Local Council Tax Scheme consultation presentation

Council Tax Support Scheme 2015/16
Councillor Darren Rodwell Leader of the Council
Jonathan Bunt Chief Finance Officer
Siân Peters Director Revenues & Benefits Elevate East London
11th December 2014
Changes to Council Tax Support:
• History: Abolition of Council Tax Benefit and localisation
• Council Tax Support replaced Council Tax Benefit in April 2013
• Year 1 of localisation: drop in subsidy, drop in support
• Year 2: zero subsidy but higher retention of business rates
• Year 3: £54m savings to be made by this Council:
• The Council must collect more revenue to pay for services
• This is an opportunity to explain the changes and get
your views on our revised scheme
Funding, Demographic & Legislative Pressures
Gap brought forward
Funding cuts
Growing demand
New responsibilities & legislation
Pay & inflation
Council Tax
Business Rate pooling
History of Savings 2010-2014
The options to save £54m have to be seen in the context of
the savings already made:
Inevitably means harder choices over the next three years.
Internal & Efficiency Saving Proposals
The council has endeavoured to protect the public from service cuts as
much as possible. Several efficiency savings and internal changes have
been proposed to help bridge the gap. Examples Include:
Description of saving
Review of office accommodation
Freeze staff pay increments & reduce redundancy
Restructuring councils borrowing & investments
Alternative management model – leisure services
IT efficiencies
Lean back office functions e.g. Finance, Human
Resources & management structures
Income generation & alternative funding sources
Other Saving Proposals
Due to the size of the funding cuts and pressures the council faces,
efficiency savings alone have not been enough to bridge the gap. Harder
choices are having to be made. Examples of these include:
Description of saving
Council tax support scheme
Ceasing green garden waste collections
Stop supported living arrangements
Redesign of street cleansing services
Children’s social care savings
Reduction in support to quality childcare and early years
Reduce children in need support
Reduce primary mental health workers
Changes to youth services provision
Reduction in children centre service provision
Legal Requirements
Government requirements
• Pensioners are protected
• Councils must try to ensure people are ‘better off’ in work
• Residents must have the opportunity to comment on the
scheme – online survey, public meetings etc.
Council Tax Support – The Current Scheme
What is it? – it is a means-tested reduction to a
household’s Council Tax bill
Scheme: Since April 2013 same principles as Council Tax
Benefit but with an 85% maximum reduction for working
age residents which means everyone, except pensioners,
must pay some of their bill.
Simple: easy to administer, collect and understand
Fair: support is across all customers (except pensioner
who must be protected)
April 2015 - Changes Proposed…
Maximum Reduction decreased to 75%
• What this means
• Working age residents pay at least 25% towards their Council
Tax bill
• The average bill will increase from £151.87 to £242.99 per year
(£20.45 per month over 12 months based on a Band D property)
• Is the only proposed change that will affect all customers (except
• Why reduce the maximum support?
• It is fairer to reduce support evenly across all customers
Impact – case study 1
Ms Green – Band C property
• Ms Green is a 27 year old single parent with two
children living with her aged under 5
• The amount the rules say she needs to live on
(her applicable amount) is £218.38 per week
• Her income is £176.98. She has £0 excess
• She currently receives full support (85%) so pays
£2.53 per week Council Tax (£131.54 per year)
• Under the proposed new scheme she will only
receive a reduction of 75% so will have to pay
£4.22 per week (£219.23 per year)
Changes Proposed continued…
Abolish Second Adult Rebate
• Known as the “Alternative Maximum Reduction” in the scheme
• What is it?
• It is a reduction awarded based on the income of a second adult
who is not a partner and lives in the property; and
• Where the customer wouldn’t otherwise receive a reduction to
their bill because they have sufficient income (means) to pay it.
• Reductions are set at 25%, 15% and 7.5% depending on how
much income the second adult has
• Why remove it from the scheme?
