LOCAL COUNCIL TAX SUPPORT YEAR 3 REVIEW Appendix A

LOCAL COUNCIL TAX SUPPORT YEAR 3 REVIEW Appendix A Version & Policy Number V 1.0 Guardian Date Produced 30.8.2016 Next Review Date n/a Andrea Grinney Revenues & Benefits Manager 01572 758227

Summary of document This document is Appendix A to Report 166/2016 and details the review of Local Council Tax Support scheme and the Discretionary Fund for financial year 2017/18 onwards. Page 2 of 14

Contents Page 1.0 Background 4 2.0 Financial Position 4 3.0 Activity Data 6 4.0 Feedback 8 5.0 What s happening elsewhere 9 6.0 Alternative models 10 7.0 Conclusions 11 Page 3 of 14

1.0 BACKGROUND 1.1 The Government abolished Council Tax Benefit from 1st April 2013. All billing authorities had to replace this with a local scheme by 31 st January 2013. A significant amount of work was undertaken to model, forecast and consult on an affordable scheme for 2013/14. The Council approved a scheme in January 2013 (Report 2/2013), adopted the same scheme for 2014/15 in October 2013 (Report 226/2013) and for 2015/16 onwards in October 2014 (Report 185/2014). 1.2 The main scheme is means tested and provides support to people of working age who are on a low income by reducing their Council Tax bill by up to 75%, the scheme is largely based on the abolished Council Tax Benefit scheme and takes into account; the make-up of the household, i.e. single, couple, any children, non-dependants, any disabilities they may have, their unearned and earned income and any savings held. Pensioners are not affected and can receive up to 100% support. 1.3 The Discretionary Fund supports the main scheme and can provide additional top-up financial support of up to 100% off their council tax bill. Each case is assessed on its own merits against set criteria. Expenditure and personal circumstances are also taken into account i.e. medical inability to work due to health reasons, carer responsibilities. 1.4 The Council put in place a scheme to meet certain principles. These are detailed below: The scheme should reduce the overall cost of benefits through a local scheme; Support should be directed to those most in need; Incentives to work should be included; The scheme should be broadly in line with those of other authorities in this area; and The scheme should be affordable to the authority. 1.5 This report reviews whether these principles are being met using data for the last 3 financial years plus other available information. 2.0 FINANCIAL POSITION 2.1 The scheme for 2013/14 was expected to cost 1.56m based on forecasting data and actual known spending on Council Tax Benefit in preceding years. The following table shows the cost of the scheme for the last 3 financial years and data available for 2016/17. 2.2 Page 4 of 14

Year Cost Claimant numbers 2013/14 1,466,187 1,711 2014/15 1,421,086 1,625 2015/16 1,331,986 1,540 2016/17* 1,337,329 1,516 *Up to 31 st July 2016 2.3 The reduction in the cost of the scheme is consistent with the reduction in the number of claimants. 2.4 Members allocated 100k to the Discretionary Fund for 2013/14 and 2014/15 the allocated budget was reduced to 50k for 2016/17. Year Number of Total value of Number awarded Applications awards 2013/14 197 129 14,775 2014/15 214 172 24,182 2015/16 191 144 17,161 2016/17* 73 72 23,351 *Up to 31 st July 2016 2.5 The Council Tax collection rate target for 2013/14 was reduced from 99% to 98.7% to take into account the impact of charging 356 new payers for the first time. From 2014/15 the collection rate target has reverted to 99%. The Council Tax collection rates for the last 5 years are as follows: Year Collection rate 2012/13 98.9% 2013/14 98.8% 2014/15 98.9% 2015/16 98.9% 2016/17* 43.0% ( on target) *Up to 31 st July 2016 2.6 In terms of funding, the Council originally received a grant of 1.4m to cover the cost of LCTS. This grant was then rolled into Revenue Support Grant which has been significantly reduced and will be 0 by 18/19. In short, the Council receives no visible funding for this service and so must be able to afford it just like any other Council service. 2.7 In summary the following observations can be made: the scheme has cost less than was originally planned for; the Discretionary Fund continues to have a significant underspend so could be reduced (particularly as there is a Welfare Earmarked Reserve built up with savings from this area that could be used to top-up the budget as needed); Page 5 of 14

