Council Tax Reduction Scheme

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Council Tax Reduction Scheme

New proposals for cuts to the scheme will affect local people on low incomes. This consultation opened 27 July and closed on 23 September 2015 (8+ weeks).

2016/17 Council Tax Reduction Scheme

UPDATE DECEMBER 2015: Rother District Council's Cabinet made a decision to adopt all the proposed savings.  For more information read the report and minutes - Cabinet 7 November 2015

This was ratified at the next appropriate full Council meeting - Full Council 14 December 2015

 

Each authority in East Sussex has a difficult financial situation to manage over the next three years and will have to make savings and increase income.  Part of these savings could come from reducing the amount of financial help, provided to residents on low incomes, through the Council Tax Reduction Scheme.  If these savings are not made the savings will have to be found from somewhere else.

Media release: http://www.rother.gov.uk/article/11278/Consultation-on-proposed-changes-to-Council-Tax-support

This is a complex issue.  Any decision affects more than this scheme.  We would really like you to read the full background information before giving your opinion. Thank you for your help.

This consultation was going to end on 17 September.  We found that online access to the survey was not open for one Friday.  There problem was fixed.  We kept the consultation open an extra 5 days to Wednesday, 23 September to make up for the loss of service. 

 

2016/17 Council Tax Reduction Scheme - Background Information to Consultation

Council Tax Benefit

Prior to April 2013, Council Tax payers who were on low incomes could apply for Council Tax Benefit (CTB) to help pay their Council Tax.  Under this national scheme, Council Tax payers could receive benefit of up to 100% of their Council Tax liability.  (The poorer you were, the more money was knocked off your bill. It could be the whole amount.)  The Council then received full funding from the Government for all correct Council Tax Benefit awards made.

Local Authorities Set Up Their Own, Local Scheme

Changes introduced by the Government abolished the Council Tax Benefit scheme from 1 April 2013 and made local authorities responsible for setting up their own local Council Tax Reduction Schemes (CTRS) for working age people.  The Government also reduced the amount of funding given to Councils to pay for the schemes in 2013/14.  Since 2014/15 the amount of grant we get from Government to pay for CTRS can no longer be separately identified from the general grant (Revenue Support Grant) that we get.  Therefore, any decrease in our general grant means there is less money available to pay for all Council services including CTRS.

The scheme for Pension Age applicants is set by Government and is not affected by any of the options set out in this consultation.

Our Timetable

The Council is required to formally adopt a scheme by 31 January each year, ready to start on 1 April of that year.  The Council has to consult on any changes to the scheme. 

Previous Public Consultation

We consulted on our proposals for replacing Council Tax Benefit in late Summer and Autumn 2012. 

Councillors agreed the details of our Council Tax Reduction Scheme in January 2013 and the scheme came in to effect from 1 April 2013. 

For 2014/15 and 2015/16 no changes were proposed and therefore wider public consultation has not been undertaken since the scheme was first introduced. 

This consultation sets out some proposals for changes to the scheme for 2016/17 and we want your views on these to help us make final decisions.

Reduction in Funding to Local Authorities

Decisions about changes to the scheme need to be thought about alongside the wider challenges being faced by local authorities. 

The expected, continued reduction in our general grant suggests that Rother District Council will see an overall funding shortfall from 2016/17 to 2019/20 of up to £2 million.  The Council needs to consider how it will deal with this and whether the current CTR Scheme should be protected from changes.

Rother District Council collects Council Tax from you but other authorities ("the Precepting Authorities"), namely, East Sussex County Council, Sussex Police and Crime Commissioner and the East Sussex Fire Authority, receive a percentage of the overall Council Tax that we collect.  They are called precepting authorities because the money they are allowed to claim is called a precept. 

In 2015/16, we will keep approximately 10% of the Council Tax that we collect.  East Sussex County Council will receive approximately 75.5% of that Council Tax, the Fire Authority approximately 9%, and the Police and Crime Commissioner approximately 5.5%.   The Council Tax Reduction Scheme (CTRS) reduces the amount we collect and so impacts on the Precepting Authorities (because there is less collected Council Tax for them to claim a percentage of). 

It follows that reducing the cost of the scheme (and so increasing the amount of Council Tax we collect) will benefit the Precepting Authorities  in the same proportion as the split of Council Tax.