• To avoid awarding reductions to people whom can afford their
Impact – case study 2
Mr Brown – Band C property
• Mr Brown is 36 years old. He has a net weekly income of £635.12
• The amount the rules say he needs to live on (his applicable amount) is
£72.40 per week
• After ‘disregards’ he has an excess income of £540.12 per week
• His income is too high to qualify for a reduction but his 26 year old son
Kevin lives with him and receives Jobseeker’s Allowance (Income Based)
• He is entitled to a 25% alternative reduction and currently pays Council
Tax of £16.86 per week (£876.94 per year)
• If Second Adult Rebate is removed he will no longer receive any reduction
so will have to pay £22.49 per week (£1,169.25 per year)
Changes Proposed continued…
Reduce the Capital Limit to £6,000
• Currently, the limit is £16,000
• What is it?
• It is the maximum capital someone may have
• Currently, if capital is held over £16,000 there is no entitlement
to receive Council Tax Support
• Why reduce the limit?
• To avoid awarding reductions to people that can afford their bill
• People with capital over £6,000 are expected to use this to pay
their bill
Impact – case study 3
Mr and Mrs Scarlett – Band C property
• Mr and Mrs Scarlett are both 29 years old. They have a combined net
weekly income of £216.12 and £7,223 in a savings account.
• The amount the rules say they need to live on (their applicable amount) is
£113.70 per week
• After ‘disregards’ they have an excess income of £74.82 per week
• They are entitled to a reduction and currently pay £14.97 per week
(£778.44 per year) Council Tax
• If the Capital Limit is reduced they will no longer receive any reduction
because they will become exempt from the scheme. They will have to pay
£22.49 per week (£1,169.25 per year)
Changes Proposed… Final
Remove Backdate Discretion
• Currently, someone can request a 3 month backdated reduction
• What is it?
• It is a discretion that a customer can request that if awarded, can
reduce their bill further by requesting their reduction be applied
from an earlier date allowed under the normal scheme rules
• You must show the council that you had good cause for not
applying for Council Tax Support during the length of the
backdate period
• Why remove this discretion?
• Most people ask for backdate without showing good cause
• A fairer and easier to administer backdate discretion will be
made available via the Discretionary Council Tax Reduction
Impact – case study 4
Mrs Orange – Band C property
• Mrs Orange receives Income Support and applies for Council Tax Support
on 17 July 2014.
• She is entitled from 21 July 2014 and is awarded a weekly reduction of
£16.86 per week (£607.11 reduced from her annual bill)
• She will therefore pay £5.19 per week (£269.83 for the year) Council Tax
• She asks the Council for her reduction to be applied from 01 June 2014
because she was in hospital from this date up until 16 July 2014. She has
evidence and also was receiving Income Support for this period
• Her reduction is backdated to 02 June 2014 which entitles her to an
additional £118.05 reduction from her annual bill.
• Her new payments are £2.92 per week (£151.77 per year) Council Tax
• If the Backdate Discretion is removed, Mrs Orange would have continued to
pay £5.19 per week (£269.83 for the year)
• There is no funding given to run this scheme but the
council does get to keep more of the business rates it
• The proposed changes in support received from April
2015 will be dependant on individual circumstances and
Council Tax Property bands
• The Council have a discretionary scheme that will be
published later in 2015 to help those that are in
exceptional financial need.
• Proposed Changes
o 85% to 75% passes reduced support to all
o assumes those with sufficient capital to pay and therefore would
not receive support anymore
o Removes the backdate provision ; circumstances of exceptional
hardship will be supported by a discretionary reduction scheme
for council tax
o Removal of the Second Adult Rebate Scheme
• Pensioners remain protected
• Remain on the current scheme
• Your opportunity to comment on the changes
Conclusion – Councillor Darren Rodwell
• Difficult choices but no option but to make these
• Your views on the proposed revised scheme
• Fill out a survey now or on line until 20th December visit:
• Final decision taking into consideration all consultation
will be made in January 2015
• If accepted the new changes implementation from April
• Organisations like DABD, CAB can help as well as the