CABINET LOCAL COUNCIL TAX SUPPORT

Transcription

1 Report No: 166/2016 PUBLIC REPORT CABINET 18 th October 2016 LOCAL COUNCIL TAX SUPPORT Report of the Director for Resources Strategic Aim: Delivering Council Services within our Medium Term Financial Plan Key Decision: Reason for Urgency: Exempt Information Cabinet Member(s) Responsible: Forward Plan Reference: FP/130516/04 N/A No Councillor Terry King, Leader and Portfolio Holder for Finance Contact Officer(s): Ward Councillors Saverio Della Rocca, Assistant Director (Finance) Andrea Grinney, Revenues & Benefits Manager N/A DECISION RECOMMENDATIONS That Cabinet: 1. Recommends to Council to adopt the Local Council Tax Support scheme currently in operation and to adjust annually for inflation in line with the Government s annual Adjudications and Operations Circular from 2017/18 financial year onwards. 2. Recommends to Council to realign the Discretionary Fund budget from 50k to 25k in line with existing demand. 3. Recommends to Council to give authority to the Assistant Director (Finance), in consultation with the Cabinet Member with portfolio for Finance, to make minor changes to the Local Council Tax Support scheme and the Discretionary Fund as a result of best practice, guidance or legislation. 4. Recommends that a further review of the Scheme is undertaken after the completion of the Poverty review by Scrutiny.

2 1 PURPOSE OF THE REPORT 1.1 To review whether any changes are required to the Local Council Tax Support scheme for the 2017/18 financial year. 1.2 To review whether any changes are required to the Discretionary Fund policy and the level of funding allocated to the Discretionary Fund. 1.3 To ensure that the Council has appropriate arrangements in place to enable it to make minor revisions to the scheme promptly to reflect changes in guidance, legislation, judicial review and Valuation Tribunal outcomes, to achieve its objectives. 2 BACKGROUND AND MAIN CONSIDERATIONS 2.1 The Government abolished Council Tax Benefit from 1 st April The Council replaced this with a local scheme, Local Council Tax Support (LCTS). The main scheme runs alongside a Discretionary Fund which allows the Council to make further awards to those in hardship. A significant amount of work was undertaken to model, forecast and consult on an affordable scheme for 2013/14. The Council approved the scheme in January 2013 (Report 2/2013) and adopted the same scheme for 2014/15 in October 2013 (Report 226/2013) and for 2015/16 onwards in October 2014 (Report 185/2014). 2.2 A detailed review of the current scheme and the Discretionary Fund has been undertaken using data available for the financial years 2013/14, 2014/15 and 2015/16. The review is detailed at Appendix A and contains the following information: Facts and figures analysed from the last three financial years; Council Tax collection rates; Views and feedback; Intelligence gathered nationally and neighbouring authorities schemes; and Conclusions. 2.3 The review focused on whether the principles Members established for the aims of the scheme are still being met. The table below summarises the position and refers to Appendix A where more information can be found. In reviewing the scheme Members should note that any decision to fundamentally change the scheme (i.e. the amount of support that a claimant may receive) does require formal consultation. This can mean that any changes proposed may not actually be implemented (subject to the outcome of consultation) until the next new year of operation. Principles Relevant Scheme delivering outcome? The scheme should reduce the overall cost of benefits Because of the way the funding originally worked, the Council did not want to adopt a scheme that increased the cost of benefits. The cost has not

3 Principles Relevant Scheme delivering outcome? increased over the last few years and has reduced slightly from 1.466m to 1.337m because of claimant numbers reducing. (see Appendix A, 2.1 & 2.2) If Members wanted to reduce the cost of the scheme further this would mean reducing the entitlement of c600 working age claimants (the scheme for pensioners cannot be changed as it is set nationally). Whilst acknowledging the Council s need to make savings, the view of the Leader and Portfolio Holder was that with further potential increases in council tax to compensate for government funding reductions, the Council should not at this time look to make savings from those receiving financial support. (see Appendix A, 6.1) Support should be directed to those most in need The Scheme is means tested and takes into account various factors including a claimant s income, age, family circumstances, any disability and savings. If claimants fall below a level of income (for their set of circumstances), then the Council will provide some support. The means tested model is believed still to work as: Collection rates are still high (see Appendix A, 2.4) The Council is not seeing applications for extra help from specific groups (see Appendix A, 3.6) There have been no complaints(see Appendix A, 4.4) Additional support can be given through the Discretionary Fund by reviewing the income and expenditure of households (this is a different assessment to that undertaken in the main scheme) (see Appendix A, 3.6)

4 Principles Relevant Scheme delivering outcome? Incentives to work should be included The scheme should be broadly in line with those of other authorities in the area The scheme is affordable to the authority Partly Various provisions were built in to promote working such as allowing those in work to keep more of their earned income before it is taken into account and support reduced. There has been a continuous reduction in the number of claims from households claiming out of work benefits. (see Appendix A, 3.3) The scheme is broadly similar to other neighbouring schemes in terms of principles although this Council pays a maximum 75% towards council tax whereas others currently pay 12.5% 20%. Other local authorities are reviewing their schemes and are likely to bring their schemes in line with ours in terms of the minimum amount claimants will pay towards their council tax. (see Appendix A, 5.3) The scheme has been affordable in the last 3 years and is set to be affordable in 2017/18. The council has to make savings of 2.5m over the life of the MTFP so the scheme may not be affordable in the long term but targeting savings from those receiving support as noted above is not considered a priority and there are concerns that savings could be eroded by a decrease in collection rates or additional payments though the Discretionary Fund. (see Appendix A, 6) The Discretionary Fund budget is 50k but has been underspent for the last few years. The recommendation is to revise it to 25k with any excess demand met via the welfare earmarked reserve. (see Appendix A, 2.3) 2.4 The review of the current scheme has established that the scheme continues to deliver on its original objectives and at this time there is no compelling reason to