So, for instance, if the CTRS cost was reduced by £400,000, Rother District Council would benefit by approximately £40,000, East Sussex County Council by about £302,000, the Fire Authority by a little less than £36,000 and the Police and Crime Commissioner by just under £22,000, based on the percentages set out in the previous paragraph.

Other Consultation We Have Done

The law says that we must include the Precepting Authorities in an initial consultation about the proposed changes.  The proposals set out in this document take account of their views. 

Two Principles Behind Our Proposals

Councils across the county have been developing proposals for the 2016/17 scheme, which take into account two issues: how to balance the need to provide support against the continued difficult financial environment for local government; and the aim to protect or enhance any work incentives in the current scheme which, as a consequence, help to reduce the burden on the public purse. 

How Much the Council Tax Reduction Scheme Costs

The estimated gross cost of the Rother CTRS for 2015/16 is approximately £7.5 million. Rother District Council's share of this cost is around 10% in line with the split of Council Tax with the County Council, Police and Fire Service.  The total cost (before government grant) of the CTRS across East Sussex is currently £46 million. 

How Much Each Authority Must Find Overall

As can be seen from the table below, each authority in East Sussex has a difficult financial situation to manage over the next few years and will have to reduce its spending and increase its income.

Savings Targets
Authority

2016/17

£'million

2017/18

£'million

2018/19

£'million

Total

£'million

Sussex Police and Crime Commissioner

£16.8m£13.4m£13m£43.2m

East Sussex Fire Authority

£2m£0.4m£0.6m£3m

Eastbourne Borough Council

£0.8m£0.6m£0.6m£2m

Hastings Borough Council

£0.5m£1.4m£2m£3.9m

Lewes District Council

£0.7m£0.7m£0.7m£2.1m

Rother District Council

£0.4m£0.7m£0.9m£2m

Wealden District Council

£0.5m£1m£1.5m£3m

Total Savings

£21.7m£18.2m£19.3m£59.2m

East Sussex County Council

AnalysisNotAvailable£90m

TOTAL ESTIMATED SPENDING REDUCTIONS 2016/17 TO 2017/18

   £149.2m

Some of these savings could come from reducing the amount of help provided to residents through the CTRS. 

 

Council Tax Reduction Scheme options being considered

There are two proposed changes being considered for the Rother District CTRS:

  • Proposal one - A minimum amount that all working age households should pay based on 10%, 15% or 20% of the relevant Council Tax for their property
  • Proposal two - An assumed minimum income level for the self-employed to be used when assessing the amount of help to give. Allowance will be made for helping people setting up new businesses in their first year of operation.

These are described in the consultation questionnaire (link below). The potential savings from the proposed changes are summarised in the table below:

 

Option DescriptionNumber of Rother Claimants ImpactedEstimated Saving to Rother District CouncilEstimated Saving to ESCC, Police and FireEstimated total saving

Option 1a

10% would be the minimum payment from all working age applicants

3,447 people

£40,000

£360,000£400,000

Option 1b

15% would be the minimum payment requirement from all working age applicants

3,447 people

£60,000

£532,000£592,000

Option 1c

20% would be the minimum payment required from all working age applicants

3,447 people

£79,300

£704,900£784,200

Option 2

Minimum income amount for self employed

411 people

£36,000

£319,500

£355,500

In addition, a number of other options for changing the current CTRS have been rejected due to either their impact on vulnerable groups or administrative complexity. These are detailed at the bottom of this page.

Alternatives to reducing the amount of help provided by the Council Tax Reduction Scheme (CTRS)

We have also thought about other ways to make the spending cuts we need to make and maintain the amount of financial support provided by the CTRS which is currently in place.  These have not been completely rejected and you are asked about them in the Questionnaire, but at the moment we do not think we should implement them for the reasons given under each sub-heading below. 

We have considered:

  1. Increase the Level of Council Tax

    To protect the current CTRS could see a rise in the amount of council tax charged by Rother of between 0.6% and 2%. The Council, though, already has to plan its finances on the basis of a 1.9% increase in Council Tax and implementing this option would result in an increase of between 2.5% and 3.9% in our charge. In cash terms, this would increase the average council tax cost for Rother's element by between £4.07 and £6.29 per annum. If applied to the whole Council Tax charge, on average this would increase the average annual charge by between £40.24 and £62.19.

  2. Reduce Funding Available for Other Council Services

    The Council has to plan how it will save £2m over the next three years. If we decide to protect the current CTRS this will mean there is less money available to deliver all the other services provided by the Council.  Such services are already pressed.

