person or lone parent: - received DLA (Care) at high or middle rate or Constant Attendance Allowance and; - single person or lone parent lives alone and; - no-one receives CA for looking after them. People that are ignored in determining if person lives alone: - a child - joint occupier - non-dependent aged 16 or 17 - boarder - a person who received high or middle rate care component of DLA or Attendance Allowance - landlord or member of landlord s family - a person who is registered blind - a person who lives with the claimant to care for them. A couple - each member of the couple receive the benefits above and; - No-one lives with them and; - no-one receives CA for them A. Engagement with Council Tax Benefit recipients During summer 2012, consultation took place on the council s initial proposals (the reduction scheme was developed before the government s announcement on the transitional grant). Although further consultation was conducted on the revised proposed scheme, the consultation did provide some up to date analysis of the equalities profile of current Council Tax Benefit recipients. 5

10 1. Sex 2. Pregnancy / maternity 6

11 3. Ethnicity These figures reflect what we know of the borough s ethnic breakdown from Census

12 4. Disability These results are what would be expected in terms of the population in receipt of council tax benefit. It is higher than the percentage in the Watford population as a whole with 50% of respondents experiencing some form of disability. 8

13 5. Age There is a disproportionately low response from people of 65+ years this would be because they were identified by the government as not affected by any changes to the council tax support available. 6. Religion 9

14 7. Sexual orientation 8. Religion or belief 9. Gender identity 10

15 Revised consultation November 2012 January 2013 Of those who responded to the revised consultation (38), only 2 selected they were on benefits (although this question was skipped by some respondents). From this it would not be possible to conclude anything on the respondents equalities profile. B. Engagement with those impacted by discount reforms Of those responding to the consultation on the application of Council Tax discounts, 27 said they would be affected. Profile (not all respondents answered each equality question): 1. Sex Male - 16 Female Ethnicity White British - 17 White other 4 Pakistani 1 African 1 Other Disability Yes 11 No Age years years year Pregnancy / maternity None 6. Religion or belief No religion 8 Christian 15 Muslim 2 Hindu 1 7. Sexual orientation 11

16 Heterosexual 19 Bisexual 1 8. Marital or civil partnership status Single 1 Married 8 Divorced 12 Separated Gender identity All the same as gender identified at birth How will the council ensure equality is promoted through the council tax reduction scheme and discount reforms 1. eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under the Act 2. advance equality of opportunity between people who share a relevant protected characteristic and people who do not share it 3. foster good relations between people who share a relevant protected characteristic and people who do not A. Council Tax Benefit recipients As the support offered to those who are experiencing difficulties in paying their council tax is not changing, there will be no impact in the introduction of the new policy / scheme. B. Council Tax discount reforms There is limited equalities data available as to the impact of this change in policy. The information available from the consultation would indicate that no one particular equality group is being impacted disproportionately 1. Positive impacts Maintaining the current support scheme for 2013/14 will have a positive impact on all equality groups as a reduction in the council s budget of 10% for council tax support, if passed to current recipients, might have impacted people across a number of protected characteristics. This would NOT have applied to pensioners who were exempt from the impacts of any changes. In terms of the Council Tax discount reforms the data available would not indicate any positive impacts although an overall aim of the change is to encourage home owners not to leave properties empty for any significant period of time, thus helping the current shortage in housing. If this outcome were achieved it would benefit people across all protected characteristics. 2. Negative impacts No negative impacts were identified for current Council Tax benefit recipients. 12

17 In terms of the Council Tax discount reforms the data available would not indicate any negative impacts. 3. Overall conclusion I Considering the information within this report and both the positive and negative impacts together, this analysis shows that, should both schemes be adopted,, the overall impact on the Watford community is positive. This is because the support given to those members of the Watford community who are experiencing difficulty in meeting the cost of council tax will be unaffected during 2013/14. 13

18 Monitoring the review This analysis will be reviewed as part of the development of the Sports Facilities Strategy. This EIA has been approved by: Phil Adlard Date