Council Tax collection rates are broadly being maintained; The Council does not get any funding which it can specifically attribute to covering the cost of Local Council Tax Support 3.0 ACTIVITY DATA 3.1 The following data tables provide information regarding the caseload and how this has changed over time, an analysis of claimant s income, details of the pension-age to working-age ratio and details of who has been granted further support from the Discretionary Fund. 3.2 The table below details how the working age caseload has reduced over time thus, in turn, reducing the overall cost of the scheme: Year Total LCTS working Variance age caseload 2013/14 646 2014/15 633-13 2015/16 615-18 2016/17* 603-12 *Up to 31 st July 2016 3.3 The pension to working age ratio is important as pension age claimants are protected and retain their full entitlement. The following table details the pension to work-age ratio. There are no significant changes and the ratio remains stable. Year Pension Age % Working Age % 2013/14 1,008,969 68.8% 457,218 31.2% 2014/15 941,735 67.7% 479,351 32.3% 2015/16 898,067 67.4% 433,919 32.6% 2016/17* 897,230 67.1% 440,099 32.9% *Up to 31 st July 2016 3.4 The table below details the sources of income for working age claimants. The number of people claiming Job Seekers Allowance (JSA), Income Support (IS) and Employment Support Allowance (ESA) will reduce as Universal Credit is rolled out to more people. Year Income Universal JSA ESA Working Support Credit Other** 2013/14 18.4% 11.8% 20.4% 28.7% 0.0% 20.7% 2014/15 17.6% 10.5% 23.6% 32.0% 0.0% 16.3% 2015/16 16.8% 9.7% 26.3% 32.5% 0.7% 14.0% 2016/17* 18.2% 8.2% 31.4% 27.8% 1.3% 13.1% *Up to 31 st July 2016 Page 6 of 14

**other category can include claimants in receipt of other benefits such as Incapacity Benefit, Carers Allowance, Severely Disabled Allowance, Statutory sick pay, maintenance and tax credits. 3.5 The table below details a breakdown of working-age claimants by marital status and whether or not they have children in their household. There has been little change across the categories. Year Single Couples without children Lone Parents Couples with children Disabled* 2013/14 7.7% 36.6% 4.1% 51.6% 4.1% 2014/15 8.5% 37.1% 4.7% 49.6% 4.7% 2015/16 8.2% 39.7% 3.6% 48.6% 5.3% 2016/17* 8.6% 41.4% 2.7% 47.2% 4.7% * Disabled claimants also fall into one of the other categories. 3.6 The Discretionary Fund established certain groups of vulnerable people that may qualify for an award, along with wider categories to allow for other situations. The table below details the numbers awarded against each group for each financial year. Category 2013/14 2014/15 2015/16 2016/17 Care Leaver 7 5 13 2 Carer 1 2 0 0 Income Support and child 3 3 4 1 under 5 In receipt of DLA 7 5 2 2 Fleeing domestic violence 1 1 8 7 Leaving dependency 2 3 4 0 rehabilitation In receipt of ESA support 4 11 7 10 component Foster Carer 0 0 2 1 Foster Care leaver 0 0 0 0 Hostel leaver 0 0 0 2 Responsibility of a nonresident 2 1 0 0 child Supported Accommodation 2 2 0 0 Other vulnerable group 45 41 32 13 Severe Financial Hardship 42 98 62 34 Total 129 172 144 72 3.7 On analysing the above data, it is clear that there are no clear specific groups or set of circumstances that should, or could be, included in the main scheme. This supports the principle that each application is assessed on its own merits having regard to the household income and expenditure. However, Officers will try to define further groups within Page 7 of 14

the categories of Other vulnerable groups and Severe Financial Hardship to provide clarity on who is receiving support and the reasons why i.e. mental health illness, physical health illness. 3.8 The Discretionary Fund policy was revised from 2015/16 to take into account feedback from CAB, appeals from customers and findings upon review. The following changes were made: Child Benefit is disregarded as income when working out the household income; The support component of ESA is disregarded when working out the household income. 3.9 Applications for a Discretionary Award are refused for a number of reasons: Excess income was available to meet the liability, or alternative funds were available-such as savings; Criteria set out in the policy were not met; and Insufficient evidence was provided to support the application. 3.10 In cases of refusal, all received written notification detailing their right of appeal and are signposted to the Rutland Citizens Advice Bureau (CAB) for budgeting or debt advice. 3.11 In summary the following observations can be made; 4.0 FEEDBACK The number of claimants has reduced consistently since 2013/14; There are no real trends for Discretionary Fund awards that would merit inclusion in the main scheme; and The Discretionary Fund is supporting the most vulnerable and alleviating financial pressures of paying Council Tax for households. Officers will try to identify more categories within the other vulnerable groups and severe financial hardship categories to provide clarity and information for future reviews. There is nothing to suggest that the main scheme and the Discretionary Fund is not working. 4.1 Feedback has been provided, upon request, from CAB and they have stated that the scheme is working satisfactorily. Previous feedback has resulted in some changes being made to the Discretionary Fund these are detailed at 3.8 above. 4.2 CAB are concerned about further DWP led welfare reforms and the overall impact upon households i.e. the roll-out of Universal Credit, the Page 8 of 14