  3. Use the Council's Reserves 

    Using our reserves to protect the Council Tax Reduction Scheme could be a short term option. Once used, however, they will be gone and no longer available to support and invest in other Council services.

Maintaining an Exceptional Hardship Fund for Residents

The Council is concerned that the implementation of any one of the proposals currently under consideration may lead to hardship for some residents.

If the Council implements the proposals to change the CTRS, we think it will be necessary to protect the most vulnerable households through the provision of an Exceptional Hardship Fund. People would be able to apply for additional help and the Council would assess their applications based on a number of factors including:

  • Their household income;

  • Their personal circumstances; and

  • The level of their essential expenditure.

Each case would be examined on its own merits and any exceptional hardship payment would be paid in addition to any Council Tax Reduction. The Exceptional Hardship Fund would be separate from the Discretionary Housing Payments scheme, which is only available to people on Housing Benefit.

Conclusion

All authorities in East Sussex have to consider where savings will come from in order to meet the impact of the continued reductions in government grants and are therefore proposing some changes to the CTRS.

No final decisions have been made yet and the questionnaire (on website below) seeks your views and suggestions to help us design the scheme for 2016/17.

Rejected Options

The following potential changes to the current Council Tax Reduction Scheme were considered by the Council but are not proposed for the 2016/17 scheme due to the impact they may have on vulnerable groups or because they would simply be too complex to administer.  

Council Tax Band Cap

Council Tax Reduction (CTR) would only be awarded up to an agreed level of Council Tax.

Example: An applicant living in a Band G property will have their entitlement calculated as if they lived in a Band D property. This means they would have to pay the difference in council tax between a Band D property and a Band G property as a minimum. This option has been discounted because it could create potential disparity of treatment between areas with town councils rather than parish councils and areas where there is variation in property values across districts. It would also add a great deal of complexity and a large administrative burden.

Limitation to Dependants' Allowances

This option would limit the amount included for dependants within the assessment when working out someone's entitlement.

Example: An applicant with 4 children would have their entitlement for CTR assessed as if there were only 2 children within the household. The change would have no effect on the average sized family or applicants with no dependants but would limit the level of awards to larger families, which is why it was rejected.

Inclusion of Some Benefits as Income

Within the current scheme, certain incomes are disregarded in full - for example, Child Benefit, Child Maintenance, Disability Living Allowance and Personal Independence Payments. If these were to be included as income in working out entitlement to support it would reduce the cost of the scheme. However, it would also mean that people receiving these benefits would receive less support and, because these groups may be potentially vulnerable, this option has been discounted.

Limit to the Amount of Capital (Savings) to £6,000

This change would mean any applicant with over £6,000 capital (savings) would not qualify for support. Currently the capital limit is £16,000. This option has been discounted by Councillors as it could be seen as a disincentive to saving.

How the Council has made Savings since 2010

  • Cutting 27% of the staff
  • A staff pay freeze for 3 years, followed by increasing pay by only 1% in 2015/16.
  • Closing one of our three main office buildings and letting spare space to partners in the other buildings, reducing our office space by about half.
  • Investment in technology and our website to enable people to help themselves at any time.
  • New ways of working to reduce office space: flexible hours, working from home and 'agile' working spaces for staff who spend a lot of time out in the district.
  • Running our services by joint working with other district councils, sharing management and reducing costs
  • Moving our services to other organisations in the community, such as allotments
  • New partnerships to save on our big contracts to supply public services

But to get even more savings will prove a challenge. There is less now that we can change. At the same time, during a recession there is more call for Council services rather than less. We have seen a rise in demand for benefits and housing services.  [Extract from Budget and Council Tax Consultation 2015]

How to Have Your Say:

There was an online questionnaire. This was our preferred method. The survey is CLOSED.

Or, if you have evidence that you wish to attach, which you can't do on the questionnaire, please email: consultations@rother.gov.uk

Write to

Council Tax Reduction Scheme Consultation
Chris Watchman, Revenues and Benefits Manager
Rother District Council
Town Hall
Bexhill on Sea
TN39 3JX

Members of Rother Citizens Panel should email on citizenspanel@rother.gov.uk

Please comment on our proposed options (listed above).  Alternative suggestions are welcome.

If you like to have your say, then you could join the Rother Citizens Panel.  Read more Rother Citizens Panel

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