5 make any amendments other than to adjust annually for inflation in line with the Government s annual Adjudications and Operations Circular from 2017/18 financial year onwards (this ensures the value of support stays the same in real terms). In any event, with the review of Poverty being undertaken by Scrutiny it would seem appropriate to await the outcome of this review before considering any changes. 2.5 Notwithstanding this conclusion, two recommendations are made to address a number of issues: Adoption of a new principle officers are suggesting that a new principle is added to the ones above, namely that the rules of the LCTS scheme are aligned as far as possible with other benefit regulation changes. Many customers who receive housing benefit also receive local council tax support; currently some of the rules affecting housing benefit awards are different to council tax support. This is because the Government are updating Housing Benefit regulations in line with the welfare reform agenda, but are not updating the default local council tax support scheme. This can be confusing for customers and officers. For example: a) Backdating rules have changed for housing benefit claimants from up to 6 months to 4 weeks where good cause for not claiming sooner is demonstrated. b) Temporary absence rules have changed for housing benefit claimants from up to 52 weeks entitlement to 4 weeks entitlement for some claimants. In next year s review therefore, the Council will seek to make proposals to align the Local Council Tax Support scheme to the Housing Benefit regulation changes from 2018/19 onwards for new claimants. Those currently in receipt of council tax support will not be affected. Officers will also review how other welfare reform changes such as the roll out of Universal Credit and the extension of the benefit cap are progressing and will assess the likely impact of these on our Local Council Tax Support scheme and on claimants. Reduction in Discretionary Fund budget the budget is 50k but has been underspent for the last few years. The recommendation is to revise it to 25k with any excess demand met via the welfare earmarked reserve. This is not a change to the policy in terms of who will receive support but acknowledges that as a demand led budget, it was originally difficult to set and now that usage data is available 25k is a reasonable level. 3 CONSULTATION 3.1 Consultation is not required for any decision being sought in this report as no changes are being made to the scheme at this stage. Where changes are made to the scheme, the regulations stipulate that all those affected or who could be affected should be consulted. Our neighbours are currently going through a consultation process. This can take up to 12 weeks. 4 ALTERNATIVE OPTIONS

6 4.1 The Council has a statutory duty to adopt a Local Council Tax Support scheme. Consideration was given to making changes to the existing scheme or to devise a new scheme (Appendix A 6.0) but this option has been rejected due to the following reasons: The existing scheme currently meets the principles originally established. There would be significant technology costs (even for small changes) in revising the existing scheme or devising a new scheme along with necessary resources to implement IT requirements, train staff, revise literature and communicate to customers; The impact of Universal Credit and other welfare reforms is still largely unknown so any changes should wait until the position becomes clearer. The Council s Scrutiny function is just beginning a review of Poverty. The outcome of this review may provide a steer for a future review of the scheme. 5 FINANCIAL IMPLICATIONS 5.1 The costs of the Local Council Tax Support scheme sit within the Collection Fund and are effectively netted off the income amount shown in the Medium Term Financial Plan for Council Tax. There will be no direct financial implications from keeping the scheme the same. 5.2 Reducing the Discretionary Fund from 50k to 25k will give a General Fund saving of 25k with any excess demand met from the Welfare Earmarked Reserve which has been built up from savings in this area over the last few years. 6 LEGAL AND GOVERNANCE CONSIDERATIONS 6.1 The Local Government Finance Act 2012 requires that for each financial year, each billing authority must consider whether to revise its scheme or to replace it with another scheme. 6.2 The authority must make any revision to its scheme, or any replacement scheme, no later than 31 January in the financial year preceding that for which the revision or replacement scheme is to have effect. 7 EQUALITY IMPACT ASSESSMENT 7.1 An Equality Impact Assessment (EqIA) has not been completed because there are no service, policy or organisational changes being proposed. 8 COMMUNITY SAFETY IMPLICATIONS 8.1 There are no community safety implications arising from this report. 9 HEALTH AND WELLBEING IMPLICATIONS 9.1 There are no health and wellbeing implications arising from this report. 10 CONCLUSION AND SUMMARY OF REASONS FOR THE

7 RECOMMENDATIONS 10.1 It is the view of officers that there is no compelling reason for making major changes to the scheme. Should Members wish to propose changes then officers will need to consider the steps required. Legal advice received is that formal consultation will be required if any changes to the structure of the scheme are made. This would exclude adjusting applicable amounts in the scheme in line with the Government s annual circular The Scrutiny Commission has agreed a corporate wide review of poverty in Rutland. It may be appropriate to review the local council tax support scheme and the discretionary fund following this review. 11 BACKGROUND PAPERS 11.1 There are no additional background papers to the report. 12 APPENDICES 12.1 Appendix A A Large Print or Braille Version of this Report is available upon request Contact