extension of the Benefit Cap. Officers will review the impact of these changes as they are implemented. 4.3 Little feedback has been received directly from customers. Those who are unable to meet their Council Tax liability are invited to apply to the Discretionary Fund or are signposted to seek debt advice. 4.4 In summary, the following observations can be made: CAB have no concerns regarding the current scheme; There have been no complaints regarding the main scheme and few appeals to decisions for Discretionary Fund awards. 5.0 WHAT S HAPPENING ELSEWHERE 5.1 The following section provides data, which has been gathered from national sources, to enable consideration of other schemes and best practice since the scheme was introduced in 2013/14. 5.2 The New Policy Institute has collated data about all national Local Council Tax Support schemes every year. They have published this data, which can be used as a comparator to our own scheme: 66 councils changed their scheme in April 2016, with 50 changing their schemes the previous year. Our scheme has not changed since it was introduced. Of these 42 changed or introduced a minimum payment, a proportion of council tax liability that all residents are required to pay. Our scheme has a minimum payment of 25% Only 41 councils are continuing to provide the levels of support available under the former Council Tax Benefit system. There are 11 local authorities with a minimum payment of 30% or more, 20% is the most common minimum payment amount. Our scheme has a minimum payment of 25% with further top-up support of up to 100% via the Discretionary Fund. 5.3 Neighbouring Leicestershire authorities are considering making changes to their schemes from 2017/18. A public consultation has taken place from 4 th August to 28 th September 2016 the options being considered are to make no changes, to change to maximum level of award to either 80%,75% or 70% and to align the scheme to housing benefit regulations. 5.4 In summary the following observations can be made; Our scheme is broadly in line with those of neighbouring authorities; Page 9 of 14

Nationally, our scheme is broadly in line with others; most authorities have a means tested scheme based on a minimum payment. 6.0 ALTERNATIVE MODELS 6.1 As there are no emerging issues arising from the above work, no alternative schemes have been modelled at this stage. However, a key point to note is that many authorities are reviewing schemes with a view to making savings given Government funding reductions. This is the case for many of the Leicestershire Councils. Because the scheme for pensioners is controlled by central government, any savings made would impact directly on working age claimants. The table below sets out the average impact on those claimants should the Council wish to make gross savings on the 440k support it gives to working age claimants. Savings sought (%) Value ( ) Average support given now (per week) 10% 44,000 14.03 12.62 20% 88,000 14.03 11.22 30% 132,000 14.03 9.82 40% 176,000 14.03 8.41 Average support under revised scheme (per week) In reality savings could be offset by costs elsewhere. Any reduction in support could lead to reduced collection rates (a reduction in rates for the total liability paid by working age claimants is c 16k) or increased demand on the Discretionary Fund (assuming 20% of working age claimants are eligible for extra support the 44k savings would reduce by 5k) With reductions in Government funding, the need for savings in understood. However, with further Council Tax rises likely to compensate for funding loss, the Portfolio Holder has advised that for now the scheme should not be remodelled as a means to making savings. 6.2 In summary the following observations can be made: There are no emerging issues that required the scheme to be remodelled at this time; Any savings target would affect working age claimants only which in turn could adversely impact on collection rates and demand on the Discretionary Fund. Page 10 of 14

7.0 CONCLUSIONS 7.1 Using the above information, a review of the current scheme (as shown below) demonstrates that the Council s objective and established principles are still being met. Principle The scheme should reduce the overall cost of Benefits through a local scheme Relevant and required? Yes Scheme delivering outcome? 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 increased over the last few years and has reduced slightly from 1.466m to 1.337m because of claimant numbers reducing. (see 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 6.1) Support should be directed to those most in need Yes 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 2.4) The Council is not seeing applications for extra help from specific groups (see 3.6) There have been no complaints (see Page 11 of 14

Principle Relevant and required? Scheme delivering outcome? 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 3.6) Incentives to work should be included The scheme should be broadly in line with those of other authorities in this area The scheme is affordable to the authority Yes Yes 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 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 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. 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 2.3) Page 12 of 14

7.2 It is the view of officers that there is no compelling reason to make changes to the scheme at the present time. 7.3 Over the course of the next year officers will: try to identify more categories within the other vulnerable groups and severe financial hardship categories to provide clarity and information for future reviews; undertake further analysis to seek to make proposals to align the Local Council Tax Support scheme to the Housing Benefit regulations from 2018/19 onwards; review how other welfare reform changes are progressing and the impact of these on our scheme and claimants. Consider any issues coming out of the corporate wide review of poverty which will be undertaken shortly. Page 13 of 14

A large print version of this document is available on request Rutland County Council Catmose, Oakham, Rutland LE15 6HP 01572 722 577 enquiries@rutland.gov.uk www.rutland.gov.uk Page 14 of 14