Agenda item

The purpose of this report is to present proposals for changes to the local Council Tax Support (CTS) Scheme, effective from 1 April 2025. The proposed changes are to mitigate the rising costs of the scheme and the associated administrative burden with approval being sought to consult on the proposed changes to the CTS Scheme with residents and key stakeholders in order to enable a final recommendation to be made on any changes as part of the 2025/26 budget setting process for adoption by Full Council.

Cabinet RESOLVED:

(1)        To reject Option 1 (do nothing) and approve Option 2 (as detailed within the report) which would involve public consultation with residents and key stakeholders including the Greater London Authority on the following package of proposals (in addition to technical administrative proposals) in order to reduce the costs to the Council’s working aged local Council Tax Support (CTS) Scheme and to implement the scheme with effect from 1 April 2025:

(a)        Introduce a standard 35% minimum payment for working age households and apply a percentage reduction to each of the income bands. This would mean all CTS claimants being expected to contribute a minimum of 35% towards their Council Tax liability. Their CTS will then be calculated based on their income and this will determine which income band they fall into. If this proposal was adopted, the cost of the scheme would reduce by £7.6m, with detailed explanations and calculations, number of residents impacted and the proposed weekly reduction in CTS shown in Appendix A of the report.

(b)    Simplify the non-dependant charges and have just two flat rate non-dependant deductions for most households with other adults living in the property, £8 per week for non-dependants “out of work” and £20 per week for non-dependants “in work”. This would remove the need to verify income for non-dependants for CTS claims and reduce the administration burden. Adopting this proposal would reduce the cost of the scheme by £0.7m, with a detailed explanation and calculations of the proposed non-dependant deduction, number of households affected and proposed weekly reduction in CTS support shown in Appendix B of the report.

Proposed Changes - Technical Administrative

(2)        To align the backdating rules for new CTS claim in line with the Housing Benefit and Universal Credit regulations i.e. for a maximum of one calendar month. The backdating request to be made at the time of submission of new claim. This proposal would reduce the overall cost of the scheme because it would not be required to automatically go back to the beginning of the financial year, as per the current scheme.

(3)    To review the section 13A policy for hardship fund for Council tax.

(4)    To enable the consideration (by Cabinet) of increasing/decreasing the income bands for customers and non-dependant charges depending on the Consumer Pricing Index (CPI) from September of the previous year and DWP uprating of welfare support received in January of the new financial year.

(5)    To amend the CTS scheme to include the Universal Credit notification received from DWP for Council tax, as start date of claim for Council tax reduction if there was entitlement to it.

Eligible for call-in: Yes

Deadline for submission of call-in: 6pm on Monday 21 October 2024

Councillor Donnelly Jackson (as Cabinet Member for Resident Support & Culture) introduced a report presenting proposals for changes to the local Council Tax Support (CTS) Scheme that would, subject to approval, become effective from 1^st April 2025.

In introducing the report, members noted (as initial context) the significant financial challenges faced by the Council and £210m cut from the budget since 2010 with (as had been identified in the previous report) the Council needing to address a budget gap that was projected to reach £30 million by 2027-28 and therefore needing to make informed and responsible decisions that sought to balance the needs of residents with the sustainability of services being provided.

As part of this approach the review of the CTS Schemes, and changes proposed as a result, had not only been designed to deliver an essential financial adjustment but were seen as a necessary evolution to ensure the Council could continue to effectively support its most vulnerable residents whilst promoting a fair contribution from all working-age households which would also have the effect of bringing the scheme closer in line with those offered by other London Boroughs.  In seeking to outline the rationale behind the proposed changes members were advised that from a financial perspective the costs of providing Council Tax Support were forecast to increase from £19.9m in 2024/-5 to £21.2m in 2025-26.  In order to mitigate against this increase, the proposed changes aimed to reduce the cost of the scheme by £8m, delivering savings of £5m which it was pointed out would directly contribute towards addressing the Council’s identified budget gap, ensuring that resources could continue to be allocated effectively to those services relied on by residents.  As a further aim, the proposals had also been also designed to simplify non-dependant charges and align the backdating rules with Universal Credit regulations in order to reduce the administrative burden on both residents and staff with the adoption of flat-rate deductions for non-dependants removing the need to verify income for those individuals, streamlining the application process whilst also reducing administrative costs and making it easier for families to understand their entitlements and responsibilities for payments.

In presenting the proposals for consideration, Cabinet was assured of the Council’s continued commitment to supporting its most vulnerable residents with members advised that the proposed changes would also include a £1.5 million hardship fund as a means of ensuring those most in need had access to targeted, transitional assistance and support.  Members were also assured that, prior to implementation of any changes, the proposals would be subject to a process of meaningful consultation and engagement with residents and stakeholders in order to allow input and ensure all views were considered in seeking to work collaboratively and develop a scheme that best served local need.

In summary, Councillor Donnelly-Jackson felt that the proposed changes to the Council Tax Support Scheme represented a strategic and necessary step forward with the options outlined in the report having been designed to not only address the Council’s current financial challenges, but also to simplify the schemes administration whilst also seeking to promote fairness and ensure support continued to be provided for the most vulnerable.

In considering the report and options outlined, members recognised the challenging nature of the changes outlined but in recognising the context in which they had need to be developed welcomed the detailed and careful nature of the review undertaken into available options.

In taking the opportunity to express support for continued lobbying in seeking to introduce a fairer and more equitable way in which local authorities were funded through the Fair Funding Review Cabinet RESOLVED having considered the options available:

(1)       Whilst indicating their support for Option 2, to consultation with residents and key stakeholders including the Greater London Authority on the following options (as detailed in section 2 of the report) - Option 1 (do nothing) and Option 2 (based on the following package of proposals in addition to the technical administrative proposals designed to reduce the costs to the Council’s working aged local Council Tax Support (CTS) Scheme) and to implement the final scheme with effect from 1 April 2025:

(a)       Introduce a standard 35% minimum payment for working age households and apply a percentage reduction to each of the income bands. This would mean all CTS claimants being expected to contribute a minimum of 35% towards their Council Tax liability. Their CTS will then be calculated based on their income and this will determine which income band they fall into. If this proposal was adopted, the cost of the scheme would reduce by £7.6m, with detailed explanations and calculations, number of residents impacted and the proposed weekly reduction in CTS shown in Appendix A of the report.

(b)    Simplify the non-dependant charges and have just two flat rate non-dependant deductions for most households with other adults living in the property, £8 per week for non-dependants “out of work” and £20 per week for non-dependants “in work”. This would remove the need to verify income for non-dependants for CTS claims and reduce the administration burden. Adopting this proposal would reduce the cost of the scheme by £0.7m, with a detailed explanation and calculations of the proposed non-dependant deduction, number of households affected and proposed weekly reduction in CTS support shown in Appendix B of the report.

Proposed Changes - Technical Administrative

(2)       To align the backdating rules for new CTS claim in line with the Housing Benefit and Universal Credit regulations i.e. for a maximum of one calendar month. The backdating request to be made at the time of submission of new claim. This proposal would reduce the overall cost of the scheme because it would not be required to automatically go back to the beginning of the financial year, as per the current scheme.

(3)    To review the section 13A policy for hardship fund for Council tax.

(4)    To enable the consideration (by Cabinet) of increasing/decreasing the income bands for customers and non-dependant charges depending on the Consumer Pricing Index (CPI) from September of the previous year and DWP uprating of welfare support received in January of the new financial year.

(5)    To amend the CTS scheme to include the Universal Credit notification received from DWP for Council tax, as start date of claim for Council tax reduction if there was entitlement to it.